My last few posts have been very much “inside the world of vc and high tech” and I wanted to get back to the broader theme that underpins this blog – meaningful failure and what you can learn from failure.
I had one of those wonderful experiences last week where a friend connected me to a friend, and I subsequently found myself deep into a conversation I hadn’t expected. In this case, I was on the phone with a former technology executive who left his career to pursue his passion for poetry. There we were, getting to know each other, locating some common ground in our shared interests of startups and writing.
One of the subjects we lingered on was how whether you’re at work or at home, you’re the same person deep inside. And that the converse is perhaps more interesting: what happens when you’re a different person at work than you are at home? I was thinking alignment of values and areas of ambiguity. This sent me in an interesting arc.
When I first started thinking about this I thought the issue was more about decency and less about ethics.
Except people can be incredibly decent, treat others well, communicate compassionately and still be unethical. They can define “truth” in a way that is not true at all, and exploit this ambiguity motivated by fear, or greed, or insecurity, you name it. But it means who they are on the outside (defined truth) is different from who they are on the inside (actual truth)
Which made me think of Entellium. This is old news, but offers a rich example.
Entellium was a high flying venture capital backed startup in Seattle, where the CEO and CFO created a second set of financial statements that overstated revenue and presented these to their employees, board, and investors. Only these two executives knew about it, and they compartmentalized the truth, keeping it deep inside. For a long time.
John Cook of TechFlash summed it up well: “More than $50 million in venture capital down the drain. Over 200 people out of work. And two Internet executives — both fathers — going to federal prison.”
They didn’t do it because of greed – they didn’t even profit from this deception. In fact they ended up spurning a $100million offer from Intuit, knowing the fraud would come to light during the accounting review.
One of the executives admitted the fraud was driven by the fear of failure. A missed sales objective one quarter and the fear of confronting that caused them to overstate actual revenue. And then the next quarter of course they were even further behind, and well you know the way these things play out. So, they lied to their board and employees.
And to their families too, who were blindsided by the fraud. The police showed up at their houses and took the execs away in handcuffs in front of their wives and children. Imagine what was going through their heads, and the heads of their families in those moments. And the comment I kept hearing from people who knew both men was “they were such decent people.”
So I guess you can be decent and have a very ambiguous ethical foundation. In fact, the belief that your your ethical foundation has ambiguity is the tell-tale that you are no longer behaving ethically. Entellium was all about the difference between what was true and what could be gotten away with. There’s plenty of ambiguity to go around in those last six words.
But deception is a whole number, there are no fractions of it. There is no ambiguity. So it’s really not about being a different person at work or home, it’s about always being the same person inside and outside. Having truth be the connective tissue between the two.
If it’s up front, then it’s there for everyone to see. A nice alignment between who you are inside and who you are outside.