Business Ethics: An Oxymoron?

My friend, Rich Marin, has invited me to teach at one of his graduate business school classes in San Diego, on the subject of Evaluating and Using Business Ethics. While looking forward to this, it’s forced me to take several actions.  The first was to find a company around which to build an appropriate case study, one which could become a lens for evaluating the points I hope to make.  After some reflection, I chose the story of Theranos.  The jury had just found its CEO guilty of fraud charges this month (January 2022). The saga of this company’s trip from a $9B valuation to zero is compelling and provides an opportunity to discuss the ethical issues I plan to cover.

Next, I reviewed ethical issues I faced in my business career, as real-world questions faced by the presenter are sometimes the most memorable.  Then I dusted off and reviewed sources and inspiration for my ideas on right and wrong and tools I evolved for making decisions consistent with my values and beliefs. Finally, I found several books written by thinkers on ethics and read or re-read them, including one Rich assigned his students.  I’ll list these, as well as some videos at the bottom of this newsletter, with some links. This newsletter is as much to help me crystalize my thinking as it is to convey some thoughts to readers on why I believe this is such an important topic.

I believe ethics is not a theoretical abstract idea to be relegated to the classroom or pulpit. Ethics is practical and pragmatic, a tool for making the best decisions, in business and life.  It helps ensure our choices are consistent with our values, principles, beliefs, and norms.  The more difficult and ambiguous the decision, the more ethical considerations play an important, even crucial role.   Complicating things is the fact that right and wrong are often moving targets. While one may be tempted to believe the proper decision is only a matter of viewing alternatives against a backdrop of carved-in-stone rules or codified laws, it often is far more complex.

Next, I contend business ethics is not an oxymoron. While fraud at Enron, cheating clients at Goldman Sachs, illegal foreclosures at Countrywide Financial, and a Ponzi scheme by Bernie Madoff may seem like a trend, they’re all anomalies.  Most businesses struggle to operate within the law and some even adhere to strict ethical standards.  It is rare to join a decent-sized company today and not be given an employee manual containing a section on ethical considerations.  Some larger companies even have chief ethics and compliance officers, responsible for training, monitoring, and auditing compliance with laws and the company’s expressed values. Ethical failures, businesses have found, can lead to embarrassing messes that require massive effort and expense to clean up. Better to do it right the first time.

Is Business Ethics an oxymoron in “Fake It ‘till You Make It” culture?

Although I’d read some about Theranos and its charismatic CEO, Elizabeth Holmes, I was unaware of the whole story.   While my timeline in Silicon Valley overlapped somewhat with hers, she and her company were not on my radar. By the time they left their “quiet period,” I was long gone and so have no firsthand knowledge.  During a deep dive into the company, I was again impressed with how incredible the Internet is at chronicling and preserving nearly everything.  Besides books and movies, I was able to easily find some of the first news stories on the company.  I watched an early TED talk where Holmes outlined her dreams for the company and even found a clip of her on the stage with Bill Clinton.  I found the first of what would become many cover stories on Holmes which would pack newsstands, including Roger Parloff’s cover profile of her in Fortune Magazine in June of 2014 with the headline, This CEO is out for Blood as well as Ken Auletta’s in-depth article in The New Yorker in December of 2014.

Within a few days, I’d created a PowerPoint presentation with most of the key elements for a solid case study – a timeline of Theranos, information on the key players, and finally, the protagonist who made the decisions that we could scrutinize and discuss.

Since then I’ve engaged several good friends and former business colleagues in discussions on ethical questions.  Ethical questions impact a large number of contemporary issues and discussing them with so many intelligent people has been a world of fun – although I’m not sure it’s been as much fun for them as it has for me.

Ethical dilemmas are everywhere:

  • Early in the Covid crisis, nurses faced inadequate supplies of protective equipment and limited testing. They could go to work, putting themselves, their patients, and their families at risk. Alternatively, they could stay at home, knowing severely ill patients need nurses to be on duty. What to do?
  • As it relates to charges of voter fraud in the 2020 presidential election, some attorneys who represented those bringing lawsuits claiming fraud may be facing ethical issues with their state bars. On the one hand, every client deserves representation, even those with claims you may not agree with or might be unpopular.  On the other hand, it is something else to file baseless or false claims.  Every state bar has some version of a rule known as “the rule of candor.” It requires that lawyers shall not knowingly file false statements of fact or knowingly present false evidence to a court. The argument goes: by making allegations of voting improprieties without data to substantiate those claims, these lawyers might be violating the rule of candor. They could be disbarred. Which is the ethical choice: to give legal representation or obey the rule of candor?
  • And on voting itself: Should voters vote solely for their interest, or should they vote for the common good, whatever that is?
  • The U.S. Congress where elected officials vote not for the good of the whole (state or country) but for the segment that might re-elect them?

I will no doubt have more to say about all of this after the class, so stay tuned.  In the meantime, below is a list of the most compelling books, movies, and YouTube videos I’ve found on this topic:

Books

Right/Wrong – How Technology Transforms Our Ethics, by Juan Enriqez. A fun, entertaining, and thought-provoking look on how common wisdom and technology enable ethical behaviors.
Bad Blood: Secrets and Lies in a Silicon Valley Startup, by John Carreyrou.  A deeply well researched and compelling history of Theranos by the Wall Street Journal reporter who broke the story about the company’s misdeeds in 2015.
Justice: What’s The Right Thing to Do?  By Michael J. Sandel.I’m reading it a second time.  It is an easy read. Sandel weaves in the biggest ethical questions man has struggled with through the ages using contemporary situations and issues.  Highly recommended.
Something for Nothing: Arbitrage and Ethics on Wall Street, by Maureen O’Hara.  This book attempts to tease apart “legal” and “ethical” in a practical and educational way.  Rich recommends it for his class. Not being a finance person, I found it slow going.

Movies

The Inventor: Out for Blood in Silicon Valley – 2019  (Documentary – HBO) Well done, unbiased and thoughtful history of Theranos and what occurred. Many good interviews with key people and relevant historical footage.

The Real Adam Smith: Ideas That Changed the World – 2017  (Documentary in 2 parts – Curiosity Stream and YouTube). Adam Smith’s observations, chronicled in two books written in the 18th Century, on free trade, the nature of wealth, and moral behavior, remain valid in the 20th Century.  This show explores how his thinking changed the world in the decades after his death and how his principles are still part of modern thought. A highly compelling story.

YouTube Videos

Elizabeth Holmes, Theranos CEO at TEDMED 2014

The Significance of Ethics and Ethics Education in Daily Life | Michael D. Burroughs | TEDxPSU

Science can answer moral questions | Sam Harris

Spilling the Blood of a Silicon Valley Unicorn

Creating ethical cultures in business: Brooke Deterline at TEDxPresidio

In His Own Words: The Theranos Whistleblower  (Filmed at the Markkula Center for Applied Ethics)

Ex-Theranos CEO Elizabeth Holmes says ‘I don’t know’ 600+ times in depo tapes: Nightline Part 2/2

How Elizabeth Holmes sold the idea of Theranos to employees, investors: Nightline Part 1/2  (In two parts)

Theranos CEO Elizabeth Holmes: Firing Back At Doubters | Mad Money | CNBC

2015 Clinton Health Matters Initiatve: Disruptors in Healthcare

Theranos: How Did a $9 Billion Health Tech Startup End Up DOA?  (Berkeley Hass School of Business)

Building business on character ethic – Kevin Byrne at TEDxNoviSad

Ethical dilemma: The burger murders – George Siedel and Christine Ladwig

Justice: What’s The Right Thing To Do? Episode 01 “THE MORAL SIDE OF MURDER”  (Class at Harvard University)

Ethics in the age of technology | Juan Enriquez | TEDxBerlin

Thoughts on two films: American Folk and Don’t Look Up

By chance, I watched two movies in the same week that, upon reflection, created some remarkable and fun contrasts.  The first, AMERICAN FOLK (2017) is a movie on Amazon Prime ($0.99 rental).  You can also watch it free (with commercials) on other streaming services like Netflix.  The second, Don’t Look Up (2021) is generating a lot of social media attention.  They’re both good, but of the two, I think my readers will appreciate American Folk.  Where Don’t Look Up is as subtle as Marvel’s Venom monster, American Folk is a cautious, gentle, and beautifully told tale. Not to give anything away, but you’ll need to watch American Folk carefully. It’s easy to dismiss as “nothing’s happening,” when, in fact, a powerful story is being deftly told with subtle tenderness. After piloting my motorcycle on many of the roads traversed in American Folk, the scenery and vistas were recognizable. But more familiar were the everyday interactions the protagonists had with people they met.  This is what generated the greatest affinity for me and reminded me to pay attention and not under-value my coffees and lunches with my old guys, talking about the weather with my neighbor’s tree trimming landscaper, discussing how to attach patches to my motorcycle jacket with the Russian-speaking seamstress and kidding with the woman behind the counter where I drop off my dry cleaning.    American Folk does not have star actors like Meryl Streep, Leonardo DiCaprio, Jennifer Lawrence, or Cate Blanchett. Instead, its two main characters have little acting experience, making them more like your neighbor down the block or the guy you always see at Home Depot. I highly recommended American Folk and, yes, if you’ve not seen it, Don’t Look Up is worth watching, too.

Goodbye Chris Locke

News reached me yesterday my friend, Chris Locke passed away on Dec 21.

Chris had a remarkably large impact on my life and the way I thought, during my critical transition from working for large companies like IBM and AT&T to early stage startup companies. The Internet was just a baby learning to crawl. Chris expanded my thinking, kept me from doing dumb things, and never belittled my inability to see what was so remarkably obvious to him.  Chris was many things, a futurist, a provocateur, music and art lover and perhaps the best conversationalist ever as Doc Searls so graciously and accurately captures in his obituary here. I knew him best as a brilliant marketer, futurist and friend whose path intersected with my own in the area of business development. In that process I got to know him as a man, one who loved and cared deeply about his family, particularly his daughter. He could never stop talking about her, especially when she was young.  Our daughters were similar in age and as many fathers did, we compared notes, desperately seeking insight and understanding of these unfathomably amazing beings and what we might do to help minimize the obstacles that would no doubt impact their future selves. Neither of us, if I recall, would conclude there was much we could do but “stay out of the way.” Years later he introduced me to the music of his brother, Joe Locke, and I eventually managed to collect about ten of Joe’s recordings. Chris was intensely proud of Joe (an internationally recognized jazz vibraphone player) and the music he produced.

Just about the time we got together, Chris had started a publication called the “Internet Business Report,” when no one had even the foggiest idea the Internet was much beyond news groups and games. Later Chris provided the brains and the writing behind Mecklerweb.  If there was a theme to my friendship with Chris, it was that he could see the future.  Chris and I met when we both were in New York, me working for IBM-funded Prodigy Services Company while Chris was with IBM proper, helping them with a large-scale AI project, a mismatch of epic proportions.  We instantly hit it off and were closely involved personally and professionally for the next couple of decades.  We drove together to Esther Dyson and Jerry Michalski’s first “Retreat” in the early 1990s and later I recalled and wrote about it. Below is a summary, the full story can be found here.

1996: Things will Never Be The Same:

“Driving back to New York from Philadelphia in my ’91 Nissan 300ZX, I loved it.  In the car with me is Christopher Locke — rambling intensity, endless chain of menthol light cigarettes, a three gallon tank of cappuccino and a raspy, boyish, brick-through-the-window rage.  We were high as kites because we’d just left a conference outside Philadelphia where 50+ of the brightest people around had taken a few wonderfully unstructured days to throw paper airplanes and talk about what they thought and what they wanted to do. And all of it had been so possible, so absolutely open and feasible, that it had been like being present at the discovery of a new world. Whether an individual’s interests had been commercial or social or political or spiritual, there had been something there – a sense of things shifting and moving smoothly, like tumblers in a great lock.

When Chris and I get there after the long drive down from New York, we’re immediately pointed to tables and given t-shirts and magic markers so we can write on and decorate them. We also get green and red and yellow paddles for use in the next day’s sessions — a green paddle held up will mean “I agree with you,” a yellow paddle, “Hmmm, where are you going with this?” A red paddle, “Bullshit.”

The conversations are incredible, and for the first time in my life I participate in a real dialogue with 50+ people. Jerry Michalski leads the group in making a determination on what we want to talk about, where do we wish to focus our energy and then moderates. It’s a wild group and while I first get the feeling that Jerry’s task is somewhat akin to herding cats but after a time he appears more like Coach Pat Riley coaching the Los Angeles Lakers in their prime. Some people go off and prepare, then come back and present to the group, others present with little to no preparation.

Many things of interest, but nothing compares, though, with Chris’ free form rant. He’s been waiting to get on for a while and finally goes on our last full day. He’s enraged — you can see it in him as he walks. I’ve noticed him seething at our table — not always — mostly during the particularly techno-dweeb or business-as-usual ramblings. The amphitheater is terraced and on each level there are tables and all the energy seems to drain down toward the speaker, good or bad.

Chris gets up and “What the fuck,” he says, not questioning, more like a statement of fact. “I’ve been stuck at IBM for a year with my thumb up my ass and I’m waiting for someone to figure out what the fuck is going on and they’ve got plans I give them all the time and they file them and say “Yeah, Chris, that’s great, then they take me into some fucking egg carton room and tell me what I’ve got to work with, which is nothing, no money no equipment no staff, and then they give me a check and I fucking go home and sit there, where I’ve got better tech stuff anyway than IBM where it took me two solid months to get an internet hookup, and this is what they want me to do, see, they want me to do the internet thinking, and get them into it, but the first fucking thing they tell me is you’ve got no resources and ‘Oh, by the way, don’t talk to anyone about this stuff without clearing it through channels.’ A fucking year. And I sit here and some of what I’m hearing is how to work in the system. Well I say fuck the system — it’s dead it’s stupid it’s non-responsive it’s counter productive it’s fucking socially evil and if we put any more of our goddamn time into propping up these dead- ass morons we deserve what we fucking get.”

The veins are standing out in his neck. “Just fuck ’em and move on. I’m sitting around drawing a fat check off these people and it isn’t enough. I don’t want their money. These are deathly structures with no perceptible pulse except for once in a while you run into somebody lost in the fucking halls and maybe you start to talk about something real and then the guy with the fucking glad-hand comes around and tells you can’t do that, you can’t talk.”

“This is a huge goddamn breakthrough into who knows what and as we sit here IBM is trying to figure out how to put it in a box and make it sit up to beg for airholes and fucking cheese. We’re not going to work in the system because THE SYSTEM DOES NOT WANT US.”

Go rageboy, go,” Esther Dyson yells out (ed: the moniker would stick).  “THEY DO NOT WANT US AND THEY’RE CRIMINALS BY INSTINCT ANYWAY AND IF WE PUT ONE MORE YEAR INTO FUCKING AROUND WITH THESE DEAD FROM THE FUCKING TOP DOWN PIECES OF MANUAL-BOUND SHIT WE’RE GOING TO MISS THE GODDAMN TRAIN!”

There are whistles and cheers in the crowd. People are standing. One guy is on his table. Paper airplanes and erasers are filling the air.  “Let me tell you — I’m Program Director for Online Community Development and they’re paying me to do nothing and when I say “Hey, I’m getting paid for doing nothing they say, ‘As long as you understand the situation.’

His rant achieved eloquence, as rants occasionally can. Now, speeding toward home on the unspeakable New Jersey Turnpike, peering red-eyed through the cloud of smoke from the unspeakable Locke’s cigarettes, we’re turning over a lot of information, twisting and bending it, shooting into the twilight and the greasy salmon-smear that twilight can be around Newark, the refineries, the lights hung on the outsides of the buildings, seemingly, just like always.

How can I tell you about that conversation/monologue? Mix up a vat of hard information, coffee dregs, healthy contempt, real world pragmatism, mashed Toxico cigarette butts, visionary eloquence, trailing-off-in-the-haze 60s enthusiasms, pure rage, a sense of mission, Thirteen Ways of Saying Fuck It, a highly-tuned bullshit detector with wires and lights and everything, democratic zeal, arcane rock and roll, a dollop of Howl, a cloud of menthol smoke and a driver with his head in and out of the window, trying to breathe, at ninety or so, bearing down on the Hanging Gardens of Newark.

“We absolutely have to fucking burn the Fortune 500 down to the water-line. This is a moral obligation, this is an absolute fucking obligation.” Chris waving his left hand in the air, the smoke from his cigarette eddying around in search of free air to poison.”

Chris and I at one of the Personalization Summits.

Over the years I began a number of start-up companies. Occasionally an unsolvable problem would arise or I found an excuse to bring Chris and his thinking into the mix, as I always knew good things would happen.  The call would begin with me saying, “Chris, I’m getting the band back together,” and long before I’d explained what we were doing he’d say, “I’m in, man. Where and when?” His involvement at Net Perceptions led to the creation of the Personalization Summit, a conference we held over several years, where Chris’ influence on the agenda and speakers catapulted the event into a “must attend” conference for everyone in the early customization and personalization space. Speakers included John Hagel, Malcom Gladwell, Joseph Pine III, Ann Winblad, Robert Krulwich, Marc Singer and Doc Searls.  Of course, Chris would always speak, sit on panels or conduct interviews.  His favored setup was free-form, unscripted dialogs with some brainiac in which they bounced ideas around. Chris would open mental windows to the sky or a new universe and the interviewee would keep up as best he/she could.  I wish I had those recordings!

Some years later when he joined me at Krugle in Palo Alto, he arrived with a massive beard and his trademark waist length hair and announced he wanted to get a haircut.  Off to the barber we went and you can see the results below.

In May 2006 Chris joined me at Krugle for a few months. He arrived with a massive beard and his trademark shoulder length hair. He asked if we could get a hair cut and off we went. You can see me chronicling the event in the mirror on the 3rd picture.

Chris also visited me for a few weeks in Arizona after we’d moved there, and that was fun.  He seemed to like the desert.

Doc Searls, one of the collaborators on The Cluetrain Manifesto with Chris.

Chris used some of his experiences at one of my companies in his book Gonzo Marketing: Winning Through Worst Practices,” which took some of the themes he and a brilliant group of collaborators (Doc Searls, David Weinberger, and Rick Levine) had articulated in “A Cluetrain Manifesto” and put them into practice.   I was immensely proud to have been part of his thinking.

If Chris had a problem, and this is just my opinion, it was this:  given the brain space and time spent in the future, a place he needed to go, sometimes arriving back in the here and now was difficult and disconcerting.  In his trips to the future, Chris figured out a great many things. He had a clear picture of how certain things would be, what would continue to exist and work, and what things would be discarded.  He used these insights to formulate ideas, products, services, and life in general to describe what life in the future might look like and how it would work. When Chris “came back to earth,” he was troubled to see things around he’s discarded in his head as “dead men walking,” and learned he couldn’t do some things he wanted as they hadn’t been invented yet.

It puts me in mind of Dick Tracy and his telephone watch (two-way wrist radio). The generation that remembers Dick Tracy is fading but the telephone watch is in its infancy. Chris Locke didn’t draw a comic strip but he probably saw the future that way. Following are a few of his insightful comments recorded in The Cluetrain Manifesto:

Page 167:

“How quickly will commerce move to the Web?…is this question really so important, or does it just address a detail about timing?…there is a heartfelt question lurking here…It has to do with our fear of replacing the shops—and the neighborhoods they enable—with a paper-souled efficiency that lets us search out and consume commodity products at disquietingly low prices. We’re afraid that the last shred of human skin left on the bones of commerce is about to come off in our hands.”

Page 169:

“When we can’t rely on a central authority—the government, the newspaper, the experts in the witness box—for our information, what new ways of believing will we find? How will we be smart in a world where it’s easier to look something up than to know it? How will we learn to listen to ideas in context, to information inextricably tied to the voice that’s uttering it?”

Pages 174-175:

“Invisibility is freedom. At first it feels awful that no one can see you, that nobody’s paying attention…But you get used to it. Then one day you find yourself on a network…and it’s like walking through walls…You can get away with saying things you could never say if anyone took you seriously…And if anyone comes sniffling around and wonders if this Internet stuff could be maybe dangerous, culturally subversive, it’s oh, hey, never mind us. We’re just goofing off over here on the Web. No threat. Carry on. As you were.  But we aren’t just goofing off. We’re organizing, building and extending the Net itself…”

I have to stop here before I transcribe the whole book. It was published in the year 2000, twenty-one years ago. Doc Searls does a wonderful job in his Obituary of Chris describing the impact it had.  What a mind is gone from us! Goodbye, Chris. If you get a chance, send me message from the future.

Chris in his ID photo at Krugle, looking more like a convict than our newest employee.

Confessions of a Republican Political Operative

In Dubai last month I met the principals of an exciting Tempe, AZ start-up company, ZEV. The CEO, Carolyn Maury, and her co-founders were all at GITEX Global. ZEV converts fleets of gas-powered vans into electric vehicles quickly and at a low cost.  What they’re doing is brilliant.  As they have grown, they have sought and found political guidance and lobbying help from Barry Goldwater, Jr., son of the late Arizona senator who is now an energetic 83-year-old, who regularly visits Washington D.C. and provides politicians with his ideas.  When talking with Carolyn in Dubai, she showed me a photo of herself with the Jr. Barry Goldwater. He’s a spitting image of his father and it reminded me of my time as a Barry Goldwater (sr.), political operative.  I meant to tell Carolyn the story, but never found the time, so now I will tell you.

In 1964, my early teen years,  I found myself on the slippery slope where righteous intent slides into political chicanery.  My father, always a staunch Democrat in a family of Democrats, had sided with the republicans when J. F. Kennedy gained the party’s nomination in 1960. The church we attended believed if a Catholic were ever elected to the presidency, it would mean the Pope would be in charge of the USA. While my uncles stuck with the democrats, my dad—horribly distressed by Kennedy’s election—chose to side with the republicans into the 1964 election when Nelson Rockefeller and Barry Goldwater struggled for the nomination.  Rockefeller had divorced his wife and remarried. This was another major black mark on him from our church’s standpoint. Barry Goldwater was our man.  Goldwater expected to run against Kennedy, but when JFK was shot in 1963, his opponent became Lyndon Johnson.

During the final days before the election, my father brought my brother Leif (11) and me, (13), to a late-stage Barry Goldwater get-out-the-vote organizing event and rally at Lincoln Grade School about a mile from our home in Fairmont, Minnesota.  We quickly tired of the “what do we do next” discussions and found ourselves in a cloakroom in the back.  It was full of campaign literature, political tchotchkes, and bumper stickers — boxes of them – lots and lots of boxes of stickers. Staring longingly at the boxes, we asked one of the party faithful if we might help ourselves to a few bumper stickers.  “Of course, of course,” he said, “… take as many as you want.  We’ll never be able to use them all.”  We grabbed a box, not realizing it contained about 10,000 stickers, and headed out into the early November night.

Our first stop was the school parking lot, where every car got at least two new “GOLDWATER 64” bumper stickers.  Heading around George Lake towards home, every parked car we passed got Goldwater stickers, whether it was on the street or in a driveway.   About a third of the way home, we realized that unless we prodigiously upped our rate of sticker application, we would arrive home with a mostly full box. Although only junior operatives, we knew stickers in boxes could not help the cause, and we got to work.  Stop signs soon had 4 or 5 Goldwater Stickers.  The sign to the boat landing was covered with them.  A homebuilder’s billboard advertising lakeside lots for sale was soon coated with at least a hundred stickers or more.  We crawled up street signs at every crossing and placed stickers over street names.  A block or two from home, it occurred to us that mailboxes should also get stickers, and from that point on, both sides of every mailbox on all sides of the street were adorned with Goldwater 64 stickers.  But even with all that hard work and creativity, we arrived home with nearly half a box of stickers left.

When my father got home he acted less than pleased. The stickers, which shined in the dark, had reflected in his headlights, illuminating his drive all the way home.  He explained we shouldn’t have put stickers on public property and as to people’s cars and mailboxes, we should have asked first.  He acted mad, but I suspect there was some internally smirking – as no one would know who’d done it.  He made us give him the remaining stickers and he locked them in his car trunk.  He told us the next day we needed to go out and remove the ones we’d put up.  Good idea, but the glue used back in those days was meant to last, and remnants of those stickers remained well into the following summer, long after the election was over.  I don’t recall voting for many republican candidates, but I had one exhilarating hour as a volunteer operative!