The Ethical Entrepreneur

I am an entrepreneur and I love what I do. I am passionate about the problem I am solving in a manner that will disrupt the industry and I have a vision — to change the world.

Who do you think has made this profound statement? Perhaps 9 out of 10 entrepreneurs, if not 10/10. BTW, I fall in this category as well.

I have met many entrepreneurs and read about many more — in the press, blogs, books, etc., So, what differentiates us entrepreneurs other than just the problem we are trying to solve passionately? I spent quite some time mulling over this question and here is a perspective — perhaps a new one.

The society we live in measures the success of an entrepreneur essentially on one measure — financial (Valuation to be precise). This is probably because not only is it tangible but also comparable. I am sure there are many founders who are extensively motivated by financial returns and there is nothing wrong with it. However, I do not think founders decide to take the plunge at the front end for the financials. It is apparent to most that founding a company is a hard slog compared to a 9-to-5 in a corporate and financial returns will be at least 5–10 years away. So, that can’t be the reason.

The reason entrepreneurs are driven to start a company

The core driver of a real entrepreneur is “To do good to others and to improve their lives”.

In most entrepreneurs, there is a deep sense of ethical and moral responsibility to benefit “others” — not self. The “others” generally include customers, team members, shareholders and even one’s own family. Ethical founders go above and beyond their duties to develop people and the only true satisfaction they seek is to observe the positive change in behaviour of the people around them. I believe personal sacrifice across multiple dimensions is a given and it probably never even occurs to the entrepreneur the toll this journey takes on the individual. What really matters is having a client tell them “This is so useful and wonderful — I have never seen the world this way” and is way more satisfying than hearing “I have processed your invoice today”. Personally, I would rather have a team member tell me “I got the opportunity to work on some amazing technology and with a great team” than think to themselves“I like the pay package though the culture sucks, so I will hang around till I find a better job”.

If you look at some of the founders who really changed the world and delivered on their passion, you will find many were minimalistic in their material needs (sure they ended up enjoying the financial success, after all they are humans, but that wasn’t the reason they started). They worked hard to bring something positive and better to the customer and developed their teams along the way. In contrast, some of the public failures in recent times have exposed the fact that whilst these entrepreneurs were driven, passionate and had a great product / service — they lacked the DNA to honestly “do good”. That will eventually morph into company culture and will affect the way the business manages their customer relationships. It’s a hard vicious cycle to stop.

So, how do you find the Ethical Quotient of an entrepreneur?

It turns out this is a very hard trait to suss out — even for a VC, let alone a client. However, it is not impossible. Most Due Diligence conducted are around technology, sales & financials. I rarely see VC’s asking me about team dynamics or needing to talk to my team about how I “behave”. All that matters is sales traction (undoubtedly this is critical), but the sustainability of a startup really lies in the culture of the firm — the unwritten rules of engagement between founder and the team. The level of trust that is built on tacit knowledge — that the founder will do his/her best for the team.

The more a team is built upon unwritten rules, the stronger the bonds, which will enable the start up to survive tumultuous times that it will invariably face during it’s course. Come to think of it, this could be the defining characteristics that will determine if a start up will deliver value to society at large. Surely this is not a new concept since Henry Ford said a while ago “A business that makes nothing but money is a poor kind of business” — I just decided to resurface the conversation.