Silicon Muse Startup Lessons from HBO’s Silicon Valley
Ethical Challenges for Startups
Startup Lessons From Season 6 Episode 5 of Silicon Valley
If you’re in the startup game HBO’s ‘Silicon Valley’ is must-see television. In its sixth and final season my own Gen Z’er has informed me that ‘Silicon Valley’ has pretty much ‘jumped the shark’, but after investing five years in this groundbreaking series I feel obligated to finish it. So throughout the season I’ll be covering each episode in a series I’m calling Silicon Muse.
Episode 51: Tethics
Directed by Pete Chatmon, written by Lew Morton, aired Nov. 24, 2019
Recap: “Richard is incensed that after years of standing up to Gavin Belson on ethical issues, he has been one-upped when Gavin creates the “Tethics” pledge. Richard vows to expose Gavin’s hypocrisy while his co-workers and advisers urge him to sign the pledge. Gavin, the silver-tongued former head of tech giant Hooli has one more trick up his sleeve when it comes to manipulating Richard. Meanwhile Gilfoyle and Monica are accused of being bad managers. They engage in a contest to see who can win the favor of their co-workers. Jared has returned to Richard’s side and is now attempting to gaslight his former protege Holden. The brash and ultra-confident billionaire investor Russ Hanneman returns to Richard to convince him to install free internet infrastructure for his RussFest event.”
Gavin Belson pulls yet another fast one on poor Richard by calling for an investigation into himself that puts Pied Piper in the crosshairs of the attorney general as it owns Belson’s former company Hooli. Russ Hanneman has an easy solution for Richard — he has dirt on the attorney general and can blackmail the AG into dropping the investigation. As a startup founder you’re going to be faced with scores of similar ethical challenges along the way.
For example, when I was building my first venture backed startup I was trying to get a certificate of occupancy for a data center we were opening in Chicago. The city inspectors had an issue with our generator and its belly fuel tank. Their rejection notices simply indicated that our system was out of spec. They would not provide any additional clarification and we were at a loss. The facility had been ready for six months before my father recommended hiring a ‘consultant’ with experience working with the city. Our contractor recommended a couple of ‘consultants’ and I interviewed each. One indicated that he’d work with the city to get our CO for $40K and the other said he could do it for $50K. When I asked them to explain what they would do they BOTH explained that they would work with the city to get our CO — period.
It sounded a lot like we were paying a bribe through an intermediary. It made me sick that in the United States we were having to deal with the sort of graft and corruption that I associated with the third world. I talked it through with our lawyers and they suggested that hiring a consultant to help us obtain a CO was fairly standard and would not be a violation of the law. I explained that it seemed like we would be involved in the payment of a bribe with the consultant being the cutout. The lawyers concurred, but stressed that this was how business was done in Chicago and the system was designed to allow companies like our have plausible deniability. They assured me that we weren’t doing anything illegal.
At the end of the day I knew it was wrong. I knew that we would be contributing to public corruption in Chicago. I decided to reach out to the board for their advice and they unanimously recommended that we pay the consultant and get the facility open. I was in my twenties and my board members were far more experienced than I was — they also had millions invested in my startup. I decided to pay the consultant and within the week, without explanation, we got our CO in the mail. It was done.
In this episode Richard is dealing with a fake investigation that will shut his company down. It will mean hundreds of people lose their jobs. It will mean that his investors will lose all of their money. All because of a fake investigation initiated by his nemesis, Gavin Belson. Using Russ’ leverage is technically wrong, but the AG is already corrupt and the investigation is total B.S. — what is the harm? Startup founders face these sort of issues on various levels every single day. There is no right answer most of the time. My advice? Leverage your board, your mentors, and your advisors whenever you’re faced with these sort of ethical challenges. Take your time. Think it through. It is your butt on the line.
About The Author
Alexander Muse is a serial entrepreneur, author of the GEN Z Startup and Sous Vide Science, contributor to Forbes and managing partner of Sumo. Check out his podcast on iTunes. You can connect with him on Twitter, Facebook, LinkedIn and Instagram.