

Ask HN: Do you judge business models on morals and ethics? - playeren

Could you join a company/project that clashes with your personal code of ethics?<p>Have you had offers that seemed both viable and lucrative, but was turned down because it seemed morally dubious?<p>What would be grey areas for you in a moral sense?<p>Would you sign up to hack python for a site that revolutionizes international arms transactions?<p>Would you design UX for a next-generation pay-day-loan start-up?<p>I personally come across many opportunities, where I can see potential for both viable and legal business models, but I trash them because they rely on targeting a vulnerable group of people, or relies on "cheap" psychological tricks to work. But that's just me.<p>Where do _you_ draw the line?
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einhverfr
I have a friend who has said that business ethics classes teach how to justify
the answers the teacher (and later boss) wants instead of how to ask the real
questions. After all, what you get is a series of hypotheticals and asked what
the right thing to do is and why. The hypotheticals are written so it's
obvious what the teacher wants. So the goal is to justify the "right" answer.

What my friend has argued instead is that the question you are asking, namely
how do you evaluate a system? Is it one that encourages the cream to rise, or
one where shit floats? To me that's the biggest question.

If you have a business model where the unethical individuals rise to the top
(and if they are up at the top that's a pretty good bet) then that's a bad
system. If you have one that encourages the ethical folks to rise to the top,
then you have a good system.

Now what would I do?

I have worked on projects that others found unethical that I did not, for
example, an accounting system for a porn payment gateway. I knew others on the
project who did have ethical problems with it. However, the people that ran my
customer's business were great--- professional and ethical in terms of running
a business.

Similarly I had no problem writing documentation for Microsoft regarding
interop of Linux and Windows, even though I was helping Microsoft with Windows
marketing and I favor Linux for both ethical and more practical reasons.
Whatever helps the customer run a mixed environment is ultimately a good
thing.

On the other hand, there are plenty of projects I wouldn't do even if they
seem viable. I don't think Monsanto could pay me enough to do anything for
them, for example.

As for a next-gen pay-day-loan startup? I would want to have a serious talk
with the founders and see if I was missing something. Maybe they have a clear
idea on how to make it ethical? Also if I met the founders I might have a
better idea if they were being predatory or rather trying to bring a better
way for everyone into the industry.

For international arms transactions? Hmmm.... given that countries usually buy
arms from other countries, that would mostly be to facilitate organized crime.
No thank you.

If it's a gray area, you sit down and try to get a better sense of things. It
is possible for a project to be ethical in a sea of poor ethics. If it is
unambiguously unethical, I would not touch it. But if the people running it
are clearly ethically impaired, then run like hell.

I don't want to be Zinga'd. No thx.... ;-)

~~~
playeren
Interesting point on evaluating a company based on individuals' code of ethics
compared to their upwards career mobility. But the obvious (albeit a bit
contrived) question would then be; What if the so-called unethical individuals
measurably contributes more revenue and profit, than the ethical individuals?
Is a CEO who allows lesser contributing individuals rise to the top of the
management hierarchy, acting ethically towards the shareholders?

~~~
einhverfr
Basically every system rewards some behaviors and punishes others. If your
system rewards bringing in money and to hell with ethics, then the shit will
float, and eventually the folks at the top will be unethical psychopaths who
will tear your company apart.

If you have people who genuinely want to bring money in, work hard at this,
and so forth, and they are ethical, and you reward them for both of these,
then your business is protected and will not lose sight of the necessity to
change the world for the better, which is, likely the heart of the business if
it is any good. It's easy to sell products that benefit people, and things
that make the world a better place do that.

~~~
playeren
>It's easy to sell products that benefit people, and things that make the
world a better place do that.

I know this is kind of a YC mantra, but I can't help but suspect it of being a
matter of faith, more than a matter of fact. Is Groupon (val. ~12bn) really
helping the world 24x more than, say, Atlassian (val. ~500mm)?

If you're up for it - time for an even more contrived scenario.

You are heading a successful start-up. You've proven your concept and it's
time for your Series A. You sit down with your angel who has some
introductions lined up for you.

S.P.E.C.T.R.E. VC Inc. has a proven track record helping companies to record
breaking public offerings in record time. ALL of their portfolio companies has
so far successfully completed a "let-it-rain" IPO. Some also went bankrupt not
so long after that. Some people accuse the company of using "dirty tricks" to
obtain their goals. They also seem like total assholes when you meet them.

H.E.R.O. & Partners VC on the other hand, seem like nice guys you could hang
out with in private. They are a successful VC company in their own right, but
their investments are a bit more hit-and-miss, and they've only been part in
one moderately successful IPO.

Both seem professional. Both have the tools to help your company. Who do you
choose?

~~~
einhverfr
First, re Groupon. Certainly they help people.

But I didn't say that making the world a better place was necessary. I said
that it was one way to make products that benefit people. Groupon benefits
people. Whether it makes the world a better place is a different question.

As for your scenario, I don't trust VC's. Someone may be being nice at first
just to leverage you out of more of a share later.

My first impression is that SPECTRE poses a distinct danger of pushing a
company too far too fast, and that this is most likely the source of the
accusations of dirty tricks. I don't know what you mean about assholes. If
they are merely arrogant and irreverent that's one thing. If they seem to
encourage unethical behavior I would not consider them.

HERO poses a different initial concern. I would be worried about them pushing
to dilute my share, and just being nice at first to win confidence.

Bringing someone into a business is a lot like getting married. I would want
someone I could both respect and get along with, but failing that at least
knowing where I stand would be helpful.

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jnorthrop
That's a tricky question and the heart of the problem with it is that human
beings are very good at rationalization.

> Would you sign up to hack python for a site that revolutionizes
> international arms transactions?

Yes, I want to help those innocent rebels overthrow that cruel dictator by
giving them a means to protect themselves.

> Would you design UX for a next-generation pay-day-loan start-up?

Yes, what may seem like an extraordinary fee is actually justified by the
risk, and many of their customers truly need the service provided. They have
no other means.

I face this kind of rationalization in my own job. I'm a director at the
International Assoc. of Privacy Professionals. My membership, as you can
imagine, is very sensitive to what we do with the personal data we collect. So
when the marketing guy asks if he can slice and dice the membership data to do
some targeting marketing, I have to assess whether the data he is using was
collected with proper permission for that use.

When we collect data it is with the mission of supporting the privacy
profession and should only be used for that purpose or to enhance the value
the member receives from us. Now, the marketing guy is a sharp fellow and, as
such, he will rationalize that it is to the members' benefit that we
accurately execute his plan. He will make a sensible case every single time,
almost regardless of the situation. It is what humans are really good at.

~~~
playeren
I totally agree that post-hoc rationalization is rife within any corporate
(even social) environment. I even suspect it is an inherent part of our every-
day decision process. We make a decision based on emotion/primal drive and
then instantly come up with a rationalization, which we then remember as being
the reason for our decision.

But how do you argue against an - in your view - immoral/unethical decision
which is presented with a far more eloquent and verbose supporting
rationalization than you're able to counter? Does it come to who is the most
adept at debating?

~~~
jnorthrop
I'm afraid I'm going to give you a non-answer to what is a very good question,
but have you ever watched a political debate? Who wins -- your guy of course!
He trounces the other guy. Yet those who like the other guy will feel the
opposite and no amount of eloquence is going to move that opinion.

Back to the original question: The bottom line is that everyone has an ethical
and moral line that they aren't willing to cross, but that line moves all of
the time. When you don't need to cross that line, it is firm. If an
opportunity comes up that is on the wrong side of the line but you really need
it, your line moves. That is human nature.

~~~
playeren
> When you don't need to cross that line, it is firm. If an opportunity comes
> up that is on the wrong side of the line but you really need it, your line
> moves. That is human nature.

Very insightful in my opinion.

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damoncali
Unlike many successful startups* (Zynga, Facebook, etc) I turn down ads for
weight-loss scams, mesothelioma, etc all the time. It sucks because there are
a lot of them willing to pay. But years from now, I won't remember the cash. I
will remember that I contributed to the victimization/extortion of others.

As an aside, I see no problem with payday loans, arms dealing, or the like -
there is nothing inherently unethical about the businesses. They both offer
ample opportunity to cross ethical lines, but that is a choice, not something
that is inherent in the business model. It's like Experian - there is nothing
wrong with their business - except that they rely on trickery to get people to
sign up. There is a difference between an unethical business and a business
that is operated in an unethical manner.

*Note: I don't believe that the choice to engage in scam advertising is what made these companies successful. I think it is a rationalization of poor behavior on their part.

~~~
playeren
>But years from now, I won't remember the cash. I will remember that I
contributed to the victimization/extortion of others.

I'd like to think that it is far more important to invest in a wealth of
_experiences_ rather than pure financial wealth, for that same reason. But I
guess it's just as valid to say that this is just another post-hoc
rationalization of a poor financial choice :)

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mmhobbyist
An interesting new development on this issue is called a “B-Corp.” It stands
for benefit corporation, and basically it is a legal designation when a
company organizes to have a social mission (things like environmental impact,
community involvement, etc.) as part of their fiduciary duty. The result is
that a B-Corp can be legally held to its social mission.

Relating back to your question, looking for a B-Corp can be helpful for
someone looking at the ethics of a business model because a B-Corp is required
to have a third party certify that they are actually pursuing their original
social mission.

If you are evaluating companies in SV, California is one of the states that
allow B-Corps, so you should check with the company. Other states (including
New York, Maryland, and Virginia) also have allowed B-Corps.

Because this idea is so new, it’s hard to say how effective it will be. But
hopefully it will be another way to better evaluate a company’s ethics.

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astrofinch
My goal in making money is to give money to charity (to fight existential
risk; <http://lesswrong.com/lw/8f0/existential_risk/>). In trolley problem
type scenarios where I could kill one person to save four, I would do it. So
by the same logic, I'm willing to do stuff with undesirable consequences to
make money if the extra money made more than cancels out the undesirable
consequences after I donate it to charity.

