Ryan made a good point on the show that looking at some of the largest success stories in Silicon Valley right now, such as Facebook and Apple, it appears that you do need to be a jerk to win.
I disagreed. Being a jerk has nothing to do with success. In this business it is teams that win — not individuals. If you are a jerk it quickly gets around and people will avoid you, they will choose to work elsewhere given the choice.
The HP Way…
Ethical behavior is very important. We have some great examples of companies that have done very well and where their founders did not engage in questionable ethics, or were jerks. Hewlett-Packard, Silicon Valley’s oldest, and one of its largest companies provides a great example.
Its founders created the “HP Way” a blueprint for treating staff with respect and encouraging an ethical way of doing business.
For example, Steve Wozniak, Apple co-founder, once worked at HP and that experience influenced his behavior at Apple.
Here is a quote from an interview with Steve Wozniak, found in Jessica Livingston’s book “Founders at Work: Stories of Startup’s Early Days.”
When we went public, I was a little disturbed that 5 people who had been with us in our little office from the start and had been so important–Randy Wigginton, Chris Espinosa, a couple of young kids, and a couple of older ones just hadn’t gotten any stock.
I felt that they were a part of this whole energy and excitement and passion for what computers were going to be and what we were doing and how right it was… So I gave each of those 5 a large amount of stock, probably a million dollars in that day.
Ms Livingston tells him “that was so generous.”
Mr Wozniak cites HP.
It’s that whole thing I was talking about: Hewlett-Packard, we’re a community. There was a recession in ‘73 and Hewlett-Packard had to cut back 10%. Instead of laying off 10% of the people, they cut everyone’s salary by 10% and gave us one day off every two weeks. So basically they said “nobody goes without a job.” And I like that sort of thing.
Apple co-founder Steve Jobs didn’t have the benefit of the same experience of working at an ethical company.
He famously short-changed Mr Wozniak when he sold a game to Atari, paying him just a few hundred dollars and keeping thousands for himself.
Mr Wozniak didn’t find out about it until 12 years later, and he generously dismissed the incident, saying, “He probably needed the money. And I didn’t; I had an engineering job at Hewlett-Packard.”
Monkey see, monkey do…
Intel is another example. It is incredibly successful yet its founders and its top management have never generated reports of jerk behavior, or questionable ethics. Yes, Craig Barrett, a former CEO and chairman, was sometimes reported to shout a bit, but that’s about as bad as it gets at Intel.
And there are many more examples of good companies than bad in Silicon Valley. But it’s important to point to both.
“Monkey see, monkey do,” applies to us too, we teach each new generation by example. If young people are looking at movies such as the “Social Network” to learn how to succeed in Silicon Valley, then it’s important to provide them with a bigger picture and one that’s rooted in reality rather than a scriptwriter’s fantasy.
Startup life is a tough life, most startups will fail, which is why young entrepreneurs should focus on having fun, they shouldn’t have to worry about screwing each other over, or engaging in scammy business practices to make a buck.
Young entrepreneurs are drawn to Silicon Valley because they want to make a big difference in the world. I know of none that came here because their ambition was to be a jerk and to screw customers.
I’m glad that Ryan and CNBC have helped to bring this topic into a public forum because it is an important one.
Pay the piper…
I have no doubt that unethical leaders and companies will pay the price. A study by IBM has shown that Millennials are very much concerned with working for companies doing the right thing; and the Edelman Trust Barometer for 2011 shows an extremely high focus on social responsibility by customers of companies.
People care about where they work, they want to work for cool companies not scammy, unethical ones. Is anyone proud of having Enron on their resume?
Moral pygmies
Yahoo paid a big price when it conspired with Chinese authorities to help uncover the source of a leaked document that directed Chinese publications not to write about the anniversary of the Tiananmen Square protests.
Yahoo handed over information that resulted in the arrest of two people, who received ten year prison sentences in a hard labor camp.
Yahoo was accused of acting as a “police informer” by Reporters without Borders. And House Foreign Affairs Committee Chairman Tom Lantos, D-San Mateo, called Yahoo management “moral pygmies.“
I knew from my contacts that there was a lot of unhappiness about Yahoo’s role in China among its rank and file. It’s not cool to work for a “police informer” let alone “moral pygmies.”
You could make a good case, and I certainly did, for pegging Yahoo’s slide in its fortunes to this incident — a slide that wiped out tens of billions of dollars in shareholder value because staff morale had been badly affected.
Advice for startups…
Here’s some great advice to startups from Steve Wozniak:
First of all, try to have the highest of ethics and to be open and truthful about things, not hiding… Don’t mislead people.
Know in your heart that you are a good person with good goals because that will carry over to your own self-confidence and your belief in your engineering abilities. Always seek excellence.
Or you can be a jerk. It’s your choice. But remember posterity because others will remember what you did. And today there are so many new ways for the truth to come out.
Steve Jobs is facing his mortality — how do you think he feels, knowing that millions of people know that he acted like a jerk and cheated his business partner?
Tom Foremski is the editor and publisher of Silicon Valley Watcher and Silicon Valley Watch. Tibco Software is an advertiser.
Biography
Tom Foremski
In May 2004, Tom Foremski became the first journalist to leave a major newspaper, the Financial Times, to make a living as a full-time journalist blogger. He writes the popular news blog Silicon Valley Watcher--reporting on the business of Silicon Valley.
Tom arrived in San Francisco in 1984, and has covered US technology markets for leading computer journals around the world.
Sorry, I didn't watch the video because Foremski's argument is complete rubbish from start to finish.
The culture at Apple, INTEL and M$ ... to name but a few ... is one of unlawful competitor extermination, customer deception in the face of defects, secrecy, FUD, rampant profit-driven-technology-decisions ... and that's just for starters! The senior execs. and individuals at these companies are clearly unethical (which is why they were fined huge sums by their own Governement and classed as 'evil' in IT folklore).
"I have no doubt that unethical leaders and companies will pay the price." An idiotic statement flying in the face of the facts: has Foremski actually looked at the profits made by the most successful companies in the world, as named above? Has Ballmer been sacked? Has Otellini been sacked? Has Jobs been sacked? No, he got the CEO of the year award!
Of course I am defining 'success' in monetary terms ... and page hits
It takes someone with a lot of "drive" to make CEO, and the person who's the "driver" will sometimes be labeled a jerk. I think this is especially true of entrepreneurs who start their own companies more so than MBAs who climb the corporate ladder. Sometimes, it takes a strong will to keep a company on track. These "jerks" may not be the guy you'd want to have a beer with after work, but you gotta give them credit for getting the job done.
House Foreign Affairs Committee Chairman Tom Lantos, D-San Mateo, called Yahoo management ?moral pygmies."
Now that is just hilarious, a Politician saying someone else has less than ethical behavior. The very fools that have bankrupt the country to fill their own pockets, like they are the poster children for moral behavior?
It depends a lot on what you consider being a jerk -- most of us do things that some would consider jerkish from time to time. And success in business does require you to have great confidence in your own ability and a willingness to do things like criticize bad ideas, end projects and take really nice people out of jobs they aren't doing well. That's going to get you called a jerk, no matter how legitimate your actions are. But do you have to give up ethics and/or human decency, as some executives do, abusing their authority and making decisions from personal motives rather than relevant facts? Absolutely not, but if you're inclined to operate without ethics and decency, the idea that success doesn't allow them becomes a great justification to tell yourself.
Good article, just one comment on: "A study by IBM has shown that Millennials are very much concerned with working for companies doing the right thing."
And all Libras are sensitive, all Geminis are thoughtful...
Seriously, we need to stop feeding this idea that somehow one generation has different ethics than the rest -- it's like trying to match people to their horoscopes. Replace "millenials" with "Generation X" and you've just mimicked a headline you'd certainly have seen in the late eighties. As far as I can tell (and over the course of my life I've talked to people born as early as 1880), each generation has roughly the same share of moral, decent, awful, driven, determined, happy, pretentious, duplicitous, and saintly people, and each generation comes charging into the workforce carrying the banner of ethics and purpose. (My generation was supposed to look up to the baby boomers because of their supposed increased social consciousness -- that generation is currently running the government and as far as I can tell have pretty much the same ethical challenges and successes as those that preceded them.) The medium for their interaction may change, but it seems to me that the same vices and motivations recur again and again.
@sismoc This is not fair. Anyone could attract an illness, whether 'jerk' or pious. Let's not bring someone's health problems into this discussion. Just wish them best for their health.
I wouldn't use HP as an example of good behaviour. Jus remember the spying on other board members fiasco, Mark Hurd being asked to leave for fiddling his expenses, after being investigated for sexual harrassment. The Board under Mark Hurd and, so far, continuing onder Leo Apotheker paying themselves 10's of millions of $ in bonuses when laying off people, citing the GFC. (I will say that treatment of employees has got better under Leo, but better than terrible is an easy hill to climb)
HP is a very different compny than it was in the 1970's.
What is different today compated to the heady days of the 70's and 80's is that the margins in IT, particularly hardware (Apple being the exception) are much lower. It is no longer a license to print money and is much more cut throat. This leads to some dodgey practices.
The question about start-up ethics struck a chord with me. I was working at a start-up international travel magazine in 1978 when the staff learned that South African Airways had signed on to advertise in our second issue. Everyone was a little queasy about the idea. As the publisher's assistant, I was the only one who felt brave enough to express the staff's concerns to him. His reply was simple: "If we don't let SAA advertise in the second issue, we won't have enough money to produce a second issue." Was he being a jerk? Probably. Did we keep our jobs? Definitely. Situational ethics suck sometimes.
Whether someone is a jerk is largely in the eye of the beholder. Various behaviors can be seen by various people as confident, aggressive, clever, smart, cunning, sly, devious, cruel, etc. It takes serious resolve to create a successful business, and sometimes you have to consciously assess short- and near-term goals using different moral standards. A single decision could affect a large group of people in many different ways. Some will win, others will not. A good person - and a good businessperson - will always keep the larger-good goals in mind. I know this firsthand from being an entrepreneur in the Valley since 1986.
The classic pairing of good vs. evil in the Valley (not mentioned here) is Bill Gates vs. Larry Ellison. Neither an angel, Ellison is a legendary *******. Today, Bill is the quintessential giver, and Ellison - more mellow now - is...not. But, they both employed hundreds-of-thousands of people, and provided many of them with wealth and comfort far beyond their native abilities.
Stealing and cheating are mostly bad (depends on what reason, and for/from whom). Aggressiveness is, in itself, not. How it affects people varies. That's not much different from the way things work in just about any professional or personal situation, or for any generation. Interesting topic, but most of the complainers need to grow up a bit.
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