Ethics & Entrepreneurship

Theranos. The now-defunct company creates a visceral reaction with people when you say its name. Try it. Its story has been detailed in the book Bad Blood: Secrets and Lies in a Silicon Valley Startup by Wall Street Journalist John Carreyrou, as well as the HBO documentary movie The Inventor: Out for Blood in Silicon Valley. I would hope none of my students would ever do such a thing, but how do I know?

Reading the book made me feel very comfortable that they would not – at least without some terribly distorted justification. It was simply fraud pure and simple. The technology never worked and it was terribly misrepresented to others that it did. It was the Enron of Silicon Valley.

The movie, however, presents a much more nuanced and scary picture of how to create a distorted mind that could justify what was done. The Theranos “true believers” could say that they had such a noble “raison d’être” (a French term meaning “reason for existence”) that is could justify short-circuiting basic values in the short term. Didn’t Steve Jobs often use the principle of “fake it until you make it”? Thomas Edison did this as well with the light bulb.

While we always teach that a new venture/endeavor should have an inspiring and unifying “raison d’être,” this must be pursued within the boundaries of acceptable values of honesty and integrity.

Often I see Steve Jobs (or Elon Musk, Mark Zuckerberg or others) worshiping as being used entirely incorrectly and without thoughtful justification. While successful, these people are a data set of one (“n=1” as we like to say at MIT). How do you know that is the factor that made them succeed? You don’t for sure when n=1. There are so many different factors at play to disentangle them and figure out which ones were positive and which were negative is practically impossible with a larger data set and certain not with a data set of one.

I remember a coach once told me “sometimes you succeed because of yourself and your habits and sometimes in spite of them.” Great to keep in mind.

Don’t get me wrong. I am impressed with Jobs, Musk, Zuckerberg, Bezos, and others have accomplished but that does not mean everything they have done, do and will do is gospel. I strongly object to the deification of these people and using their behavior to justify bad behavior elsewhere. Everyone has their own style. Each person has strengths and weaknesses.  Decode carefully and chose the strengths but avoid the weaknesses.

My opinion is as follows. I have written and spoken about the incredible importance of culture. I have written about the primary importance of teams.  These two are intertwined. On team and in a healthy culture, you need to have trust. For trust, there must be honesty and integrity.

For one example, the best salesperson you can ever have is your customer. How can a customer really love you in a sustainable way if they don’t trust you? Underlying ethics in entrepreneurship are not optional, they are the foundation and the guard rails to success.

I give tremendous credit to my friend and colleague at Stanford, Tom Byers, for taking this issue head-on. He has been banging the drum on this topic for a while now and he is not done. His fabulous OpEd piece frames the issues well and begins the dialogue in a productive manner, but we are just at the beginning. We look forward to welcoming Tom to MIT this year to discuss this and move the dialogue forward to accelerate the discussion of this crucial topic especially related to entrepreneurship education.

The mission of MIT is to promote the development of knowledge related to science, engineering, and technology for the betterment of the world. There can be no justification in that mission for fraud. Sometimes it really is black and white.