23:00 PM

Do Jerks Do Better In Silicon Valley?

This morning on CNBC, Ryan Tate from Gawker and I, were debating "questionable ethics and jerk behavior by CEOs" it was related to my post last week: Questionable Ethics And The Next Generation Of Entrepreneurs; and Ryan's follow up: Why Are Tech Founders Such Assholes?

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?