I have a very vivid memory of looking at my watch at 5:10pm. I was lying on my belly next to other soldiers in my platoon, and Shatyim Gimel was standing maybe 20 meters in front of us. We called him Shtayim Gimel, or 2c, because we were the second platoon in the 601st battalion’s incoming company, and he was in charge of the third squad, and we were not allowed to use commanders’ names in basic training. We were lying on top of thorny bushes doing push-ups on our fists and were then supposed to battle-crawl, M16s pointing forward, towards him.

I started sobbing. I don’t judge my younger self. I sobbed like an 18 year old geek who was sent to be a jarhead, instead of sitting in front of a computer like his friends did. Like a kid who thought he was going to get dinner a while ago, who was dirty and confused, who was going through what felt like senseless torture. The sobbing turned into anger. I sprang forward, crawling towards the target, 2c yelling in my ears “That’s right, Samet! That’s how you do it!”

Cool story, huh? I endured an act of hardship meant to break young recruits’ spirits and mold them into good soldiers. I persevered and here I am, a better person who knows better. Well, what if I told you that two years after this episode I was back on the same hill, a second lieutenant’s rank on my shoulders, doing the same to my platoon? Not just the same area, the same fucking hill. We were all wearing gas masks, and a squad was crawling while carrying a stretcher with a team member in it, playing wounded. My runner, Ian (not his real name), was yelling and reaching out to Dave (also not his real name) who was lying in the fetal position. I don’t even remember how it started or ended, I just know it’s etched on my mind forever.

What was my justification? Maybe that my platoon was remembered for years later as the legendary 2000 class of the 601st? That we went toe to toe with elite units we had no business running ops with? That I dragged 35 bewildered kids through a year of close-quarter fighting with zero fatalities or serious injury? My moral agency as a platoon commander was clear and well defined for the role I took on. I could have resisted the draft and sat in jail; I didn’t. I could have resisted going to officers’ course and maybe I’d have gotten away with it; I didn’t.

When I became a platoon commander I became an agent of the state with a specific mission. When I trained 35 young men to be taken into violent conflict I had the moral clarity of that end in sight. I did and could act as an individual moral agent, for example, when I refused to harass civilians in road blocks or the handful of times I didn’t take what I considered to be suicide missions. Nevertheless, my role and position were clear. This is the reason soldiers aren’t murderers when they kill enemy combatants but we still have the concept of war crimes.

The moral authority of founding CEOs

Founding CEOs should similarly grapple with moral authority and agency. We should do so because we, too, exercise power over our team and the ecosystem that surrounds our company. We define compensation guides, set the limits on entertainment options when closing deals, hire and fire, prevent, stay silent about, or even encourage harassment and bullying in the workplace. These are not secondary considerations in our search for profit but key tenets of how we carry ourselves in the world, and not considering them as such creates a lot of unnecessary pain, suffering, and corporate cultural decay. Unfortunately this isn’t something that’s taught or even paid special attention to. In fact, in many cases unethical behavior is tolerated, sometimes even encouraged, for the sake of “winning”. Founders who aren’t sociopaths should resist that urge.

Founding CEOs are unique among CEOs in their relationship to the corporation’s moral agency. Professional CEOs are hired “by the corporation” (its board of directors and often by vote) and can rationalize making ethically questionable decisions as a hired gun. Founders, however, do not have this luxury. Both de jure (since they incorporated the company and often control it through voting shares or board composition) and de facto (because of the reverence for and deference to the founder in the last 10+ years) their moral agency is inseparable from the corporation’s. Everything they do cascades down and becomes the organization’s ethical framework (part of “the culture”).

Two external counter-weights: the company and the mission

This moral responsibility is a heavy burden to bear, because it implies that everything that happens within a company is not only the founder’s responsibility but also a direct result of their deliberate actions. Most founders want to feel like ethical actors, and the burden of that desire is heavy. To resolve the tension, founders look for external sources of moral authority. The capitalist argument alone (“I started a company to make money”) creates problematic cultures and is generally not socially acceptable in startups, where talking about money is, surprisingly, considered gauche. (As a side note, some startup cultures are sociopathic, but that’s a topic for a different post).

More commonly, founders turn to two other external sources of moral authority: the “company” and the “mission”. Both serve as counterweights to the founder’s ego and help guide strategic and operating decisions in a way that relieves some of the tension founders (should) feel when making decisions that impact the lives of their employees.

The company is a separate entity that demands consideration when making business decisions. It can be a legal entity or an actual group of people (“the board” or “the investors” or “the shareholders”) who place expectations and requirements on the CEO. Both offer a counter-weight to the founder’s agency and ostensibly influence decisions in a way that’s sometimes opposite the will of the founder, forcing their hand.

I’m not sympathetic to this argument. Though the rise in startup factories has increased the number of companies that are merely exercises in risk transfer from future corporate acquirers to venture capitalists, most companies are run independently by the founders who are also among their largest shareholders. Again, by having both de jure and de facto control of the corporate entity as well as managing the business on a day to day basis, founders lose the privilege of putting the company (and by extension, themselves) before employees. 

The mission-centric argument says that the company was formed to achieve something other than its founder’s whims or enrichment: a tangible change in the world. Making a difference, disrupting, etc.; the mission provides this needed counterbalance and justifies many business decisions that would otherwise weigh heavy on the founder. Why fire employees when you’re at risk of running out of money, if your only reason to do so is sustaining your position as a founding CEO? Because we’re trying to achieve our mission, and both the existence of the company and the founder as its CEO are critical for that to happen.

I am obviously biased, but I’m sympathetic to this argument. It’s consistent with the Valley’s stated raison d’être and the reason people join startups, and even if the mission rings false (by being vacuous, or unattainable) it is something employees and other stakeholders can opt in to willingly, based on their personal preferences. You may not care about “changing the world, one dry cleaning delivery at a time” but if enough people do, they can start a company to achieve that mission.

A team, not a family

The mission reduces the moral tension for the founding CEO, but many take it too far by implying the social contract their company operates under: they describe their company as a family. This is incorrect, but not deliberately so. We spend the majority of our working hours at work, our sense of self worth is largely tied to professional success, and most employees are young and without strong family connections where the company is located. The extension into the “work family” idea seems natural, even acceptable.

My best guess is that founders themselves get confused by the same dynamics, and can’t resolve a different model for applying empathy at work. However a “family” offers a completely different source of moral authority and is at best confusing when trying to resolve ethical issues that arise from business needs. In other words, it’s not common to have to fire your cousin because the family’s cash reserves are dwindling. Most families don’t work towards a mission nor operate like a business enterprise; teams do. And while this is a topic for a longer and separate post, it’s an important call out when discussing the moral authority of founding CEOs and how to frame it.

Bottom line

Talking about business ethics doesn’t make you a saint. Not talking about it doesn’t free you from serious moral implications. Framing the social contract correctly won’t stop you from getting lit up in reviews when you make a tough business decision. Being ethical doesn’t improve your chances of success. This isn’t about money. This is about a life worth living. It’s about not having “some very sad news to share” while also announcing a huge funding round, about making decisions with moral clarity, even when they’re tough ones. I recommend giving the topic some thought.