8 ms·

"As a CEO you are obliged to keep the company on the right side of the law." This advice is akin to "don't do drugs." The devil is in the details. And the deta

by zaidf 11y ago

"As a CEO you are obliged to keep the company on the right side of the law." This advice is akin to "don't do drugs." The devil is in the details. And the details aren't always black and white. The hardest challenge in being a CEO isn't in knowing your obligations. The challenging part is making compromises in order to make good on competing obligations...without letting shit hit the fan.

raverbashing 11y ago
Yes, and I would add this text is naive (in some aspects) Being a CEO you sometimes need to enter agreements you can't honour (at the time). It's condescending > So, for example, if there is some kind of lucrative short-cut to making a lot of money but it is illegal in your jurisdiction to do so: don’t do it. Youtube, Uber, Airbnb have been founded on a grey legal area, some other ones have closed because of it (like the one that would stream OTA TV, I forgot the name)
- Ologn 11y ago
  Nowadays people forget that Google was founded on a grey legal area.
  - raverbashing 11y ago
    What was that?
    - Ologn 11y ago
      The areas raised in cases such as Field v. Google.
      - jacquesm 11y ago
        That was just about google caching stuff and making that cache available again, it has nothing to do with the core of google (search engine / advertising) and was not as far as I can see a founding principle for google.
        Ologn 11y ago
        The core of Google is a search engine and that case has everything to do with the founding principles of Google. As I said, this is just one of the cases. There was also Parker v. Google. Or Authors Guild et al vs. Google. Or Viacom v. Google.
        jacquesm 11y ago
        No, because they don't actually have to expose the cache to make a working search engine. The Authors Guild had to do with Google books and Viacom vs Google was an outflow of them buying youtube. Really, you are simply not correct about any of this.
        Ologn 11y ago
        Also Belgian Association of Newspaper Editors v Google. Also Perfect 10 v Google. These cases mostly revolve around the same issue - they say Google is ripping off their content.
        jacquesm 11y ago
        You keep on bringing more and more stuff on that has nothing to do with what google was founded on. Google news linking to newspaper articles has nothing to do with the search engine and so on (it was in fact someone's '20%' project that gained traction long after google was founded). Anyway, I'm done with pointing these out, yes, google got sued a lot, nobody ever - as far as I know - sued them on what they were founded on, let's say pagerank or the fact that they are a search engine at all or anything closely related to their mainstay of income once they found a way to generate it (adsense). And there was absolutely nothing 'legally gray' about it.
        dilemma 11y ago
        Your dismissal of what the parent brought up is arbitrary. All of these lawsuits are due to Google's business model, which it needs to keep the search engine running.
- jacquesm 11y ago
  You can't hold up Youtube, Uber and Airbnb as examples for others to follow, those are extreme outliers that willfully and consciously chose to challenge a very specific aspect of the law. In the case of Youtube the only thing that saved their asses was the fact that they got bought out by a party strong enough that they could stand the heat, the other two had sufficient funding that they could take a chance on the battle not lasting longer than they could afford. There is nothing condescending about this post and if you feel that as a CEO you 'sometimes need to enter into agreements you can't honour (at the time)' then you've misunderstood what this is all about, if you enter into such an agreement you are actively misleading the other party and they may very well have cause to sue you personally if your gamble does not pay off and this will likely stick. If that's ok with you, then be my guest, go sign whatever you feel like and to hell with the consequences but do not complain that you have not been warned.
  - raverbashing 11y ago
    > if you enter into such an agreement you are actively misleading the other party and they may very well have cause to sue you personally if your gamble does not pay off and this will likely stick True, but not necessarily misleading. And of course you may be subjecting yourself to a lawsuit (also depends on the juridical safety of the location you're in) Selling before buying is pretty common.
    - jacquesm 11y ago
      In that context you are right. But in the context of ordering a large shipment of goods that you have no ability to pay for gambling that you will have the money by the time the invoice is due is going to get you looked at in a different light. Depending on the magnitude of the transgression you could be looking at anything from an honest mistake all the way up to fraud and deception. It's important to know where the distinction lies, and as a general rule you should not contract when you can expect that you will not be able to perform. And by your example your expectation to perform hinges on your suppliers ability to deliver and all things being normal you are actually able to expect this. That's a 'chain' of liability that does not end with you.
  - 11y ago
- taude 11y ago
  Aereo is the OTV TV company name you're thinking of.
wimagguc 11y ago
It's not really within the premise of the post, but focusing too much on the law side without much regard on morals & ethics isn't that great either. Some CEOs do think that it's OK to cause environmental damage, outsource to sweatshops or conduct mass layoffs - as long as it's a lawful act.
- EdwardDiego 11y ago
  But there's no shareholder value in acknowledging externalities, so most professional CEOs appointed by a board won't challenge immoral acts if it would contradict their mantra to "increase shareholder value". As a recently arrived member of the "C-suite", I find that the cult of maximising shareholder value leaves me cold. But ultimately, the shareholders pay the piper, so they can call the tune.
  - mehrdada 11y ago
    It goes even beyond just upsetting some shareholders paying for it. The CEO has the fiduciary duty to ignore such externalities.
    - jacquesm 11y ago
      That is an oft repeated un-truth.
      - mehrdada 11y ago
        Would love to be corrected with evidence.
        jacquesm 11y ago
        http://www.nytimes.com/roomfordebate/2015/04/16/what-are-corporations-obligations-to-shareholders/corporations-dont-have-to-maximize-profits http://www.nytimes.com/roomfordebate/2015/04/16/what-are-cor... Will that do?
hawkice 11y ago
Let's not underestimate how many startups do things to keep afloat that are black-and-white illegal. I've been ordered to do something illegal to help keep the company afloat. It's tremendously upsetting for me but was treated with enough nonchalance by the CEO / founders that I cannot help but think "Don't break the law" is advice the startup community is DESPERATELY in need of.
- sgift 11y ago
  I agree with you. The sad truth is that many people only follow the rules as long as they live in fear of punishment. Now, I know that this is obviously a very big brush I use here to paint a picture but just as an example see how long it took for the looting to begin after hurricane Katrina hit New Orleans. Now, was all looting unethical? Not in my opinion, but that's a different point and a discussion for another time.
  - acdha 11y ago
    Katrina isn't a good example because it's inextricably bound to the complexities of racism in U.S. culture — much of what the media reported about looting and other crime was exaggerated or outright fiction, those fears and other mistakes delayed aid for long periods of time, and it completely leaves out official misconduct like shutting down evacuation routes, or racially-motivated police and vigilante killings. The more I think about it, the fact that even after being so badly failed repeatedly the iconic pictures of looting were people scavenging for no-longer saleable bottled water & food seems more like an argument that most people are law-abiding for reasons beyond just fear of punishment. http://articles.latimes.com/2010/aug/29/opinion/la-oe-solnit-katrina-looting-20100829 http://articles.latimes.com/2010/aug/29/opinion/la-oe-solnit... http://mobile.nytimes.com/2010/08/27/us/27racial.html http://mobile.nytimes.com/2010/08/27/us/27racial.html
    - sgift 11y ago
      > The more I think about it, the fact that even after being so badly failed repeatedly the iconic pictures of looting were people scavenging for no-longer saleable bottled water & food seems more like an argument that most people are law-abiding for reasons beyond just fear of punishment. That's what I wanted to get at with the part about it not being necessarily unethical, just because it is illegal. I first thought about using a different example (war zones and how fast peoples behaviour detoriates into "I take what I want because no one can stop me"), but somehow Katrina felt more relatable. Reading your linked articles maybe it wasn't the best example after all. Thanks for the heads-up.
sgift 11y ago
> This advice is akin to "don't do drugs." The devil is in the details. And the details aren't always black and white. If the details were black and white you wouldn't need a CEO, you could build a machine to do the job, but actually you can get a black and white version: Pick a wide enough safety margin between the black parts and the white parts. Now, if you make it too wide your profit will suffer. If you make it too small you run risk of going from white to black. And somewhere between those two extremes is the correct course of action to take, depending on your personal risk profile (really white? Maybe a bit gray? dark gray?), your knowledge of the situation (I KNOW that this is white vs. yeah, probably okay) and so on.
- hobofan 11y ago
  TLDR: CEOs can be digital transistor gates.
yuhong 11y ago
I like to focus on individual problems, like the employee collusion fiasco. I wonder if it would be possible for Eric Schmidt to report Steve Jobs for doing it, and at least admission of wrongdoing in settlements would be nice.

by zaidf 11y ago

raverbashing 11y ago

Yes, and I would add this text is naive (in some aspects) Being a CEO you sometimes need to enter agreements you can't honour (at the time). It's condescending > So, for example, if there is some kind of lucrative short-cut to making a lot of money but it is illegal in your jurisdiction to do so: don’t do it. Youtube, Uber, Airbnb have been founded on a grey legal area, some other ones have closed because of it (like the one that would stream OTA TV, I forgot the name)

Ologn 11y ago
Nowadays people forget that Google was founded on a grey legal area.
- raverbashing 11y ago
  What was that?
  - Ologn 11y ago
    The areas raised in cases such as Field v. Google.
    - jacquesm 11y ago
      That was just about google caching stuff and making that cache available again, it has nothing to do with the core of google (search engine / advertising) and was not as far as I can see a founding principle for google.
      - Ologn 11y ago
        The core of Google is a search engine and that case has everything to do with the founding principles of Google. As I said, this is just one of the cases. There was also Parker v. Google. Or Authors Guild et al vs. Google. Or Viacom v. Google.
        jacquesm 11y ago
        No, because they don't actually have to expose the cache to make a working search engine. The Authors Guild had to do with Google books and Viacom vs Google was an outflow of them buying youtube. Really, you are simply not correct about any of this.
        Ologn 11y ago
        Also Belgian Association of Newspaper Editors v Google. Also Perfect 10 v Google. These cases mostly revolve around the same issue - they say Google is ripping off their content.
        jacquesm 11y ago
        You keep on bringing more and more stuff on that has nothing to do with what google was founded on. Google news linking to newspaper articles has nothing to do with the search engine and so on (it was in fact someone's '20%' project that gained traction long after google was founded). Anyway, I'm done with pointing these out, yes, google got sued a lot, nobody ever - as far as I know - sued them on what they were founded on, let's say pagerank or the fact that they are a search engine at all or anything closely related to their mainstay of income once they found a way to generate it (adsense). And there was absolutely nothing 'legally gray' about it.
        dilemma 11y ago
        Your dismissal of what the parent brought up is arbitrary. All of these lawsuits are due to Google's business model, which it needs to keep the search engine running.
jacquesm 11y ago
You can't hold up Youtube, Uber and Airbnb as examples for others to follow, those are extreme outliers that willfully and consciously chose to challenge a very specific aspect of the law. In the case of Youtube the only thing that saved their asses was the fact that they got bought out by a party strong enough that they could stand the heat, the other two had sufficient funding that they could take a chance on the battle not lasting longer than they could afford. There is nothing condescending about this post and if you feel that as a CEO you 'sometimes need to enter into agreements you can't honour (at the time)' then you've misunderstood what this is all about, if you enter into such an agreement you are actively misleading the other party and they may very well have cause to sue you personally if your gamble does not pay off and this will likely stick. If that's ok with you, then be my guest, go sign whatever you feel like and to hell with the consequences but do not complain that you have not been warned.
- raverbashing 11y ago
  > if you enter into such an agreement you are actively misleading the other party and they may very well have cause to sue you personally if your gamble does not pay off and this will likely stick True, but not necessarily misleading. And of course you may be subjecting yourself to a lawsuit (also depends on the juridical safety of the location you're in) Selling before buying is pretty common.
  - jacquesm 11y ago
    In that context you are right. But in the context of ordering a large shipment of goods that you have no ability to pay for gambling that you will have the money by the time the invoice is due is going to get you looked at in a different light. Depending on the magnitude of the transgression you could be looking at anything from an honest mistake all the way up to fraud and deception. It's important to know where the distinction lies, and as a general rule you should not contract when you can expect that you will not be able to perform. And by your example your expectation to perform hinges on your suppliers ability to deliver and all things being normal you are actually able to expect this. That's a 'chain' of liability that does not end with you.
- 11y ago
taude 11y ago
Aereo is the OTV TV company name you're thinking of.

wimagguc 11y ago

It's not really within the premise of the post, but focusing too much on the law side without much regard on morals & ethics isn't that great either. Some CEOs do think that it's OK to cause environmental damage, outsource to sweatshops or conduct mass layoffs - as long as it's a lawful act.

EdwardDiego 11y ago
But there's no shareholder value in acknowledging externalities, so most professional CEOs appointed by a board won't challenge immoral acts if it would contradict their mantra to "increase shareholder value". As a recently arrived member of the "C-suite", I find that the cult of maximising shareholder value leaves me cold. But ultimately, the shareholders pay the piper, so they can call the tune.
- mehrdada 11y ago
  It goes even beyond just upsetting some shareholders paying for it. The CEO has the fiduciary duty to ignore such externalities.
  - jacquesm 11y ago
    That is an oft repeated un-truth.
    - mehrdada 11y ago
      Would love to be corrected with evidence.
      - jacquesm 11y ago
        http://www.nytimes.com/roomfordebate/2015/04/16/what-are-corporations-obligations-to-shareholders/corporations-dont-have-to-maximize-profits http://www.nytimes.com/roomfordebate/2015/04/16/what-are-cor... Will that do?

hawkice 11y ago

Let's not underestimate how many startups do things to keep afloat that are black-and-white illegal. I've been ordered to do something illegal to help keep the company afloat. It's tremendously upsetting for me but was treated with enough nonchalance by the CEO / founders that I cannot help but think "Don't break the law" is advice the startup community is DESPERATELY in need of.

sgift 11y ago
I agree with you. The sad truth is that many people only follow the rules as long as they live in fear of punishment. Now, I know that this is obviously a very big brush I use here to paint a picture but just as an example see how long it took for the looting to begin after hurricane Katrina hit New Orleans. Now, was all looting unethical? Not in my opinion, but that's a different point and a discussion for another time.
- acdha 11y ago
  Katrina isn't a good example because it's inextricably bound to the complexities of racism in U.S. culture — much of what the media reported about looting and other crime was exaggerated or outright fiction, those fears and other mistakes delayed aid for long periods of time, and it completely leaves out official misconduct like shutting down evacuation routes, or racially-motivated police and vigilante killings. The more I think about it, the fact that even after being so badly failed repeatedly the iconic pictures of looting were people scavenging for no-longer saleable bottled water & food seems more like an argument that most people are law-abiding for reasons beyond just fear of punishment. http://articles.latimes.com/2010/aug/29/opinion/la-oe-solnit-katrina-looting-20100829 http://articles.latimes.com/2010/aug/29/opinion/la-oe-solnit... http://mobile.nytimes.com/2010/08/27/us/27racial.html http://mobile.nytimes.com/2010/08/27/us/27racial.html
  - sgift 11y ago
    > The more I think about it, the fact that even after being so badly failed repeatedly the iconic pictures of looting were people scavenging for no-longer saleable bottled water & food seems more like an argument that most people are law-abiding for reasons beyond just fear of punishment. That's what I wanted to get at with the part about it not being necessarily unethical, just because it is illegal. I first thought about using a different example (war zones and how fast peoples behaviour detoriates into "I take what I want because no one can stop me"), but somehow Katrina felt more relatable. Reading your linked articles maybe it wasn't the best example after all. Thanks for the heads-up.

sgift 11y ago

> This advice is akin to "don't do drugs." The devil is in the details. And the details aren't always black and white. If the details were black and white you wouldn't need a CEO, you could build a machine to do the job, but actually you can get a black and white version: Pick a wide enough safety margin between the black parts and the white parts. Now, if you make it too wide your profit will suffer. If you make it too small you run risk of going from white to black. And somewhere between those two extremes is the correct course of action to take, depending on your personal risk profile (really white? Maybe a bit gray? dark gray?), your knowledge of the situation (I KNOW that this is white vs. yeah, probably okay) and so on.

hobofan 11y ago
TLDR: CEOs can be digital transistor gates.

yuhong 11y ago

I like to focus on individual problems, like the employee collusion fiasco. I wonder if it would be possible for Eric Schmidt to report Steve Jobs for doing it, and at least admission of wrongdoing in settlements would be nice.