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Comment by numbsafari | Hacker News Reader

The amount of "I don't get why this is wrong?" going on in this thread would seem to support the prosecutors' view that this is a widespread practice.

Long ago, before Dotcom went Dotbomb, I worked for a firm where the CIO was being paid kickbacks by our hardware reseller. He was terminated for other reasons and, shortly after he left, our head of network ops got a call from the distributor asking where they should send the bonus check that was due to him. They clearly thought that with the CIO gone, the head of network ops would be down the with the deal.

Unfortunately for them, and fortunately for him, he was absolutely not down with the deal and reported the whole thing up the chain.

We were overpaying for hardware and the previous CIO had been splitting the difference with the distributor.

If it's unclear to anyone on this thread why that is both illegal and immoral... perhaps you are in the wrong business?

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> The amount of "I don't get why this is wrong?" going on in this thread would seem to support the prosecutors' view that this is a widespread practice.

I think it's because a lot of "hustle" culture and stories of the early business careers of very successful founders involve a bunch of stuff that sure looks like fraud or otherwise like something that ought to be illegal (it may not be, but I mean that it feels like the kind of thing that ought to be illegal, to a normal person) that works out great for them and sure looks like it was a necessary step on their journey to hundreds of millions of dollars and being on the cover of TIME or whatever.

Add in normal corporate business practices just feeling gross as hell on a pretty regular basis, and I can kinda see why people might see this as not really that different from how you're "supposed to" do things—if you aren't a chump, anyway.

Kinda like the college admissions bribery scandal. There was a lot of "oh, so their crime was not being rich enough to bribe the correct way?" in people's reactions, because... well, the system's officially corrupt, in a lot of people's opinions, so prosecuting unofficial corruption feels more like a very fancy organized crime racket putting the screws to the (relatively) little guy to protect their own corruption, than good old feel-good justice.

https://www.bloomberg.com/opinion/articles/2021-08-31/theran...

The worst example of this is the recent NCAA shoe company bribery scandal, where shoe companies paid student athletes and their families to attend particular schools sponsored by the companies. In any other industry, delivering money to people who become a part of your organization and generate revenue for it is just employment, and having your sponsors pay them directly is just cutting out the middleman. Only in amateur sports is that considered bribery and an offense that can get a person sent to prison.

Kickbacks, of course, are quite different, where a company official has a legal duty to negotiate in good faith in the best interests of their company and not make purchasing decisions based on which vendor gives them the biggest personal cut of the deal. It's hard for me to see the other side of that, how anyone can possibly not understand that that is illegal.

Heh, yea. Good observation.

This reminds me of the ridesharing debacle. Uber was operating an illegal taxi service which upset a lot of local governments. It was taken to the courts multiple times. Uber won but one of the lessons to young founders was to go for it even if it's not strictly legal - laws can change.

Now I'm not saying what Uber did was necessarily a bad thing. But if I had the idea to disrupt taxi services and learned about the legality of it all, I'd have moved on to the next idea.

YouTube got huge largely due to rampant piracy, in the early days. Straight-up posting copyrighted material unmodified, and all kinds of use of media (songs, especially) in ways that aren't protected by fair use. All while copyright cartels were going after torrent users—YouTube? Made a bunch of people rich, none of them paid for what they knowingly did, and no-one thinks 1/10 as ill of any of them as they do of this guy, now.

What the hell is the lesson of any of this? It sure seems to be "doing unethical and/or illegal things is downright necessary to succeed big-time in business, and doing them successfully will make you rich and, most bizarrely, respected—unless you screw the wrong people (i.e. the bigger scammers/criminals/morally-questionable people) then you're just a criminal and we'll all sneer and spit on you and fine you and send you to prison"

Copyright and taxi-medallion laws are grossly immoral examples of regulatory capture that impoverish and endanger the public in order to provide a much smaller benefit to a small number of "exploiters." YouTube, BitTorrent, and Uber Cab were able to improve this situation, making them very popular despite greatly angering the exploiters. Similarly for, say, marijuana sellers. Doing illegal things that are nevertheless ethically upright and very popular may pay off for a business, as it did in those cases. Or it may not.

It's less likely to pay off when the illegal things are instead unethical, unpopular, and harmful to the public, at least if you get caught—and when they involve betraying the people closest to you, you're probably going to get caught.

When I was in law school, I felt patronized by the amount of time we spent talking about conflicts of interest because it seemed so obvious to me. In retrospect, having read so many of the disbarment announcements in the bar association newsletter, it's clear that a great many people do not understand what a conflict of interest is.

s/understand/care

Perhaps I'm naive, but I think the number of people who know and don't care is a small fraction of the people who honestly don't understand that they're doing something wrong. I mean, obviously this guy knew he was doing something wrong, but a lot of people just can't imagine that their own unethical behavior wouldn't be obvious to them.

I think a lot of people feel "clever" and like what they're doing is, while not expressly allowed, not forbidden either.

See a bunch of people in this thread finding out they're probably committing tax fraud by underpaying themselves from their own s-corp to dodge taxes.

Haha I do taxes for a living, and the number of times people have said, "My buddy does this and he says it's fine." As if the fact that the person hasn't been caught is evidence that what they're doing is legal. It's what you mentioned, they feel clever and don't think they're doing anything illegal.

I feel patronised by yearly mandatory training. All of it seems obvious and not relevant to me because I’ve never negotiated a contract on behalf of my employer. Still, good to know there’s plenty of people who might find training useful.

It's also for everyone not involved to notice something is wrong if they overhear a contract-related conversation that mentions kickbacks.

Yes, your description is clear and I can see why it's illegal and immoral, but the article is very vague on what's illegal or wrong about it.

The key distinction that you outline is that the CIO did something behind the company's back that the company would almost certainly not have approved of. The CIO defrauded their own company by taking kickbacks in exchange for purchasing agreements; most people can see that as being wrong.

As I'm reading this article with no familiarity or background knowledge, I did not presume that this exec, Kail, was doing something that Netflix would not have approved of and using his position for his own benefit and to defraud Netflix.

If Netflix had been okay with Kail becoming a consultant or partner of the startups that Netflix entered into an arrangement with, then there would be no issue.

Anyways, this article is written as if the reader already knows what happened and what's going on, which is fine but it shouldn't be titled "Why a former Netflix exec is facing ..." It should have instead been titled "Former head of IT Operations who defrauded Netflix will face 7 years in jail."

I think some people may be confused because in the case the the dude was some biz dev type, involved with Netflix _investing_ in the startup, then this arrangement (him being on their board, an advisor, have stock) is quite common. The difference is that here he was the IT director, and Netflix was a customer not an investor, and the arrangement wasn't disclosed.

I have an easy breakdown:

If, in order for it to work, everyone up the chain from you (or next to you even) has to be unaware of it, it's probably wrong. If the other bidders on a business relationship have to be unaware of it, it's probably wrong. You're basically profiting off ignorance/deception.

I mean, even if you don't understand conflict of interest, this should at least ring a bell.

Candor and integrity should be fundamental values in all people. It's not like you can't conduct a profitable business or become very successful if you prioritize those attributes.

Yup, it is, at every level

One main reason I started my first computer consultancy was that I found out that although computer stores and Value Added Resellers advertised independent objective advice to customers, they accepted major software & hardware vendors giving bonuses "spiffs" directly to the salespeople, blatantly corrupting their 'objective advice' (vs supporting the overall organization's ability to sell and support the equipment). One of the first things that went in the employee manual, and of course had to can some salesguy who tried to collect a spiff under the radar (our actual practice was the spiff goes to the company or goes uncollected, and if collected, we generally added half to discretionary bonuses).

Pretty small step from that culture of working to directly corrupt "independent" advice to trying to collect it on the other end. I'd like to know how many startups actively offer this kind of deal to execs in order to get the bigger deal?

I think the current generation has absorbed so much cynicism that a concept like a legally enforceable honest service just seems like a joke. It's a blanket assumption that everyone is out for themselves so why punish anyone for it. I've never personally observed or even suspected a kickback from having been paid, but vendor selection and contract enforcement is so arbitrary I'm not sure any corruption would have made much difference.

I've been on the receiving end of attempted bribery and other attempts at pressuring a couple of times and I made sure the party attempting that would never ever do it again. Daylight really is a pretty good desinfectant.

I used to work for a company that actively sought out and hired the adult children of high level executives.

Even those that weren't very competent were hired since if they were part of the same Ivy League alumni network.

I have no knowledge of the business dealings but the company definitely appeared to benefit from having those connections.

“Nepotism”

It's huge in Australia. Big Coal/Fossil has its fingers deep into government and apparently no-one thinks this is bad.

We're still approving new coal and gas projects in 2021, and milage taxing EVs with not a CO² vehicle tax in sight...

Yes, I'm flabbergasted by a lot of the responses. I've kept clinging on to the idea that everyone must have a moral compass, but the last few years are really hitting home that I may be in a minority to have such clear ideas about what is obviously wrong, and what is obviously right.

Almost everything Trump did or said was in the former category, he cared only for his own benefit it would seem.

A huge number of people don't get why they should vaccinate to protect others perhaps not as immunity fortunate as themselves.

"Myself first, second, and then my fellow, if I stand to gain." (Loosely translated from the Norwegian "først meg selv, så meg selv, og så min neste, hvis det er til eget beste")

Edit: Perhaps I'm clinging on to old ideas. Everything is "obviously" personal choice these days, and who am I to say my values are "better" than theirs. That we should all strive to "do good" is not universal, because why should people be forced to or expected to look after anyone but themselves?

Every single early stage company I know does this.

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