First of all, unless you are in SF or another tech city, I wouldn't even try relying on your local city in order to build your company. You have to think about the internet as your startup scene, and focus on having a good presence there (twitter, etc.). I think trying to be too local with an internet product is a mistake for most companies.

To some extent the social space is riddled with a lack of ethics, mainly because it's effective and users are fickle. But there are a lot of other spaces where you don't have to make such tradeoffs and can still build a business. Maybe those would be a better fit for how you want to run your company?

Unfortunately, ethics kind of go out the door when you've got major investors that you want to provide a positive return to. Imagine the pressure for Circle to provide a return, and then imagine whether you'd even want to have that kind of pressure on you every day (and they've been around for a while and aren't huge yet, so I'm guessing it's by no means an easy ride for them either).