Startups Behaving Badly, Does Anyone Care?

There is behaving badly, and there is behaving illegally. Even the later is becoming more and more common, even among media darlings, be it the outright copying of Zynga, the zoning violation of AirBnB and the taxi regulation violation of Uber...

And very few people seem seem worried by it, possibly because violating the law is just "disrupting an ossified market" when done by rich white kids...

As somebody on the other side of the world from SV I find it difficult to gauge how common this type of dishonest behaviour is. It certainly seems like most startups who become popular have at least one negative tale of dishonesty associated with them. Stories of the kind where it is obvious that the behaviour was a deliberate strategy sanctioned by CEOs and probably VCs as well.

One thing I do find telling is the reaction when these stories break. Powerful VCs and incubators seem happy to defend the behaviour. Examples that spring to mind:

- Path CEO and SV heavyweight Dave Morin defending stealing users address books as 'industry best practice'[1]

- pg defending a YC company that was selling a malware bundling installer service by claiming that people 'choose' to install spyware: 'The apps that get installed are "crapware." This one seems a matter of opinion. A lot of the world's most popular apps and sites seem like junk to us. But the users are choosing to install these things.'[2]

- Josh Hannah of Matrix Partners defending JustFab which was (is?) engaging in various scams like negative option billing[3] dressed up as a one time purchase. [4]

- pg defending the spamming and blackhat seo tactics of AirBnb

Generally the tone is one of surprise that people are even upset about these things, followed by talk about how the spammers in question are really 'nice guys'. The only conclusion I can come to is that this is endemic in the culture of SV startups. The people funding startups are happy to stand behind spammers and scammers. The only thing I don't know is if they are just turning a blind eye or are actively encouraging this behaviour in their startups.

To quote the YC application page: "If this wasn't already clear, we're not looking for the sort of obedient, middle-of-the-road people that big companies tend to hire. We're looking for people who like to beat the system."

I think it's pretty clear what that means…

[1] https://news.ycombinator.com/item?id=3563639

[2] https://news.ycombinator.com/item?id=5092711

[3] https://en.wikipedia.org/wiki/Negative_option_billing

[4] https://news.ycombinator.com/item?id=6455575

"It’s been rumored that Facebook has lied about how many people actually use their service. However, if it’s good for investors as well as stockholders, does anybody care?"

It would only be good for those stockholders who happen to sell their stock before the truth becomes public. The rest would suffer as the market re-values the stock downward based on the real usage numbers. (And since Facebook is a publicly held company, a material misrepresentation of the company's condition could incur the wrath of the SEC.)

I enjoyed this essay. Unfortunately, one of the drawbacks of tech culture is the importance of momentum/hype to bring in investors and users. Unsurprisingly, it brings out some bad apples. I do think most are going about things the right way, but maybe I'm naive.