Are Business Ethics at a Low Ebb?

The fate of startups may eventually be tied to their ability to respect customers, partners, staff and society. Is it time to adopt CEO Dov Seidman's idea?

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By Andrew Keen

Opinions expressed by Entrepreneur contributors are their own.

Probably most Silicon Valley entrepreneurs are familiar with Moore's Law, the observation from Intel co-founder Gordon Moore that "the number of transistors incorporated in a chip will approximately double every 24 months."

But there's another, equally important idea that perhaps they should acquaint themselves with: concepts developed by the business thinker and LRN CEO Dov Seidman that I dub "Seidman's Law."

During my December meeting with Seidman, he quoted Scottish philosopher David Hume's observation that "sympathy with persons remote from us [is] much fainter than that with persons near."

Building off this observation, Seidman tells me, "Our moral imagination will increase as distance decreases." In other words, the more technologically connected and closer people become, the more important values and principled behavior become.

In an age of perpetual technological disruption, doing the right thing matters more than ever in ways it never has before.

In the past, technology entrepreneurs created and sold devices, Seidman explains: "Today, they create and sell platforms for human behavior, which in turn raises real questions about the social and moral implications of the behavior -- and their underlying values -- on their platforms and about the responsibility that they have for these behaviors."

In other words, technology is now in the behavior business.

Related: Facebook Basically Shrugs Off User Outrage Over 'Emotional' Experiment

Not only will ethics have to become important in order for businesses to survive. They will also be important for them to thrive, win and compete.

"In a world in which more and more people are going to have a handheld phone and technological access," Seidman says, "what will differentiate us will be the humanity that comes through the phone."

Declares Seidman: "How we use technology will be the most valuable currency for creating meaningful, lasting and valuable connection."

Unfortunately, Seidman's notions are being ignored by many of Silicon Valley's hottest startups, which are seemingly outpacing the rate in Moore's Law with astonishing annual growth but are sometimes far less meteoric in ethical development.

Take, for example, Uber, the privately owned peer-to-peer ridesharing company founded by CEO Travis Kalanick in 2009, Now available in more than 54 countries and 200 cities, Uber is expanding rapidly with a vertiginous valuation of $40 billion.

But Uber's ethical development is far less meteoric. Uber is, according to Paypal co-founder and technology investor Peter Thiel, the "most ethically challenged" company in Silicon Valley. Uber has disrespected its customers by charging outrageously inflated fares during bad weather.

In response to such claims, an Uber spokeperson told yesterday, "During states of emergencies, dynamic pricing will be capped."

Every week seems to bring a new ethical scandal in which the tech world is implicated. There's Amazon's labor policies in its distribution centers, which employees say, according to The Seattle Times, "push workers to physical limit." (Amazon has responded to such criticism, saying it has "processes to help ensure the proper reporting of recordable injuries," including independent audits, an anonymous hotline for reporting concerns and a policy that lets staffers choose their own doctors.)

And there are antitrust charges against Google being investigated by the E.U. (A Google spokesperson has said, "We continue to work with the EC to resolve the concerns they have raised.")

Ethically challenged companies can, no doubt, be massively successful in the short term, but they aren't viable for the long term. Their fate will eventually be tied to their ability to respect not only their customers, partners and employees but also the broader interests of society.

Related: J.D. Power: How I Stayed True to My Values Over 50 Years

Such respect for society is the greatest challenge now for Silicon Valley technology firms. Their widespread disruption of a growing number of industries is being driven by Moore's Law. But ultimate success will be determined by Dov Seidman's idea about the increasing importance of values and behavior in this connected world.

"When it comes to human behavior, Moore's Law isn't relevant," Seidman says. "Even if it's possible to grow computing power linearly," when it comes to "scaling values-inspired behavior, progress will be much more curvilinear and involve ups and downs."

Adds Seidman: "It will require thinking in terms of a journey with pivots, failure and experimentation rather than in a linear progression."

But, after all, it is "Silicon Valley that has inspired people to journey with new business models and technological imagination," Seidman says. "Now it is for these innovators to lead the way when it comes to human behavior."

Correction: This piece has been updated to include the actual David Hume quote that Dov Seidman shared with the author.

Related: A Proactive Approach to Addressing Unethical Behavior in the Workplace

Andrew Keen

Author, Founder and Web Series Host

San Francisco-based Andrew Keen is the author of the new book The Internet Is Not the Answer. He is an entrepreneur who founded and the host of the Techonomy web series Keen On.  

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