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The 'Al Capone Theory' Shows How Sexual Harassment Hurts Your Bottom Line, Too When you hire and partner, look for people whose values you can trust in all things.

By Nina Zipkin

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Recode reported yesterday that Vinod Khosla, the billionaire founder of Khosla Ventures, had this to say during a speaking engagement about sexual harassment in the world of venture capital: "I did not know that there was any discrimination."

Khosla went on to say that he thought it was "rarer than in most other businesses," and that "it's a reality because it's perceived as a reality." His comments came after a several week stretch that has shown just how real this discrimination is.

Related: Uber Fires More Than 20 Employees for Harassment

In June, following six allegations of sexual harassment against VC Justin Caldbeck, he released a statement and resigned from the fund he co-founded, Binary Capital. It shut down completely shortly thereafter.

On June 30, The New York Times published an article titled "Women in Tech Speak Frankly on Culture of Harassment." In it, writer Katie Brenner spoke with female founders about being subjected to unwanted advances. They named a number of high profile VCs, including Chris Sacca and 500 Startups co-founder Dave McClure.

McClure resigned from his role at 500 Startups and his female co-founder Christine Tsai took over. Both McClure and Sacca took to Medium in an attempt to own up to their behavior, though not before being contacted by and named in a paper of record.

Related: Don't Be Blind to Workplace Harassment: 5 Tough Questions to Ask

In his post, "I'm a Creep. I'm Sorry," McClure wrote, "When confronted about what happened, I was at first defensive. What did I do wrong? We were just hanging out! Why are people so upset? I tried to present my crappy behavior in the best possible light. I didn't have much empathy for the people I hurt and offended, and rather than face up to my own shallow motivations, I rationalized my actions and came up with reasons to find blame in others, rather than solely with me."

In Sacca's post, titled "I Have More Work to Do," he wrote, "particularly when reflecting upon my early years in Silicon Valley, there is no doubt I said and did things that made some women feel awkward, unwelcome, insecure, and/or discouraged. In social settings, under the guise of joking, being collegial, flirting, or having a good time, I undoubtedly caused some women to question themselves, retreat, feel alone, and worry they can't be their authentic selves. By stupidly perpetuating a culture rife with busting chops, teasing, and peer pressure to go out drinking, I made some women feel self-conscious, anxious, and fear they might not be taken seriously."

In response to this series of high profile incidents, Valerie Aurora, principal consultant at Frame Shift Consulting, a firm that helps companies promote diversity and inclusion, and Leigh Honeywell, the co-founder of female-driven makerspaces HackLabTO and the Seattle Attic Community Workshop, shared what they call "The Al Capone theory of sexual harassment."

Related: 5 Ways to Create a Healthy, Thriving Tech Company Culture

The pair explained what the infamous crime boss -- who was caught for the relatively prosaic felony of not paying taxes rather than the more garish ones he committed -- has to do with Silicon Valley's culture of harassment.

"The U.S. government recognized a pattern in the Al Capone case: smuggling goods was a crime often paired with failing to pay taxes on the proceeds of the smuggling. We noticed a similar pattern in reports of sexual harassment and assault: often people who engage in sexually predatory behavior also faked expense reports, plagiarized writing, or stole credit for other people's work. … All of these behaviors are the actions of someone who feels entitled to other people's property -- regardless of whether it's someone else's ideas, work, money, or body."

Which is to say, as founders, you have a responsibility to your employees to build organizations where people feel that they are safe and can do their best work. Once you are in a position to hire or partner, as you do your due diligence about the backgrounds of the people you bring into your orbit, you cannot ignore or brush aside this kind of behavior as one-off incidents or just the way things are. To do so is to allow harmful actors to thrive while the environment around them suffers. Because to quote the late educator, author and activist Maya Angelou, "when someone shows you who they are, believe them the first time."

Nina Zipkin

Entrepreneur Staff

Staff Writer. Covers leadership, media, technology and culture.

Nina Zipkin is a staff writer at Entrepreneur.com. She frequently covers leadership, media, tech, startups, culture and workplace trends.

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