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How to Prevent Your Company from Being Used for Evil From a Founder Who's Been There In creating something of meaning and scale, founders have an obligation to ensure their life's work is not misused to inflict harm.

By Ryan Howard Edited by Jessica Thomas

Opinions expressed by Entrepreneur contributors are their own.

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Early this year, I encountered some staggering news: Practice Fusion, a company I founded in 2005 and left in 2015, had reached a settlement with the DOJ for suddenly partnering with an opioid manufacturer, and for encouraging doctors on the platform to prescribe opioids to patients.

I was horrified.

As someone with friends and family who have fallen victim to the opioid crisis, seeing my life's work corrupted in this way has been especially devastating. How should I — and other founders — prevent something like this from ever happening again?

In the beginning, I'd founded the cloud-based, electronic health records platform Practice Fusion with the genuine mission of "connecting doctors, patients, and data to drive better health and save lives."

During my tenure, our team worked tirelessly to deliver better health outcomes through data and to ultimately save lives. The platform facilitated hundreds of millions of patient visits –– and was free to use by doctors and patients, alike. As a result, our innovative functionality helped to make millions of patients safer. By all accounts, we were fulfilling our mission to make the world a healthier place.

Then, a sea change. Following my departure in 2015, my successors seemingly adopted a new mission –– they allowed the aforementioned pharmaceutical partnership to take root –– and for this, I suggest they experience the full retribution of our justice system.

Related: Exit Strategy: Don't Let Personal Motivations Conflict With Rational Business Decisions

Of course, my successors aren't alone in falling prey to the allure of capital over human lives. Notably, we can look to drug companies increasing the cost of a life-saving therapy by 100 times, or the multitude of companies using slave labor to manufacture your products. We might even implicate your social network in fomenting genocide and threatening democracy as we know it. And in Practice Fusion's case, advertising to doctors 230 million times to prescribe opioids. But what can you do now to prevent something similar from happening in your company?

Although founders can't explicitly control what happens after an exit, this traumatic experience has prompted me to assemble a preventative framework for founders –– especially those in healthcare and biotech.

Here are, in my estimation, the practices that will help protect your company's legacy:

  • Become a B Corp to align purpose with profit.

  • Make founder board seats irrevocable to ensure founders are part of the company, whether or not they're still operators.

  • Set term limits on independent board seats to exit bad actors and directors not aligned with the company's core values.

  • Pre-allocate common board seats to ensure balanced seats that will be taken by investors at a later date — and don't feel pressured to fill those seats.

  • Have all team members commit to a code of ethics to ensure the formal commitment of your board and team to serving your mission and customers.

  • Vet your board members thoroughly by interviewing them with rigor and having the courage to explain your expectations of them upfront.

  • Raise capital from impact-driven funds that have a social impact focus to ensure the business cannot be corrupted no matter who may be at the helm in the future. I have included a list of funds here.

In the formation of my current company, 100Plus, we incorporated a number of these controls –– and have raised capital from social impact funds like Kairos' K50, which invests in founders making life better and more affordable for all.

All of the mentioned items are worth consideration for founders in leveraging and creating lasting, ethical companies. Most founders think they'll be with their companies until it exits, but the truth is, more than half leave within 18 months of taking institutional capital. Thus, it's critical for modern founders to be thoughtful about establishing their company's core tenets and values from the onset. Please, take it from me.

Related: 5 Tools to Help You Exit Your Digital Business

* * *

Full disclosure: I was never contacted by the DOJ, or any other authority, regarding Practice Fusion's investigations. Likewise, I was not part of any conversation with any opioid manufacturer while I was CEO. The referenced partnership occurred in 2016, after my departure, as detailed in the official DOJ report (p. 18).

For further background regarding the Clinical Decision Support functionality, its original intent and how it was utilized to identify seniors citizens who needed vaccinations, please see this piece by Practice Fusion's former head of business development Dan O'Neil.

Related: 4 Tips for a Happy Exit From the Company You Founded and Love

Ryan Howard

Entrepreneur Leadership Network® Contributor

The Founder Advisor

Ryan Howard is is the founder of 100Plus and Practice Fusion. He partners with founders and lectures at UCSF and UC Berkeley on founder realities, fundraising, venture capital, maintaining control of their companies, hiring, firing and gaining liquidity.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

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