Startup Founder Ethics

1. DCDalton Caldwell0:00

   There is a final judge of all startups. Like, someday-

2. MSMichael Seibel0:04

   [laughs]

3. DCDalton Caldwell0:05

   ... all will be accounted for, okay? There is a reckoning for all startups, right?

4. MSMichael Seibel0:10

   [laughs]

5. DCDalton Caldwell0:10

   And that's either, you know, when you go public and the m- market gives you a value, you may not like it, but that is a reckoning.

6. MSMichael Seibel0:16

   That is a reckoning.

7. DCDalton Caldwell0:17

   Or, it's you get acquired, and that is a-

8. MSMichael Seibel0:19

   Yes

9. DCDalton Caldwell0:19

   ... there will be a number there, and someone-

10. MSMichael Seibel0:21

    Yes

11. DCDalton Caldwell0:21

    ... will come up with that number. [upbeat music]

12. MSMichael Seibel0:25

    All right. This is, uh, Dalton + Michael. This is a throwback episode, and today we're gonna be talking about the ethics of the startup game. Maybe a topic that doesn't come up enough. What do you think, Dalton?

13. DCDalton Caldwell0:39

    This was a recurring theme in all of our talks to the YC batches over the year, which is-

14. MSMichael Seibel0:43

    Yes

15. DCDalton Caldwell0:44

    ... there's some basic rule of the game, and one cool thing about, you know, Silicon Valley and the tech industry is you can fail, and you will be held up and celebrated by the community, right?

16. MSMichael Seibel0:55

    Yes.

17. DCDalton Caldwell0:55

    Like, it's okay if your startup-

18. MSMichael Seibel0:56

    Yes

19. DCDalton Caldwell0:56

    ... doesn't succeed. We would-

20. MSMichael Seibel0:57

    It's not unethical to fail.

21. DCDalton Caldwell0:59

    Yeah. That's part-

22. MSMichael Seibel1:00

    [laughs]

23. DCDalton Caldwell1:00

    ... of the business. You earn respect from your peers. But we would always say, in our advice to YC companies, "There are rules [laughs] , and if you, you know, cheat people or lie or, uh, follow bad business practices, you will be in trouble." You know, like, you are out of the business, basically. Like, it is, it is very hard, if not impossible, to recover from that, and that is not the way to fail.

24. MSMichael Seibel1:27

    Over the years, it's be- be s- become painfully obvious that we're in a trust-based business, and I think the major mistake that founders make is they over-fetishize the next milestone. I almost wanna kill this analogy that's been popular, which is like, oh, a startup ... You know, first you're pushing the rock uphill, and then it's like you're pushing it down- you're following downhill, and that's the easy part. I think there's kind of a bit of a mentality that, like, do whatever you can to get to the easy part, because then it's gonna be easy and then, like, whatever. You'll fix it later. Where, like, when we talk to our friends who are running massive, successful companies, I think they haven't found the easy part yet. [laughs] Like, I'd argue it's like, it's maybe a better analogy is pushing a rock uphill, but your legs are getting stronger. When you believe this myth that like, oh, if I just raise that round, then everything will break open, or if I just hit this ARR, then everything'll break open-

25. DCDalton Caldwell2:26

    Yeah. It's like-

26. MSMichael Seibel2:26

    Then you can-

27. DCDalton Caldwell2:27

    ... how small lies become big lies, right?

28. MSMichael Seibel2:29

    Exactly.

29. DCDalton Caldwell2:30

    Like, you start by-

30. MSMichael Seibel2:31

    Yes

Episode duration: 12:45