It’s a good time for crooks of all kinds.

Corporate shenanigans are a growth industry. Not since the days of the robber barons has white collar crime enjoyed such freedom.

OVER THE LAST TWO YEARS, nearly every institution of American life has taken on the unmistakable stench of moral rot.

Tax evasion siphons 10,000 times more money out of the U.S. economy every year than bank robberies. SOURCE: FBI; IRS.

And this clubbiness has human costs. Tax evasion, to pick just one crime concentrated among the wealthy, already siphons up to 10,000 times more money out of the U.S. economy every year than bank robberies. In 2017, researchers estimated that fraud by America’s largest corporations cost Americans up to $360 billion annually between 1996 and 2004.

Tech took a personal hit thanks to Warren Buffet’s partner Charlie Munger and his views on EBITDA, which stands for earnings before interest, taxes, depreciation and amortization. Tech companies love to talk about their “adjusted EBITDA,” because it makes them look profitable — even a financial loser like Uber.

“I don’t like when investment bankers talk about EBITDA, which I call bulls— earnings,” Munger said at a recent company shareholders meeting. “Think of the basic intellectual dishonesty that comes when you start talking about adjusted EBITDA. You’re almost announcing you’re a flake.”

Tech workers aren’t faring well, either, even at the most hallowed companies.

Silicon Valley has often held itself up as a highly evolved ecosystem that defies the usual capital-labor dichotomy — a place where investors, founders, executives and workers are all far too dependent on one another to make anything so crass as class warfare. The recent developments at Google have thrown that egalitarian story into doubt, showing that even in the most rarefied corners of Silicon Valley, the bosses are willing to close ranks and shut down debate when the stakes are high enough. (…)  Workers weren’t just organizing to save the world from Google. They were also organizing to save themselves from Google, where those who didn’t fit the mold of the straight, white, male techie felt they could be too easily marginalized or dismissed.

The rot isn’t just trickling down, it’s a raging torrent. Student cheating is at an all time high across grades and globally is a billion dollar market.

Philemon is part of the global industry of contract cheating in which students around the world use websites to commission their homework assignments. (…)  Lancaster began studying contract cheating more than a decade ago when he noticed one of his own students posting assignments online. “I found one of my students who was putting up my assignment up for tender on an internet site. So, people were bidding different amounts of money to complete that computer programming assignment.”

Let’s hope the handbasket we’re careening down in is well made, so we can survive our trip to Hell and come out the other side in one piece.

Image credit: Newtown grafitti

Hat tip to KG for sending me the white collar crime article.

Poking through 11+ years of posts I find information that’s as useful now as when it was written.

Golden Oldies is a collection of the most relevant and timeless posts during that time.

How time and tech fly. I wrote this in 2017 and there’s been a lot of change since then. In short, while hypocrisy has skyrocketed, with the advent of Uber, Lyft, We, and others profitability has fallen way behind. Greed, however, is alive and kicking butt — think We’s Adam Neumann.

Read other Golden Oldies here.

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here.

Tuesday I cited a post by Scott Belsky on Medium talking about how employees are often conned (my word) by founders, especially unicorns, when it comes to the wealth that is supposed to flow from their ISO.

As pithy as the post was, some of the comments were even pithier. I especially like this one from  colorfulfool (21st comment)

If profitability were proportional to hypocrisy, there would be no failed startups in the Valley.

Not just true, but succinctly and elegantly stated.

Founders love to talk about the importance of transparency, trust and authenticity.

However, their stock plans and pitfalls thereof exhibit such a high degree of opaqueness and caveat emptor that they kick a hole the size of Texas in the fabric of the founders’ authenticity.

Another prevalent piece of hypocrisy is “change the world.”

Do you really believe that another dating app or being able to evaluate a new restaurant or another way to buy your groceries will change the world?

While they may impact one’s personal world, they certainly don’t have the impact of something like Mine Kafon.

What is proportional to the Valley’s hypocrisy is its sheer greed.

Actually, when I stop to think about it, the greed probably exceeds even the hypocrisy.

Image credit: HikingArtist

Tech firms know a lot about you…

but that’s nothing compared to data brokers, who collect from everywhere and sell to anyone.

Poking through 11+ years of posts I find information that’s as useful now as when it was written.

Golden Oldies is a collection of the most relevant and timeless posts during that time.

This story about Slack is from 2015.

Any company that follows in Slack’s shoes still warrants major media coverage.

Sad, isn’t it.

Read other Golden Oldies here.

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

Being a woman in tech can be a serious drawback in 2015; far more so than in the 1980s and 90s — Tinder even dumped a woman founder on the basis that the company wouldn’t be taken seriously by investors. Sadly, they may have been right.

Leave it to Slack, valued at $2.8 billion, to do things differently.

According to its diversity report released on Wednesday, 45% of all Slack managers are female, with 41% of the entire workforce having a woman as their manager. “This means that 41% of our people report to a woman who helps set their priorities, measure their performance, mentor them in their work, and who make recommendations that will impact their compensation and career growth.”  In non-engineering positions, 51% of the workforce turned out to be female. Out of the roughly 250 employees worldwide, 39% are reported to be female.

Slack is considered the fastest growing software company in history and they certainly lead  the tech pack In gender diversity.

And while their racial diversity stats are as dismal as the rest of tech they are far more actively working on changing that, too.

Here are the company’s four hiring guidelines,

1. Examining all decisions regarding hiring/recruiting, promotion, compensation, employee recognition and management structure to ensure that we are not inadvertently advantaging one group over another.
2. Working with expert advisors and employees to build fair and inclusive processes for employee retention, such as effective management education, company-wide unconscious bias training, ally skills coaching, and compensation review.
3. Helping to address the pipeline issue with financial contributions to organizations whose mission is to educate and equip underrepresented groups with relevant technical skills (like Hack the Hood and Grace Hopper), as well as supporting a variety of internship programs to broaden access to opportunity (like CODE2040).
4. Attempting to be conscious and deliberate in our decision-making and the principles and values by which we operate. Changing our industry starts by building a workplace that is welcoming to all so that a generation of role models, examples and mentors is created.

Slack is practicing what recent studies have proven; hiring women pays.

Give that some thought the next time your unconscious bias kicks in leading you to reject a candidate because she is a she.

Image credit: HikingArtist

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here.

Meet your target audience — no matter their age.

Image credit: Frits Ahlefeldt, AKA, HikingArtist

This week I was reading a post about the top companies to work for. The usual were on the list, Alphabet, Facebook, Salesforce and others. Amazon topped the list for a variety of reasons.

In the news as well is the Chapter 11 Bankruptcy that Toys R Us is filing. As I dug deeper, I also learned that Amazon is considering buying up some of the prime locations that will now be vacant, so they can move further into brick and mortar retail.

I found it pretty amazing that for all the news about retail being a dying segment it’s not actually the case. Instead, we are seeing a right sizing and elimination of poor performers across industries. Amazon is willing to move into direct retail in a way that Toys R Us or others never did. In my mind there are a lot of factors that go into it, but one thing is sure, the culture of a company will determine its outcome.

Now I’m not here to dissect what failed at Toys R Us; in fact I have fond memories of it as a child. As an adult, I was less than overwhelmed when I stopped in and I am not that heartbroken that they are closing.

From an economist’s standpoint I applaud the invisible hand working. However I also realize that decisions made years ago, such as a leveraged buyout, made Toys R Us susceptible to market failure.

What lesson can we pull from these two somewhat unrelated events?

On one hand, you have a top ranked company that wants to move further into brick and mortar retail. On the other hand, you have a major player leaving and many others struggling.

Is our future one where we have only a few spots to shop, Walmart, Amazon and perhaps Target? In that same breath do we also have three competing delivery systems now that Target acquired Shipt?

It probably won’t be that simple, but it does make one think how can we make a positive impact in our own industries.

Are we innovating? Are we looking at the needs of our customers and anticipating the future? Are we digesting data in ways not currently mainstream? These all can lead to greater returns and profits.

Now we just have to execute.

Image credit: drivebysh00ter

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here.

This is a short post, because it links to a longer one by Henry Mintzberg that should be required reading for every entrepreneur.

Three years ago I questioned the profits entrepreneurs derived from building incompatible systems for the electronic medical records (EMR) systems mandated by the Affordable Care Act.

The money in play is substantial; privately held Epic is one of the largest suppliers and its founder, Judith R. Faulkner, is supposed to be worth around $2.3 billion.

When you’re making that kind of money who worries about lives ruined or lost because of EMR incompatibility?

Last summer Ryan wrote a thoughtful post comparing ‘enough’, on a personal level, to an empty hole that needs filling and ending with this comment.

Perhaps there is never enough.

Perhaps all that matters is what you are filling up that hole with.

Mintzberg is the latest to write on the subject, but with far more knowledge and authority than most, and his focus on staying private, instead of IPOing truly changes the conversation: Enough of MORE: Better is better

We would do well by shifting our economies from MORE toward better. While MORE is about quantities, better is about qualities. They lift us up instead of dragging us down. We can invest our efforts and our resources in durable products, healthier foods, personalized services, properly-funded education. Rather than reducing employment, a shift to better can enhance it, with higher paying jobs in healthier enterprises. When we work better, we feel better, and so we do better and live better. Our societies become better…and sustainably democratic.

Any of these moves requires moving profit out of the top slot, which won’t be easy.

I looked up the example Mintzberg provided at the end of his post and it is proof of how difficult it will be to change the money focus.

…many shareholders expressed concern on Wednesday that the Germanwings tragedy risked distracting management from its turnaround efforts.

The “distraction” involved 149 intentional murders and one suicide.

More recently, money trumped responsibility (pun intended) for Facebook, Google and Twitter during the presidential election.

Hard research from Harvard provides proof that money isn’t the focus of successful startups..

If what really interests you is building a company that actually does make a difference and helps change the world, while providing you and yours a happy life along with the money, then read Mintzberg and seriously consider his advice.

Image credit: HikingArtist

I was having a conversation this week about Silicon Valley companies. Some of them are doing amazing things.

When I was job hunting I would look at several and imagine myself there changing the world.

There were several though that also had great funding, great people, but I could not understand for the life of me what they did. They had a great list of customers, but I could not understand the value they brought.

There are two possible solutions to that conundrum.

One, I am just not savvy enough to understand (a very real possibility).

Two, they were full of hype and energy, but not substance. I can imagine that both statements are true when you look at the vast array of companies in the valley.

With that said, have we lost the forest for the trees? Have some companies been so hyped that people continue to pour money into them hoping for a huge payday that may never come to fruition?

Uber is in the news for a variety of reasons, some good, some bad. I recently read an article that Uber and Google are working on flying cars. While the concept of flying cars seems cool… I guess, I am more concerned with the participating companies.

Google provides value, products and that elusive quality, profit. They are well established, have multiple streams of income and could fail at this endeavor and live another day. It’s exciting to see them using their money for grand ideas, but it won’t decimate them either.

Uber provides value and services, but zero profit.

In fact, if Uber was run like a traditional company or household, they would have never even gone to market.

They operate more like a country that can print its own money. They take on debt, lose billions every year, yet keep on trucking.

Venture capital and perhaps greed are what allow this to occur. If they fail at the flying car concept what does it mean for the rest of the business?

I know there are very smart folks who are there and who are invested. I often wonder what their long game is. Do they believe they will become profitable at some point if they hang on long enough?

Another thing to consider is the economy. We have easy money right now with very low rates of interest.

For an investor it makes more sense to go with a high risk investment versus storing it in savings, because they essentially lose money due to inflation.

When the markets tighten does that mean Uber cannot seek out another round of funding?

My point is this.

Have we lost sight of the incremental steps it takes for us to achieve greatness by thinking we can accelerate the whole process with enough capital or am I the Luddite here?

I am a believer that debt can be good when there is a viable business model. I am less impressed though when a company has never turned a profit and had no projections to do so at any point soon, but can be valued so highly. What makes Uber so unique?

I say we need to keep dreaming the big dreams, but also look at the foundation.

Is it built on sand or rock?

Image credit: Artur (RUS) Potosi

Do you believe that Twitter was founded with effects like Arab Spring in mind? Or that Mark Zukerberg started Facebook for altruistic reasons? Or that Instagram, Snapchat and other similar sites actually have your wellbeing in mind?

If so, you probably also believe in Santa Claus, the Easter Bunny and the Tooth Fairy.

The primary purpose of every one of these sites is simple: to make as much money as possible.

How?

By using personalization to achieve behavioral addiction.

Infinite personalization comprises the artificial intelligence-driven, big-data based tools that allow algorithms to build a personalized Internet echo chamber customized just for you, designed to make you feel great. Infinite personalization feeds you the real, the fake, and everything in between, with the simple goal of holding your attention and getting you to come back for more. It is the process by which companies can measure, match, and predict consumers’ individual preferences with amazing accuracy and then tailor offerings to maximize revenue.

It’s done with full knowledge and, in my opinion, malice afore thought.

It’s why tech titans, starting with Steve Jobs in 2010, limit their kids, as I said a couple of years ago in The Hypocrites of Tech.

They want their kids to grow to positions of leadership and power and know they can’t if their world shrinks to a self-enhancing echo chamber that only regurgitates information that fits their preconceived ideas.

Personalization is active in the real world, too, and has been for several years, with young adults inventing ways to shrink their world by curating their college roommates and demanding “safe places.”  

All I can say it ‘good luck’ when their carefully curated echo chamber has to function in the work-world.

However, it’s a sad and scary commentary that in the frenzy to make more and more money tech is providing a detailed roadmap, along with the supporting technology, for demagogs to become dictators.

For a more detailed look at behavioral addiction check out Adam Alter’s Irresistible: The Rise of Addictive Technology and the Business of Keeping Us Hooked

Image credit: Mike Licht, NotionsCapital.com

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here.

Tuesday I cited a post by Scott Belsky on Medium talking about how employees are often conned (my word) by founders, especially unicorns, when it comes to the wealth that is supposed to flow from their ISO.

As pithy as the post was, some of the comments were even pithier. I especially like this one from  colorfulfool (21st comment)

If profitability were proportional to hypocrisy, there would be no failed startups in the Valley.

Not just true, but succinctly and elegantly stated.

Founders love to talk about the importance of transparency, trust and authenticity.

However, their stock plans and pitfalls thereof exhibit such a high degree of opaqueness and caveat emptor that they kick a hole the size of Texas in the fabric of the founders’ authenticity.

Another prevalent piece of hypocrisy is “change the world.”

Do you really believe that another dating app or being able to evaluate a new restaurant or a better way to buy your groceries will change the world?

While they may impact one’s personal world, they certainly don’t have the impact of something like Mine Kafon.

What is proportional to the Valley’s hypocrisy is its sheer greed.

Actually, when I stop to think about it, the greed probably exceeds even the hypocrisy.

Image credit: HikingArtist