3 Ethical Lines You Don’t Want to Cross as a Tech Startup
We’ve all seen YouTube clips of tech CEOs fumbling at Senate hearings and becoming memes in the process. It’s great content for the internet, but as a founder? Those moments can be some of the most stressful situations you can ever experience.
Fortunately, most startup leaders won’t have to go through it, but that doesn’t mean violations don’t have consequences. Even on a smaller scale, breaking rules, even unspoken ones, can sometimes threaten your entire operation.
In this article, let’s look at three ethical lines that are often tempting for tech startups, but need to be avoided at all costs.
#1. Don’t Exploit Global Inequality in Hiring
This is something that a lot of tech startups are guilty of. Today, it is incredibly easy to hire people from any country and have them work for you virtually. Did you know that “employer of record” or EOR services exist and help you legally hire without setting up a local presence? It’s remarkably easy to do this for a wide variety of roles.
According to Remote, a global HR and payroll platform, the savings per hour when hiring a freelancer from abroad can be worth it. In some areas, like data mining and management, you can save as much as $45.18 per hour via outsourcing to developing countries.
As you can imagine, this is incredibly tempting, but it also has the potential to be unethical. Data from the World Bank Group notes that the gig economy accounted for 12% of the global labor market. However, they highlight that despite the rapid growth, protection for workers in developing countries is lacking.
While job opportunities are welcome in these countries, some tech startups go too far in exploiting the lower wages. They either lay on a massive amount of work to maximize every single cent they spend. Or they try to further negotiate to even below-local wages.
You might enjoy the savings for a while, but eventually, the high turnover rate you create will begin to affect your operations. So, do the right thing and pay your employees, yes, even the ones in developing nations, a decent wage.
#2. Don’t Design for Addiction
There are certain design choices that you can implement that would greatly improve key metrics for your product or service. Everything from product purchases to ad clicks can be increased with the right techniques. If it’s something like a social media platform or even a video game, it’s not that hard to get people hooked.
One study on 183 Chinese university students found that simple design choices like red-dot notifications, AI recommendations, and gambling-like features were surprisingly potent. They found that with such features, 25% of the participants reported multiple PSUs or ‘Problematic Smartphone Use’ instances.
Yet, so many companies around the world give in to this. They use infinite-scroll or offer micro transactions, which secure their profits but also leave a bad taste in people’s mouths.
This is one of those situations where the unethical choice is perfectly legal. Sure, there have been a few lawsuits against Meta and a few other companies about smartphone addiction and the like, but everyone does it today.
The ownership needs to come from you as a leader here. Try to remember that the consequences of these design features tend to affect vulnerable people like kids and the elderly.
#3. Don’t Create a Toxic Startup Culture For Your Team
Stereotypes exist for a reason, and it’s no secret that startup culture, particularly tech startups, can be highly toxic. They often glorify brilliant ‘visionaries’ and turn a blind eye to the way they treat their team members. What’s even more common is the insanely long working hours.
As Sebastian Becker, general partner of a VC from Switzerland, notes, “60 - 70 hour weeks aren’t the exception.” In fact, the overwork culture even goes by the term “996.” That refers to 9 AM to 9 PM, six days a week.
On the one hand, it’s somewhat understandable to have high expectations from your employees as a startup. However, what isn’t acceptable is using the “we’re a startup” excuse to be a toxic leader.
All things considered, it is hard to convince most founders to forego profit for moral integrity. After all, it’s a super competitive world, and if you don’t take advantage of every edge you can find, someone else will.
However, in the long run, we’ve all seen how good ethics breeds a certain loyalty among customers. MUJI’s buy-it-for-life culture is a strong testament to this. People love that brand and are willing to pay a premium just because they refrain from the usual planned obsolescence choices we notice in other products.
As a leader of a tech startup, it’s probably a good idea to think about what lessons you can take from that.
