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<nettime> [Gary Chapman] L.A. Times column, 5/22/00-- Ethics

     [orig From: Gary Chapman <>


Monday, May 22, 2000

Some "Dot-Coms" Know Value of Stock but Put No Stock in Values

By Gary Chapman

Copyright 2000, The Los Angeles Times, All Rights Reserved

Are we closing in on another era of business scandals and suspect ethics?
Will the "new economy" wind up repeating the behavior of the notorious "Me
Decade," the 1980s?

Fortune magazine, in a March cover story on business ethics in the new
economy, said, "Questionable behavior is Silicon Valley's next big thing."

The money to be made in the new economy is not only creating great
temptations, it is also creating some new ways of doing business that may
skirt the edges of ethical behavior. The pace and novelty of the digital
economy may prevent many businesspeople from even seeing these ethical

"Let's face it: Some people think about ethics and other people think about
money," says James Werbel, co-director of the Murray Bacon Center for Ethics
and Business at Iowa State University. Werbel says that business ethics is a
strong feature of nearly every business school curriculum, but that
"training in ethics has minimal impact on people. What has a bigger impact
on people is the leadership in organizations."

John Boatwright, executive director of the Society for Business Ethics and a
professor of management at Loyola University Chicago, agrees. "The evidence
is clear: It starts at the top. No course can overcome the culture. The key
to business ethics is not getting to individuals but to the industry."

So what about the leadership in the new economy?

A scathing assessment has come from an unexpected source. In an article last
month titled "My View:," the chief executive of Forrester
Research, George F. Colony, said he interviewed a lot of other CEOs,
including "dot-com" executives, and concluded that they run "vapid, shallow
and hollow companies." (The article is at,1503,183,FF.html.)

"Many of the dot-com CEOs," Colony wrote, "lacked depth, experience and
common business sense. Their commitment was short term -- three years on the
average. They talked about their highly fluid work force -- a constantly
changing cast of characters, washing in on the promise of more stock options
and an IPO and then washing out, post-offering, in search of another pre-IPO

Colony was describing what has come to be known in Silicon Valley as "flip
and flee," a term of irony and derision that people both inside and outside
the industry are beginning to view as a serious ethical flaw.

Randy Komisar, former CEO of LucasArts Entertainment and WebTV, told
Fortune, "People walk into a VC [venture capital] presentation and their
first line is about exit strategy. They're not talking about the
investors -- they're talking about themselves. How will they cash out? And
this raises a subtle point: These founders don't think of themselves as CEOs
of operating companies. They think of themselves as investors."

The point of "flip and flee" becomes how to raise money and then bail out at
the peak of valuation, even if you've dragged the public into risky
exposure. Then you move on somewhere else to do it again.

Of his interviews with dot-com CEOs, Colony also wrote: "There was a
fanatical focus on valuation -- getting public and liquid -- while value --
what the customer eventually gets -- was a back-seat discussion."

Werbel says, "There are obviously major financial incentives that promote
this kind of behavior." He adds, "Some of these people will be spending time
in jail soon."

Another sign of ethical issues in the high-tech industry, for some people,
has been the Microsoft antitrust trial. Despite all the talk about the trial
and its outcome so far, there has been very little discussion in the
industry about whether Microsoft has behaved ethically.

According to Jeffrey L. Seglin, a professor of literature at Emerson College
 in Boston and author of "The Good, the Bad and Your Business: Choosing
Right When Ethical Dilemmas Pull You Apart," "Bill Gates appeared in court
under oath and wasn't entirely truthful in the way he answered questions."
Microsoft's explanations for the way its operating system, Windows, works
with its Internet browser have changed several times during the antitrust
case, depending on who is asking the question and what purpose the answer is
meant to serve.

Paulina Borsook, author of the new book "Cyberselfish," says, "This culture
is now so deforming, to the kind of people it favors and requires. If you're
trying to survive in that world, you cannot have time to reflect. . . . In
addition, these people have no exit strategy, no preparedness for doing
anything else.

"This thinking is so pervasive," she says. "These are the rules now -- what
other rules are you going to play by?"

The image of the heroic frontiersman on the "electronic frontier" is how
high-tech entrepreneurs describe and justify themselves, says Borsook. "This
is so at odds with reality -- they're really just enmeshed in power and
finance. While they have the rhetoric left over from the early rise of the
Internet, the information revolution and so on, their world is really a lot
more like the 'Liar's Poker' era of Wall Street 15 years ago."

That's when newspapers and TV last showed masters of the business world
being led off to jail in handcuffs.

Gary Chapman is director of the 21st Century Project at the University of
Texas at Austin. He can be reached at

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