Being an entrepreneur isn't easy--no matter how simple Silicon Valley's unicorns make it look.
In addition to the sleepless nights, penny-pinching, and frequent rejection startup founders face, they also must deal with countless temptations to lie, cheat, and cut corners, says Kirk O. Hanson, a professor of business ethics at Santa Clara University.
In a recent piece in the Wall Street Journal, Hanson identifies some of the biggest "ethical challenges" entrepreneurs face, especially in Silicon Valley, where success is measured in millions and billions of dollars. A panel of entrepreneurs and venture capitalists that Hanson recently brought together identified 10 ethical questions that fledgling startup founders should be prepared to answer. Here are three of the most common themes that arose in the discussion:
1. Are you fully prepared for the beginning and the end of your career as an entrepreneur?
Before you take the leap to become an entrepreneur, Hanson says to carefully consider the potential risks involved, by asking, "should I play the game at all?," and "what is the end game?" Be honest with family and friends about what building a startup may entail, and how it will affect your relationship with them. Figure out how to mitigate the stress placed on your spouse and/or children.
Finally, determine what you want to do should you strike it rich. Should you immediately start re-investing your money in more startups, or sock it away for retirement? What do you want your legacy as a founder to be?
2. In what situations (if any) are you willing to lie?
The temptation to attract initial customers and investors by presenting them with a rose-colored view of your company is tremendous, Hanson says. While many famous entrepreneurs achieved success by faking it until they made it, the consensus on Hanson's panel seemed to be that honesty is still the best policy.
One CEO on the panel needed to close a round of funding for his startup within a week. But he discovered that some employees had falsified parts of the financial reports that were to be given to investors. He decided to fire all employees involved and stay honest with the funders. Though his company nearly went bankrupt, at the last minute some investors, impressed by his truthfulness, decided to invest.
3. To what do you owe your customers?
These days, customers don't just expect companies to churn out beautiful or innovative products. They also expect many businesses to protect sensitive data and customer information, and to have a social purpose beyond turning a profit. As your company grows, you must decide how closely to adhere to your original values. Sure, you may launch your company with the best of intentions, but as more and more dollars start rolling in, how do you keep your focus?
Entrepreneurs who face this ethical dilemma may want to take the advice of Alli Webb, the founder behind the $70 million Drybar chain of salons: leave the idea of straying from your original vision to increase revenue to your competitors.