Some Great Advice

Over the weekend there was a minor brouhaha that emerged over AirBnB. For those of you who might have missed it, AirBnB is a hot start-up that lets you rent rooms in people’s homes as if they were hotels. The founders have decided that this would be a good time to cash out a little. There’s obviously nothing wrong with that – reaping the rewards is part of why we invest in our work. However, how they’ve chosen to go about it leaves a lot to be desired and that’s today’s thought.
In order to get some cash out, the founders are seeking new investment. With the proceeds, they’re going to pay a dividend to shareholders, mostly themselves. A potential investor – Chamath Palihapitiya – made public an email he wrote in which he declined to invest even though he is bullish on the company. The reason? That the founders aren’t making the rewards available to others in the company. He offers this great advice:

Treat your employees the same as you’d treat yourself. Do things that you will be proud of and can defend to anyone including your Board, employees, prospective hires etc. In such a competitive hiring market, you are competing with not just your obvious competitors, but also any successful tech company who is also looking for great talent. A principle that treats your employees as well as you’d treat yourself is a huge strategy for differentiation, retention and long term happiness of the exact types of people you will need to be successful. In contrast, if you are viewed as self-dealing and shady, it will only hurt your long term prospects…

Spot on, from my perspective.    The company had a problem earlier this year with a user allegedly getting robbed and handled it badly.  With the smell of that still hanging around, for the founders to take money of the table without allowing employees (who probably don’t have stock, just options at this point) to benefit as well as to create issues with future valuations (there are some tax consequences that affect that) just feels wrong.  Worst of all, it’s obvious to everyone what they’re doing – employees, investors, and customers.  Like the earlier incident, it gives one pause about using the service.

I love Chamath’s advice and urge the AirBnB folks to hang it on their wall while they rethink this.  It’s a great lesson for all of us as we contemplate how we live our business lives.

You agree?

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Filed under Helpful Hints, Reality checks

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