Pigboy,
The fragmentation and partisan analyst coverage of the networked storage biz is very interesting. What has Kumar picked up on his radar on BRCD? While BRCD spends it's millions to maintain silver spoon VC connections and steroid supplements to bulk up their propaganda ministry, while working feverishly to get higher port density switches out the door. Perhaps, what they really, really need is this job description......This is a long article, but it stuck a cord for me, that BRCD/ACR is actually a similar story. Perhaps BRCD has laid the wrong foundation from the start, and it cost them the SUNW deal, and now that fear of ANCR being too small, others will feel comfortable about givng BRCD the boot. It certainly would satisfy many ANCR longs yearning for a just and SANe world.
Gonna keep these FC seats for a few more years....
In Silicon Valley, "business ethics" is sometimes an oxymoron. Ethicist Thomas Shanks and Propel CEO Steve Kirsch are trying to make it a way of life.
A FEW WEEKS ago, Steve Kirsch signed on to his e-mail from his office at Propel and got a shock: There was a new message telling him that the best person he could think of, anywhere, for a technical job at the company had unexpectedly become available. The problem was, Kirsch had offered someone else the job minutes earlier. Kirsch couldn't believe it. He didn't know what to do.
So he called his general counsel, Andrew E. Newton, who told Kirsch that he could legally rescind the offer. Then he called his vice president of marketing, Barbara Cardillo, to get her opinion. Cardillo, a close adviser, had this suggestion for her boss: Talk to Propel's new ethicist. Yes, you read that right: The Santa Clara high-tech start-up has hired itself an ethicist. He is Tom Shanks, a former Jesuit priest. And Kirsch, a CEO who cares a great deal about ethics and values but has a business to run, had been spending quite a lot of time with Shanks perhaps more than he originally envisioned. Too much ethics, Kirsch was learning, can be . . . well, a distraction. But Kirsch followed Cardillo's advice and got Shanks on the phone. The ethicist suggested that rescinding the offer might not be a legal problem, and might not even violate strict rules of ethics. But it raised questions about fairness and commitment that Kirsch needed to consider.
"I wasn't sure what was the right thing to do," Kirsch, 43, recalls. "Because you're trying to balance your duty to the shareholders to hire the best possible person versus your obligation to the person that you just hired or made an offer to."
He called back the person to whom he had offered the job. Kirsch explained his dilemma. "Then I said, 'How would you advise me and why?' "
Propel's Thirteen Commandments
Propel has established a set of philosophical guidelines and core values to shape the company culture.
Think and act like an owner.
Have fun.
Recognize accomplishment.
Keep a balance in your life.
Teach and learn from each other.
Communicate without fear of retribution.
Require quality beyond customer expectations.
Improve continuously.
Go the extra mile to take care of the customer.
Play to win-win.
Act with a sense of urgency.
Make and meet commitments.
Give back to the community.
Who's Propelling Propel?
Series A Investors:
Marc Andreessen, founder and CEO of Loudcloud, Inc.
Alfred Chuang, co-founder, president and COO of BEA Systems
MSD Capital LP, the New York-based investment firm of Michael Dell, founder and CEO of Dell Computer
Andy Grove, co-founder and chairman of Intel
Steve Harmon, Internet stock analyst
Mark Hurst, founder and president of Creative Good
Colin Powell, former chairman of the Joint Chiefs of Staff
Meg Whitman, president and CEO of eBay
The valley and values
Something strange is going on at Propel.
There are lots of "socially responsible" businesses in the landscape. You've heard about Ben & Jerry's, the ice cream company that boasts of running a feel-good democracy for its employees. But corporate values are hard to bring to life; Ben & Jerry's, in fact, was recently accused of union-busting. Most businesses are content to distribute statements of corporate values that employees stuff into desk drawers or delete with great efficiency when they arrive via e-mail.
"Often the corporate values wind up posted on the wall," says Shanks, 50, director of business and public policy programs at Santa Clara University's Markkula Center for Applied Ethics. "So you can have people lying, cheating and stealing right below the statement that says, 'We believe in integrity.' " Kirsch's move to hire Shanks as Propel's corporate conscience is an odd turn of events in money-mad Silicon Valley, where everyone chases the golden ring and very few reflect on whether they're behaving with even a smidgeon more decency than the robber barons of a century ago.
But while Shanks can barely believe that a start-up executive would take time to reflect on anything, Kirsch says inculcating values and ethics into Propel's way of doing business is no big deal. It's a no-brainer, he says, because values are "one of the foundations on which you build a company. You can build a house without waiting for the cement to dry and pay for it later. But it's better to pour the foundation at the right depth and get everything straight from the start. And in my experience, companies that start out with a strong set of values are typically more successful and the ones I admire."
In March, Kirsch announced that 1 percent of Propel's initial equity will be donated to charity. Now Shanks wonders if Propel could become the model for a new type of "values-driven" company in the valley one that poses an alternative to the "hype your stock and cash out" mentality of so many start-ups.
Kirsch and his company are devising software to revamp the way e-commerce Web sites such as eBay the online auction house whose CEO, Meg Whitman, is a Propel investor are created. E-commerce is a volatile $20 billion marketplace, and still in an embryonic state. Technologies are changing and corporate contenders don't quite know how to make themselves stand out. Some observers are bound to say that it's easy maybe even a good PR move for Kirsch to flaunt values at this early stage of his new tech venture. It helps him get a leg up on the competition BroadVision, Blue Martini and Allaire, among others before Propel grows large and fat.
Maybe values are just a "frill" for Kirsch, a veteran of Infoseek and other successful start-ups, who has countless contacts and recently signed up eight key investors, including Gen. Colin Powell and Intel founder Andy Grove, to help pump $6.6 million into Propel. (As you read this, a second round of investments could bring the company an additional $30 million.) Full funding, after all, means never having to lie with the devil to get ahead.
Even so, the e--commerce market is 'a difficult space to crack right now,' says Peter Ausnit, an equity analyst at Prudential Securities in San Francisco. He wonders if Propel's values-driven culture may be at odds with the valley culture that is 'often much more success-focused. Vigorous competition and ruthless tactics are often the rule. . . .
"Ethics matter a lot,' he says. 'Frankly, we're all trading on our reputations. . . . [But] doing business because they make a claim of ethics or values doesn't strike me [as being] as important as the quality of their product. So this is interesting, but I'm not sure it'll make them any more successful."
Propel is hardly Kirsch's first stab at good works. He is worth about $200 million, after founding three successful companies Mouse Systems, Frame Technology, and Infoseek. Kirsch and his wife, Michele, set up a $75 million charitable foundation last year and were named 1999's Outstanding Philanthropists of the Year by the Silicon Valley chapter of the National Society of Fundraising Executives. They were also recognized by the online magazine Slate as the eighth-largest charitable givers in the United States in 1999.
Shanks makes the rounds at a party celebrating Propel's launch.
Kirsch is a business pragmatist who likes the fact that his "1 percent charity carve-out" of the company's intitial equity will bring Propel a big tax break. But he also seems sincere about developing a values-rich business culture in an industry that's rife with ethical challenges.
One of the products Propel is designing could affect whether millions of online shoppers must register credit card numbers and other personal information with e-commerce merchants who might then sell the information to advertisers and marketers. In other words, Propel is in a position to help curb the "data mining" that disturbs so many Internet users. And while Kirsch says his company is "not in business as a protector of privacy, per se," he is willing to suggest to e-commerce businesses "that protecting people's privacy is important and they should, if they want to be successful, take steps to do so." He would even consider offering a Propel "better business seal of approval" to customers and Web sites that adhere to certain standards.
This is what Shanks calls "bringing values into everyday business activities and decision making." Early this year, Kirsch who has two daughters and draws parallels between responsible parenting at home and honest brokering at work was handed a document that turned out to be from Xoom.com, a Web-building competitor. He dumped it.
This high-mindedness seems to have begun in October when Kirsch had his first meeting with four of Propel's founders and wrote down a values statement even before a business plan was discussed. The company started hiring in earnest in January, the same month that Shanks appeared on the scene. Now Propel's 60 or so employees are part of a constant, expanding discussion that turns corporate values, as one put it, into a "low-volume buzz" at the office.
Recklessness or responsibility?
On March 2, about two weeks before Propel's launch, Shanks sat down with employees, one by one, for lengthy conversations about personal and business values. From the conference room its wide windows opening to a view of the Intel complex below Shanks peppered them with questions about their past experiences with "values-driven" companies. Most said they'd had none. His first interview was with Sunny Consolvo, the company's 28-year-old director of the "user experience." A former interior designer, Consolvo is in charge of the technology that will guide online shoppers "users" or "end-users" in e-parlance through e-commerce Web sites. She wants to protect those shoppers, Consolvo told Shanks, from e-commerce merchants who would trick them into signing up for "spam" the electronic junk mail that clogs millions of e-mail accounts. Propel's software design will try to make it difficult for merchants to do that: "We have to convince the merchants to do the right thing for the end user," she said.
Then Consolvo started reading aloud from a list of Propel's values. Think and act like an owner. "Well, I'm a founder and have a decent share of stock. So that's going to be a piece of cake," she said, laughing. She conceded that as the company grows, this value "might be a problem when people don't have so much of a stock option."
Have fun. Consolvo had just taken her team to dinner at Pedro's. But "around deadline time, having fun's going to be difficult. When people are working ridiculous hours without much sleep, that's going to be a tough one."
Make and keep commitments. "If you don't do that, your customer is never going to use you again."
Communicate without fear of retribution. "I've never been at a place say, a 300-person company where you didn't have conflicts between two people. "But we might be able do do all this," Consolvo finished up. "If it's managed correctly, none of these should be impossible."
If you accept the idea that there are a couple of ethical streams running through high-tech's history one typified by Hewlett-Packard's emphasis on corporate integrity, the other by Microsoft's emphasis on corporate . . . well, you fill in the blank then Kirsch would seem to swim with HP. As would Propel's Eddie Chen, a 28-year-old engineer whose father worked at HP and raised his son on stories about the supposed moral unshakability of that company's founders. Chen told Shanks that Kirsch seems to typify the HP ideal that "you can be successful and still help humanity and not be a total jerk. Success can be achieved with grace and style, or with ugliness. You can make millionaires either way."
Propel employees celebrate the launch of their new company.
Cynics might argue that there's something inherently unethical or at least a little unjust about what's going on at Propel, whose dozens of mostly young employees stand to become instant millionaires if they strike silicon gold. But the question about the instant accumulation of vast riches is part of a larger ethical discussion of the way wealth gets distributed across society. It won't be resolved soon. So you have to ask yourself: Whom would you prefer as captains of industry reckless capitalists or responsible ones?
Shanks, who is on retainer with Propel through June and has talked to Kirsch about a two-to-three year tenure, opts for responsibility. He thinks corporate ethics can lift morale and help the bottom line: What if Intel had immediately owned up to the manufacturing defects in its Pentium chip in 1994? It would have saved time, money and reputation. And it would have been the right thing to do.
Business as a source of values Shanks is part of a cadre of ethicists who wonder if we have arrived at a moment when business will become the foundation of society's best values. With the four pillars of family, neighborhood, church and school crumbling as sources of moral guidance for many people, what's left? Business. It looms out there, larger than ever, our new religion. Work bleeds through our days, follows us home, interrupts our parenting and daily chores. If it doesn't influence some clear values about relationships with colleagues, customers, children, the community then we may be in a lot of trouble. (See the box on Page 11 that lists Propel's values.)
"Ethics is about relationships," Shanks likes to say. When he sat down to discuss the list of values several weeks ago with Propel's executives, at first the conversation dragged. Newton, the general counsel, kept looking at his watch. But the mood changed once the group began discussing what it means to have "fun" at work. Suddenly they were talking about the very meaning of work and what constitutes success.
Shanks talks with the staff. Andrew Hamel, general manager for e-commerce, listens at right.
Newton offered that success isn't an end point, it's a process: "It's getting there; the way to success is supposed to be pleasurable."
Fine. Yet start-ups are typically about burnout, not pleasure. What about that?
"There's a value missing here," Newton mused. "We need something about spending time at home with the family."
"Something like, 'Keep a balance in your life,' " suggested Barbara Cardillo.
"That's so un-Silicon Valley," said Mary Korn, the company's chief financial officer, laughing. Several weeks later, 'Keep a balance in your life' was added to the company's list of values.
Cardillo and Tom Shanks are old friends from Stanford University, where each received a doctorate in communication research in the early '80s. But while Shanks went into academia, Cardillo pursued a business career. She spent nine years in marketing at Apple, and, through a friend's recommendation, wound up helping Kirsch with his charitable foundation last spring. She learned that Kirsch drives an electric car to work a different kind of cat than, say, Oracle's Larry Ellison who flies his private jet in and out of San Jose International Airport in violation of curfews. It didn't take long for Cardillo to think of Shanks as someone who could help Kirsch with Propel's values program, and it was she who brought them together.
Like many in the valley, Cardillo has witnessed unsettling doings at the office. She says her ex-boss at another start-up, in a flash, sold the company, cashed out his stock, and helped a lucky few to walk away "with huge amounts of money." Others lost their jobs and wondered if it had all been orchestrated from Day One.
"I got a nice amount toward my nest egg, so I'm not complaining about my financial situation," she says. "But I left there not with a good taste in my mouth. You hear all these stories of engineers who work hundreds of hours, round and round the clock, and then the company's bought out and they get some piddly amount and the co-founders walk away rich. What are the guidelines? How do you be fair?"
How to divide stock is typically the first ethical decision that a start-up faces. Who gets how much and why? When Cardillo signed on with Kirsch last fall, she was relieved to learn that stock deals were not being cut privately. Kirsch made sure that each of the founders knew what the others were getting; it was all on the table, openly discussed.
At many companies, founders are given 10 times the stock that, say, the company's 50th or 100th hire receives. At Propel, Kirsch has tried to "even out the ramp," he says. While the company's 11 founders and other executives are amply compensated, most have been given only three or four times the stock that the 100th or even the 200th hire will receive. Kirsch hopes this will help everyone on staff to feel invested in the company to "think and act like an owner."
Barbara Cardillo, Propel marketing vice president, brought Shanks and Kirsch together.
The pragmatist's values Kirsch is sitting in his office, which has an outstanding view of Great America's looping roller coasters. His desk is uncluttered. Framed on the wall are the autographed handprints in silicon of William Hewlett and David Packard.
The bespectacled chief executive, who wears blue jeans, a blue denim shirt, white socks and spotless white sneakers to work most days, walks to a file cabinet and extracts a folder. It is Kirsch's values folder, containing the printed corporate values of many of his favorite companies. He pulls out a particular favorite from PSS World Medical, "a little billion dollar company you never heard of" and confesses to having "stolen some of our values from them."
He reads aloud: " 'Communicate without fear of retribution.' That was a great one. 'Reward accomplishment.' I love that," he says, smiling goofily. " 'Encourage self-help' is good, too. But we use 'teach and learn from each other' instead."
Kirsch is particularly fond of "communicate without retribution." That's because several years ago at Infoseek, following a change of ownership, employees became fearful of speaking to their bosses. If you complained, you'd better watch out.
Kirsch had founded Infoseek in 1993 without a values statement. When one was later added, it was "too little too late," he says, because management didn't work hard enough at massaging the values into the company's bedrock culture. Companies have a way of "morphing over time" anyway, and, at Infoseek, "people became actively devalued."
The PSS values seem to resonate for Kirsch like religious aphorisms. After he finishes reading them, Shanks walks in. Kirsch has been reviewing the ethicist's seven-page proposal for establishing a Propel corporate culture in which "operating out of the values becomes part of the business performance." There are plans for a series of workshops and there are summaries of research showing that values take root only if leadership makes a steady show of them. Then, once that top-down dynamic is established, the values begin to seep into each employee's consciousness. That's how a values-driven business climate happens: slowly, through the steady accretion of actions and decisions at all levels of the operation.
It's all a little too academic for Kirsch: "I have to spend six hours reading it and have a lawyer look at it? Geez!" he says of Shanks' proposal. "I've got a company to run."
Kirsch can be a tough businessman whose commitment to ethical behavior can boomerang on him. When Cardillo prepared in January to farm out some marketing work, he wanted her to offer it to two competing firms and have them battle it out. Cardillo wouldn't do it. It wasn't civil. It didn't feel right. It even seemed to violate one of Kirsch's favorite values: "Play to win-win." In other words, maintain a balance in negotiations and business relationships.
Kirsch backed off, hearing his own words spoken to him. Cardillo chose a firm that struck her as competent, and that ended it.
At another meeting, when Shanks pushed Kirsch to discuss how he might respond to specific ethical issues around hiring and Internet privacy, the chief executive blurted out, "I don't have time for this. It's sort of like . . . not a problem! Why are we spending time on things that are not broken when I've got 60 other things to do?"
Kirsch is one of those brainy engineers who have had to work a bit at getting their social skills up to speed. He can be a little inscrutable. And at times, rather than tackling the weighty questions, he likes to joke around. At Infoseek, to help employees see the value of real values, he put together a list of "anti-values." One, under the heading of Productivity, was: "Do what your boss says. This isn't a team environment. That's bull . Infoseek is a tightly run ship. Follow orders. Don't ask questions. Do what you are told. If you think of something better, keep it to yourself. Don't rock the boat."
Whereas Kirsch thinks that good values and ethics are things you just do, Shanks is the supercharged academic who thinks you must be taught to let them guide you; ethics to Shanks is something to be studied and applied. He and his colleagues at Santa Clara's Markkula Center devised an ethical decision-making model which has formed the basis for workshops and teaching seminars that Shanks has conducted for corporate and non-profit managers, engineers, health care workers, educators and students. Every few months for the last two years, he has taught workshops on business ethics to employees of Charles Schwab in San Francisco, where he has listened to "150 people in a room, repeating Schwab's values like a mantra."
Doing the right thing
Still, Kirsch recognizes that, despite his bottom-line inclinations as a businessman, he has to consider his commitment to Propel's values at every turn.
Kirsch had wavered in the case of the job candidate who was offered the position before an even better candidate came along. Newton had said it would be legal for Kirsch to withdraw the offer; Shanks advised the CEO to think about his commitment. Kirsch felt that rescinding the offer "would be legal. I believe it's ethical. And I don't know that it's immoral, either," he says, reconstructing his thoughts. "It would be highly unusual. But certainly you could make that decision to then say, 'Change of plan.' Because 'change of plan' happens in corporations all the time, and in Internet companies it happens even faster.
"But one of the problems is that if you have a history of doing that, then people can't take you at your word," Kirsch goes on. "Because what's your word worth? You may change your mind the next minute or the next day."
When Kirsch called the person to whom he had offered the job, and asked, "How would you advise me and why?" he says, "their response was that I should go through with the offer, because that was sort of the proper thing to do. "It was a commitment that was made," Kirsch says, "and there's an expectation that, gee, unless there's something very wrong, that the commitment would be kept."
He stood by his offer.
"It was one of these things that really tested you," Kirsch says. "Because that's never happened before in my career, where I've been in a situation like that."
He laughs. He figures he did OK. He says it's as if he signed Bernie Williams, the New York Yankees centerfielder and .340 batter, to a contract, even though the power-hitting Ken Griffey, Jr., turned out to be available.
Williams is probably more consistent anyway.
"So what do you do?" asks Kirsch.
You do the right thing. Which he did. |
