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Guilt (and Reliability) by Association
An Interview with Audrey MacLean
As we talked with people in the start-up field, reputation came up repeatedly as a key ethical issue. Few people want to fund or work for or invest with someone who does not have a solid reputation for integrity. Angel investor Audrey MacLean noted, however, that reputation can cut both ways. For entrepreneurs who haven't had a chance to become known in Silicon Valley, it may be difficult to get a hearing. Still, MacLean reinforced the importance to investors of preserving their own reputations:
The start-up environment in the Silicon Valley is, in general, as close to a meritocracy as you'll find. That having been said, it's not perfect. If you're a young unknown, minority or otherwise, it's hard to establish credibility. Unless you've been in charge of marketing, been a CEO, run engineering, it's hard if it's your first time out. There is a pedigree issue that has to do with where you went to school, who you worked with before. If you were in the same Stanford Business School class as the VCs or you worked at one of the companies they had previously funded, that has an influence. But if you moved here from Iowa, you're female and Indian, you, by definition, will have a harder time getting the attention of the VC community. That's probably even a bigger factor than race, creed or gender. It's hard to break in if you haven't been part of the venture circle.
But once you are, all that matters is what you accomplish. The initial filtering is where the problem is. It's not that VCs are biasedthey're biased in favor of capable teams with great ideas. But it's in the filteringwho does or doesn't get into their officeswhere the blockage occurs.
Reputation is not only an issue for aspiring entrepreneurs. MacLean went on to discuss how she puts her own reputation on the line when she works with a company.
What I worry about a lot is who I'm associating myself with. I want to, as best as I can, figure out up-front if the entrepreneurs I'm going to back are people who not only can win in the marketplace but who share my values. The way they will hire and treat employees, the way in which they will communicate with and care for customers, the integrity that they bring in negotiating a deal with partners or investors, the way in which they are or aren't true to their wordall of those things speak to the issue of their character and commitment.
The reasons [I care about values] are personal and professional. I do believe people are more likely to be successful if they are ethical although there certainly are examples of people who are very successful who I wouldn't want to work with. But aside from business success, I just don't want to spend time with people I can't trust. Also, I dont want, by association, to have my reputation tarnished. When I've backed a company as a mentor investor, sat on their board, given advice, that association reflects on me. My dad said, "You have one reputation. Spend it wisely and don't let anyone else spend it for you."
Audrey MacLean describes herself as a "mentor capitalist." She co-founded and was vice president of Network Equipment Technologies, which went public in 1987. She later co-founded and was CEO of Adaptive, which merged with NET in 1993. As an independent investor, she has helped launch such companies as Pete's Brewing, Pure Software and AdForce. She is a consulting associate professor of Management Science and Engineering at Stanford University and a member of the Advisory Board at the Markkula Center for Applied Ethics.
|Issues in Ethics - V. 12, N. 1 Spring 2001|
|Starting with Ethics|
|A Good Start|
|The Treatment of Employees in High-tech Start-ups|
|a case in point|
|The X979 Jumpstart|
|Guilt (and Reliability) by Association|
|Who is a Customer?|
|Ethics and Company Folklore|
|Who's Holding the Bag?|
|The Vendor as Investor|
|Reputation and Venture Funding|
|Questions and Assignments|
|issues in ethics tools|