I guess this is a useful lesson to any would-be founders who want to make a business out of breaking the law: make sure you don't break laws higher than those on the municipal level. The difference between Uber and Zenefits/Theranos is that cities have limited resources and angry citizens can convince them to back down (and if you lose, hey, just ignore that city and try somewhere else), whereas state and Federal agencies can nuke you at any time and don't really have to worry about the vox populi.
In general, laws are not something you want to fuck around with as a startup. You can break proprieties, you can do things that will piss certain people off (you're almost guaranteed to piss off your competitors if you're doing anything interesting, for example), and typical business ethics assumes that everybody is looking out for their own interests and can advocate for themselves. But when someone has explicitly said where the boundaries are - and particularly if that "someone" is a government - it's good to respect those.
because I remembered reading it, there's a wee bit more to the story than Ben shares. It took a while to find it since Bloomberg reorganized their site [1] but here you go [2].
tl;dr: what Sharlene really went to jail for was more than shifting grant dates around (some by more than 60 days, which is more than a month last time I checked.) She appears to have changed grant and exercise dates both to increase income and to shift exercise income to long term capital gains, and then mislead auditors about these practices. Specifically, she want to jail for listing a false exercise date on her income tax return.
The point is, according to the reporter, what she went to jail for was more clear-cut than Ben is claiming.
Ben doesn't share that backstory, but it's irrelevant to his point. He is suggesting that he might have gone to jail by association with her and having done something illegal at his own company. Hence his statement:
"Since we had the same head of finance, we almost certainly would have been investigated.... The whole thing was a case of the old saying: “When the paddy wagon pulls up to the house of ill repute, it doesn’t matter what you are doing. Everybody goes to jail.” Once the SEC decided that most technology company stock option procedures were not as desired, the jail sentences were handed out arbitrarily."
So even if she did much worse things at her old company, the SEC could have decided that he broke the law too (even if in a less major way), and should go to jail too.
> The difference between Uber and Zenefits/Theranos is that cities have limited resources and angry citizens can convince them to back down (and if you lose, hey, just ignore that city and try somewhere else), whereas state and Federal agencies can nuke you at any time and don't really have to worry about the vox populi.
Aren't a substantial share of Uber's legal issues state-level employer vs. contractor issues (which also potentially have federal counterparts)? So I'm not sure they are a good example of a company restricting its testing of legal boundaries to the municipal level.
I think the difference between potential (and likely) costs and consequences is far more complicated that simply the level of government involved.
The employee/contractor thing probably gets a lot less attention than the legal status of call-a-ride services and whether they need a medallion and the additional hurdles taxis meet, given that they don't pick up randos off the street.
Not to defend Zenefits conduct here, but I'd hardly compare them to Theranos. Not passing broker certifications doesn't mean the insurance policies were invalid. It's not giving people bogus test results based on claimed Area 51 black turtleneck technology.
