Why are ethics important for a company? And how do you start working with ethics? Following up on our Special Episode Twitter chat, ex-Airbnb GC and best-selling author Rob Chesnut is back in the studio to spoil us with his insights. This time, we're talking about how companies can benefit from prioritising ethics, and Rob shares his own experience from some of the big companies he's worked at.
Get insights, learn from peers, life lessons from some of the most influential GCs. If it's related to inhouse legal, we cover it. For more inspiration, go to openli.com/community
Stine: So welcome back to Inspiring Legal.
Rob: Thanks for having me, Stine. Rob, maybe for the listeners out there that don't know about you, tell them a little bit about your background and maybe also how you came about writing a book that became a bestseller. Well, by way of background, I was a federal prosecutor early in my career. I moved over to eBay in the early days of eBay back in 1999. And after eBay, I became the general counsel of a company called Chegg and then later general counsel and chief ethics officer at Airbnb. You know, the journey to writing a book, it was not an intentional one. I never thought I'd be an author. But, you know, while at Airbnb, I really noticed that the world was changing.
When I was growing up, companies were expected to do one thing, and that was make money. You know, that's what a company did. They were supposed to focus on just shareholders. And exactly how it got done wasn't as important. You know, if there was bad behavior by leaders that tended to get swept under the rug. It wasn't talked about. If the company had a little money left over and had a good year, maybe they would make a nice little donation, and that was integrity. But I noticed that the world has changed, and I think the Internet has a lot to do with this.
The world has become a lot more connected, and there's a lot more transparency. And with this connectedness and transparency has come increased expectations on companies. It's not good enough now for a company just to make money. People expect that, but they want more. They want a company that is also going to act responsibly in the world and actually solve some of the world's biggest problems. I think, you know, many of us are discouraged by the government's ability to solve them, and we are increasingly looking at companies to solve these problems. And, you know, there's pressure on companies from all directions here.
Employees today want more than a paycheck, Stine. They want to be part of something aligned with their own values. They want to be working for something that they believe is good and right, and they are increasingly putting pressure on their employer to behave responsibly. And if they see something they don't like, you know, in the old days they wouldn't say anything. Today what happens is they tweet about it. They post blog posts about it, right, like Susan Fowler did with Uber, her famous blog post that really turned that company upside down. They go on Glassdoor and discuss it. They may not only leave, they may leave noisily. They may leave copying documents and taking documents to the government and turning in their old company.
And it's not just employees that are putting pressure on companies to behave well. It is customers. We live in an age of conscious consumerism. That is, consumers want to do business with companies that have values aligned with their own. So companies are increasingly under pressure to care about things like the environment, as their customers do. If the company can align its purpose and its values with its employees, it can be really powerful.
Studies, like a Harvard Business Review study that just came out that showed that when there's an alignment between the values of employees and the values of a company, productivity is significantly higher. Employee retention is up. And even diversity and inclusion goes up. If there is a misalignment, where, by the way, you may find a company like Twitter, where there's a significant change in the stated purpose of the company. That bodes poorly for the performance of the company going forward.
Consumers, if they feel aligned with the company, they'll become ambassadors supporting a company. Government, as well, as raising the stakes on companies, to push them and pressure them into behaving with integrity, to think about stakeholders beyond just shareholders. And we noticed all of this happening while I was at Airbnb, and I went to talk to our founder, Brian Chesky. And we talked about things like sexual harassment in the workplace and things that were going on at Uber and other large tech companies. And we came to the fundamental question, how do you drive integrity into the culture of a company? How do you do it?
We both agreed that it was important and that it would actually help the business as well as be the right thing to do. But we weren't quite sure how to do it, but Brian, in his very Brian way, looked at me and said, go big. And we went out and we created an integrity program, where we openly talked about the importance of doing the right thing and what the right thing meant at Airbnb.
And what surprised me, Stine, was how the employees reacted to it. They loved it. It meant a lot to them to be working at a place that genuinely cared about doing the right thing and talked about it openly. And the program became really successful, and employees talked about it, were inspired by it. It became really part of the culture of the company. And that's when my wife got involved.
My wife, early in her career, had been in the publishing industry. And so she said, well, Rob, you've got to write a book about this. I'm like, I can't write a book. I'm not going to. I've got a day job. It's called being a general counsel, and it's taking like 16 hours a day. And she said, no, but it's important to share this with other companies, because most companies aren't doing the sort of things that you all are doing inside of Airbnb.You've got a responsibility. I said, I don't have the time. And she said, I will get you a major publishing deal, and I'll get you a writer to write it if you'll do this. So I'm like, sure, honey, you get me a major publishing deal, and you get me a writer, and I'll do the book.
Well, that was my mistake, because, of course, two months later, we had two major publishers both competing for the book, and we had a writer to do it. And that led to an 18-month process, really, where I gave the writer every Monday night for 18 months, and we wrote the book together. And by the time it was done, I realized that, as usual, my wife was right. It was an important book to write and one that I had really been gratified to get the response from a lot of companies who people have read it and said, wow, a lot of this makes sense. We should be doing this. It's not only the right thing to do. It not only feels right, but it's actually going to make our business better.
And so that's been a real joy, I think, in being an author. The book's called Intentional Integrity and it’s available at fine bookstores everywhere. And I hope folks read it and get something out of it. So many of the listeners today are working in in-house legal, many at tech companies, but others being in corporate departments with the legal background and often when you are the person within the legal team, either as the general counsel, head of legal, you're sitting with the responsibility when it comes to ethical behavior, when it comes to building trust in the business. And it's often maybe an uphill battle to get it on the agenda, get people to buy in, because you are using resources. You might be limiting to sales teams. You might be putting constraints on the business.
So if our listeners are sitting out there and thinking, hmm, I'm doing okay, but I'm not really getting the impact that I was looking for. What should they be looking at? Well, the first thing that has to start with is you've got to get buy in from the top of the company. I'd love to tell you if you're sitting in a corporate legal department that you can have a big impact if the CEO doesn't care.
In reality, the leaders are, I call leaders the thermostat of a company, not the thermometer. A thermometer takes the temperature of a room. A thermostat sets it. And by their words and their actions, leaders create the environment, the temperature where everyone in the company operates. And so if a leader cares about doing the right thing, all things are possible.
So what I found was no one was talking about integrity. And so it started for me just by having an honest conversation with the other leaders in the company about what was going on. Look, every time you go online, there's another leader at a company who's found guilty of some egregious behavior and a company is coming apart. We've seen the problems at Uber. We've seen them at Facebook, WeWork, Google, Theranos, over and over again. And when you go in with those examples, it gets people's attention. And then when you talk about how with a little bit of effort you can protect the brand and help build the business, that's when you start to get buy-in. And we had those sort of open, honest conversations on the executive team at Airbnb and had buy-in. And then once you have buy-in, it's a matter really, I think, of getting employees engaged.
I'll give you an example of one thing from the book, one way to get employees engaged. It doesn't have to cost. It doesn't cost a lot of money. I didn't have a big integrity budget. But one thing we decided was this was hard for me to accept, Stine, but people don't like to come talk to lawyers. It's hard, right? We're a little scary, I guess. People are reluctant to go into the legal department and tell legal something. They don't want to be a whistleblower. It's kind of scary.
If you want to be a successful, high-integrity company, you've got to have a culture where people aren't afraid to speak up if they've got an issue. So what I did was I decided that, look, legal doesn't have to own integrity exclusively. It is, I think, our responsibility to promote it and create a culture within the company. But, look, there are a lot of people inside the company that can play a big role here. So what we did was we created an ethics program where we had ethics advisors. And what we did is we picked somebody on each team inside the company and each office, someone who was senior enough to have good judgment but not so senior that they're scary. And we brought them into headquarters, and we did three days of training on our code of ethics.
We talked about common ethical questions, common issues that come up, what the biggest risks were to the brand of problems. And then we sent them back to their day job. And we told everyone in their team and their office, you've got an ethics advisor on your team. Here's the person's name. You know them. If you've got a problem or if you've just got a question, you don't understand whether something is proper or not, you want to make sure you're doing the right thing. You can always go to HR. You can always go to legal. You can go to the hotline, right? Or you can ask the ethics advisor on your team. And what we learned was if people have a choice, where are they most likely to go if given those sorts of choices?
What we learned was that people are far more likely to go to their ethics advisor, somebody they know, somebody on the team.There's no going to legal or HR.
Stine: Someone they trust.
Rob: Exactly. So we would get over 100 inquiries a quarter to ethics advisors, which by far outnumbered the inquiries that were coming in through any other channel. And I think it really taught us.The ethics advisors actually took the responsibility seriously and loved it because I think it helped their brand to be thought of as someone who had high integrity that was responsible. They became our eyes and ears.They were in the meetings where I couldn't be, since I can’t be in all the meetings, right? But they're in the meetings. And they're the ones that would see things that I wouldn't see and understand issues that I wouldn't understand.
I think by having this network of ethics advisors, we became, I think, known within the company as people that care. This is something that the entire company cares about. It's part of our culture. And the group would have a group chat when questions would come in that the ethics advisor wasn't sure of the answer. They would come back to the group. We would talk about it. We'd listen to each other. We made sure that the group was diverse so we got input from different backgrounds and cultures and the like. And then we'd make the decision. But I think it ensured that the whole company was engaged in this exercise and moved the culture.
I also guess this has a lot to do with change management. Because if you're coming in and you're building a trust program and you're getting ethical advisors within the business, you're changing a lot.
Rob: The first thing that we did was we started talking about integrity with new employees. Because the best of best time to get somebody, right when they walk in the door so you create a clear understanding with all the new people that this is the way we operate the company. For example, I would do an integrity talk to all new employees. One of the things I would talk about, for example, was sexual harassment. Let's take sexual harassment as just a good example. In a lot of companies, nobody really talks about it.You have to watch a video for an hour that says how bad it is and gives you a hotline to report it. I would actually go live to the new employee hiring class.
Every hiring class every week I would go in and talk about it. And one of the things I would talk about would be sexual harassment. And I made it clear in not legal terms, but in very simple terms, that it's wrong and that that's not the way that we operate the company. Made it clear that no member of the executive team, all the executive team agreed they would have no romantic relationship with any employee in the company at all, simply to avoid any appearance issues. And that we wouldn't put up with it. And I encourage people to use any avenue available, but if they didn't feel comfortable with HR or an ethics advisor or a hotline, they could come to me personally because I wasn't going to put up with it.
That led to an example. One day after I did one of the talks, a woman came up to me and she was in tears. And I said, oh, my goodness. No, what did I say? What did I do? And she looked at me and said, Rob, I just came from another big tech company in Silicon Valley. My boss kept propositioning me and wouldn't let it go. And she said I couldn't report it because I knew they wouldn't do anything. She said I had to quit my job. She said you have no idea what it means, my first week at my new company, to have an executive come in and to talk openly and directly about this and how that sort of behavior would not be tolerated. She said because I know if I have a problem like that at Airbnb, she said I'll come to you.
I think it really starts by speaking openly and directly as a leader about some of these issues and how you're going to operate because people take their cue from the leader. Again, the leader is the thermostat. They're setting that tone. So if the leader is speaking directly about it, plainly, authentically about how we are going to operate as a company, that makes it easier for the entire company to change in that direction because if a leader speaks that way, people take it seriously.
Just by way of example, there's Ben Horowitz, a famous venture capitalist CEO. He told me the story of how when he was a CEO, every quarter he would sit down with his CFO. And they would sit down with the numbers printed out in front of them. And Ben would always look at the CFO in this meeting and say, anything in these numbers that makes you uncomfortable? Anything in these numbers that's misleading? Anything in here that you were pressured to put in? Because Ben would then look at the CFO and say, we might miss a number. Our stock price might go down. But we're not going to lie. We're not going to cheat. And we're not going to go to jail.
A leader talks so simply and with authenticity about doing the right thing. It changes everything inside of a company. But you got to have that from a leader. So it's about the tone from the top. It is absolutely about leadership, openly talking about it. Not a fancy poster on the wall or a beautifully written paragraph in the Code of Ethics. It's about leaders actually taking a few minutes, a few minutes, at a meeting and the like to talk about doing the right thing. And it changes everything.
Stine: So you mentioned it yourself, what's been going on with Uber, for example, where you're also seeing top management all of a sudden personally being liable for behavior. So I guess that also has an impact and gives both risks but also opportunities for the community out there to really maybe push an agenda to move that ethical behavior.
Rob: Well, sure. The case I think you're referring to is the chief information security officer.
It was also, I think, the CEO of Uber, an opportunity for the CEO, the new CEO of Uber, to distance, to try at least to distance himself from the old management at Uber and to try to send a message that, look, that's the way things were done in the past. That's not the sort of thing that we are going to do now. So, yeah, I think this is all part of this new expectation, a set of expectations that's put on business and leaders. The stakes are higher. It's harder to be a leader in business today than it was 20 years ago because 20 years ago you give great financial results, you're a great leader.
Today it's not enough to deliver great financial results. You've got to deliver great financial results. You've got to do it with integrity. And you've got to do it by treating all stakeholders well, not just the shareholders.
Sure, well, the ethical revolution is the new world where employees and customers and governments have a much higher set of expectations on companies to do the right thing. So this is a two-edged sword, right? This wave can destroy a brand and destroy a career if you don't understand how the obligations have changed. However, if you get it, if you understand that this new way of the world is coming, it can actually help build your brand because employees want to be part of a company that has values aligned with their own. Customers want to support businesses that have values aligned with their own.
So in the old days, I think people used to think that all this do-good stuff is fine, but we're here to do business. And I think what we're learning is the best way to do good business is to blend in doing good as part of your business culture
I think there is so much going on at the moment. One thing is Twitter, but also with Facebook or Meta, as they're called, with Google and previously having a slogan called, well, they're doing things for good, and that's not really what they're seen as doing anymore. So how do you see that whole kind of industry going?
Rob: Well, I think social media has changed the world. It connected us, and there's a beauty in being able to be connected with others around the world, but there's a dark side to it. One dark side is it feels sometimes like we're all sitting behind a desk alone in our homes, and we're not actually connecting with other human beings in a real authentic way. And I think that's troubling.
Another troubling aspect of social media is that the loudest, most aggressive, most extreme voices have a tendency to dominate. And that, I think, is bad for the world, frankly. And that's why I'm troubled with the direction that Twitter's going, because I think social media needs to have a strong hand to ensure that its platform isn't abused by hate speech, misinformation and the like.
Of course, that's a great responsibility, because who decides what's hateful? Who decides what is information versus misinformation? And this is something where I give Elon Musk credit, the idea of a committee, some sort of an independent committee that can help here, I do think would have a lot of credibility. It's in this world where integrity can get grey, different perspectives on an issue I think are really important. What has integrity may depend upon your background, your culture, your religion, how you were raised and the like. One person's view of something might not really fully reflect a broader constituency.
I think understanding the responsibility that comes with the role of moderating a platform is really important. But I think moderating the platform is critical if you're going to prevent it, I think, from becoming what Elon Musk described as a free speech hellscape. But if you also look at what has been going on for, let's say, the last five years, we've only gotten more and more regulation.
And my own personal belief is simply due to the fact that the platforms haven't been taking their responsibilities maybe as seriously as one could hope. Claiming that, well, freedom of speech is important and therefore we will not go in and moderate, we will not go in and limit the users and take responsibility. So using that kind of like get out of jail free card, whereas now that is now being tightened and tightened and tightened even more. So if you're sitting as a general counsel at many of these tech companies, I can understand if you're starting to get grey hairs because it is tricky.
Rob: Yeah, it is tricky. I do think that a number of the large companies, well, take YouTube, for example. I know that YouTube spends an enormous sum of money on trust and safety, moderating their platform. And they're not alone. Facebook, I've been critical of Facebook. I think Facebook has moved too slowly in this area, but they're coming around and doing it as well. Yeah, my advice is, as a general counsel, it's your job to look around corners. And it's hard to look around corners. But I think recognizing the movement of the world.
But again, the movement of the world is there are no secrets anymore. Transparency is incredibly valuable. And if something is on your platform or if you are doing business with something or somebody, it reflects on you. And it's not good enough to simply throw up your hands and say, well, it's free speech. I'm not really responsible. I didn't say it because you're promoting it. It's on your platform.
Take a company like Cloudflare that has been under criticism for who it has done business with. So I think if you're looking around the corner, as a general counsel, you have to understand who you do business with is just as important as how you do business and that there are no secrets in today's world. So assume everything's going to come out, because if you try to keep it a secret, some employee is going to copy it or write a blog post about it. If you try to distance yourself from a customer, it probably won't work. You have to take responsibility for the business that you have established and falling behind and ignoring that responsibility until the pressure builds and government jumps in.The public starts speaking up about it. Well, then it's too late.
The best thing to do in my mind is to get ahead of those mega trends, really take a little greater responsibility. Look around the corners of the kinds of problems that you might have so that your business can actually benefit from that. And you'll gain the respect of employees, customers and government, and it will be wind at your back.
I remember when I first started talking to Brian about it at Airbnb and we started talking about the issue. And my first thought was, well, this is the world really changing. Somebody needs to do something about this. That was really my first thought. And then my second thought is, wow, I wonder who that somebody could be. And that's when I realized if there's not an obvious answer at your company, it's probably you, because you have to recognize that as a legal leader, if you don't do it, you're the one that's going to clean it up.
So take ownership of it and take ownership of it in a positive, sort of an upbeat way. Recognize the important role that you need to play in driving integrity into the culture of the company. It's great for your personal brand, but it's also, I think, critical for your business.
Stine: And on that note, thank you so much, Robert. It was, in all honesty, an amazing conversation. We loved having you. And I am inspired. So thank you.
Rob: Thanks for having me.
Thank you so much for listening to Inspiring Legal. Remember to subscribe and if you want more information, you can always go to openli.com/community.
