Is it possible to be an ethical software company at scale?

I’ve been thinking a lot lately about how possible it is for a software company to have a global impact AND use ethical practices and I thought it might be a good topic for a discussion here.

Some of my thoughts:

  • Hypothesis: To have a big impact, and to compete with the existing big tech players, significant resources are required. Specifically, there needs to be sufficient funding/revenue to pay a staff, to do marketing, and to support the costs of the technology (servers, tooling, etc).

  • Hypothesis: Scaling and growth of existing big software-driven companies (not including those who primarily make physical goods) has relied on a basis of unethical practices, primarily collecting and monetizing user data. Without some of these tactics, growth is much more difficult because data collection enables more personalized experiences and sales practices.

  • Hypothesis: Ethical tech itself isn’t valued by most people to the extent that they will abandon unethical tech that is ‘free’ and personalized. They will not, for the most part, pay for a service they perceive to be free from other sources, even if those sources are treating them as the product.

  • Hypothesis: Network effects compound the issue of transitioning large numbers of people from unethical software providers to more healthy alternatives.

As you can see, these hypotheses are negative, so I am looking for holes to be poked in them!

Finally, one positive hypothesis to explore: There is a software business model that can “scale” to being able to help and impact a global population that also protects privacy, doesn’t rely on selling user data, and creates enough revenue to support both the costs of the company and investment in further growth.

Please share your thoughts!

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Hi Laure,

I hope this will be helpful for you.

Best,
Sergio

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Thank you Sergio! I am actively working on this problem (in the real world at work) and I appreciate your thoughts. They seem reasonable- what would be a great addition is examples of how this is being done elsewhere. Have any thoughts there?

I thought about illustrating real-world cases, but I haven’t experienced any yet myself. But it’s not difficult to find success cases on the Internet. I just don’t trust them. For example, Doist is a SaaS company that does massive marketing that conveys an image of an ethical and innovative software company. I’m not sure how much of it is true. Maybe you could try to interview some of the workers there.

If you need anything else or even if you want to discuss more this in a hangout, please send me a private message.

Take care

Depends how you define “ethical practices” and “scale” — and “company.” You seem to mean traditional for-profit corporations with a payroll and a goal of endlessly growing profits. Here you seem to assume the main ethical “pitfall” is exploiting and abusing the customer rather than the entire purpose of this type of rentier system.

But even if you set that all aside, it seems like just another way to ask if power doesn’t corrupt, and the more power the greater the corruption. What people want and will do is a whole 'nother question about cultures conditioned by authority and domination (power) expressed in hierarchy, particularly companies that abuse and exploit them.

I think there’s a very simple answer here, and we all know what it is. Otherwise there would be no question about possibility, there would be examples, models, and a culture of big, ethical companies in a world without a doomsday clock. Within the structures we have, predatory exploitation at scale is selected for “success” (whatever the external costs to people, the biosphere, etc.), and the idea that there’s some solution within those structures to a fundamentally different outcome is just a nice optimistic space to live in, to resist despair but also at the expense of actually dealing with the reality. IMO.

There are some realities that I feel have to be acknowledged. If we don’t confront the idea that scale matters and requires resources, we are likely to further inequities, where things like privacy and data control are sacrificed by those who don’t have access to alternatives to so-called free. The experiment by Kashmir Hill where she tried to avoid various big tech products is a great example of how inescapable these poor actors are, and the options shouldn’t be avoid the internet or be a subject to the poor practices of existing software companies. To have a viable alternative to big tech, there needs to be a path for a more ethical approach to prevail, not just ways for people with education and privilege to skirt some of the worst aspects.

I am working on this right now with my company

Hypothesis: To have a big impact, and to compete with the existing big tech players, significant resources are required. Specifically, there needs to be sufficient funding/revenue to pay a staff, to do marketing, and to support the costs of the technology (servers, tooling, etc).

I have bootstrapped my company til now, and in order to continue to launch and scale we will take investment. There is only so far you can get without investment. 1. a meaningful and desirable user experience, which leads to scaling, takes time, attention, experience and as a result money. 2. you need significant resources to surface your product through all the others because there is so much noise. Even if you make a superior product. That isn’t necessarily money, but time and attention. so you need people because one person cannot do it alone.

Hypothesis: Scaling and growth of existing big software-driven companies (not including those who primarily make physical goods) has relied on a basis of unethical practices, primarily collecting and monetizing user data. Without some of these tactics, growth is much more difficult because data collection enables more personalized experiences and sales practices.

I don’t believe data collection is bad. In fact, I believe that’s the primary usefulness of the internet. It’s what is done with that data that causes issues, and does it serve the people from whom it was taken? Tech companies with an ad-based business model would argue yes, by collecting user’s data we are able to serve “personalized ads” that we know will be relevant to you. I would argue that 1) this removes some of my agency by automating my interests and more importantly 2) redirects my attention away from choices I’ve made. This removal of agency and constant redirection of attention leads to a feeling of being controlled, lack of meaning, and depression. A subscription model removes that issue and data collected can be used to enhance things you have prioritized in your life.

Hypothesis: Ethical tech itself isn’t valued by most people to the extent that they will abandon unethical tech that is ‘free’ and personalized. They will not, for the most part, pay for a service they perceive to be free from other sources, even if those sources are treating them as the product.

I strongly believe they will abandon other sources if the value of the competing ethical source is greater than the value gained from a free source. trying to get people to use a paid source for ethical reasons is a losing battle, and will not scale. It’s like that with any movement that is “good” competing with something that is “worse” but more affordable or accessible. You will have a subset of people who make the ethical choice, and you can certainly make money doing that, but to scale, results from the ethical product have to be better to get people to switch. A great example is the Impossible burger, which has radically begun to change how people consume meat. It was only after it tasted just like meat - or even better than meat - that it started to scale (in burger king etc). Also setting up use of personal data vs not as a binary ethical/unethical argument I believe is incorrect. I want my doctors to have as much personal data as they need to give me the best medical advice.I just don’t want them to take that data and suggest hydroxychloroquine because I’ve expressed an interest in COVID cures, and they’re getting paid by the company that makes it to advertise it. This can be applied to other aspects of my life.

Hypothesis: Network effects compound the issue of transitioning large numbers of people from unethical software providers to more healthy alternatives.

Network effects affect any kind of transition whether ethical or unethical. Altavista -> Google, Myspace -> Facebook. My belief is that we’re reaching the limits of network effects because the more people you have in a space the less meaning it has. Facebook began as a clean, contained space for college students, with a clear value proposition of connecting with those students. Once everyone joined the value proposition became less clear and now many people feel a sense of meaninglessness while using it, calling it a time suck, feeling more lonely and depressed after using it. This is why we’re seeing a rise in smaller social networks catering to subsets of people. The question is how does one define scaling in this environment, and how far do you want to go?

Finally, one positive hypothesis to explore: There is a software business model that can “scale” to being able to help and impact a global population that also protects privacy, doesn’t rely on selling user data, and creates enough revenue to support both the costs of the company and investment in further growth.

That’s exactly what my business is working towards and has begun to do successfully. So it is possible!

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