Is Integrity Important to Business? Warren Buffett vs. Steve Jobs, Mark Zuckerberg vs. MySpace Analysis
One thing you often hear business gurus teaching is the importance of integrity. In order to succeed in business, you must honor your agreements. Your word is your bond. It seems to make sense – After all, business is all about trust. It’s about win / win arrangements between consumers and producers, between vendors and retailers, between businesses and other businesses.
But is it true? Is integrity really essential to business success, or is it a nice sounding platitude used by business gurus to sell more books?
Let’s look at some actual business case studies.
Warren Buffett – Integrity is Essential
Warren Buffett is arguably the world’s best investor. He built Berkshire Hathaway from the ground up, creating one of the world’s most valuable corporations. He was once the world’s wealthiest man before he pledged and gave away much of his wealth.
Upon reading “The Snowball,” Warren Buffett’s only authorized biography, or any other biographies about Buffet, you’ll find one common theme: Integrity, integrity, integrity.
Buffett got his initial investors by being totally honest with them. He never lied and never over promised. When he was a stock broker, he never tried to peddle a stock that he wouldn’t himself buy. After he was a fund manager, he would never try and trick someone into buying a stock for more than he thought it was worth.
Integrity is an integral part of Buffet’s image; and he would likely say it’s also an integral part of his success. People trust Buffet. People trust his word. People trust him to manage their money. Warren Buffett’s reputation is a prime example of how integrity can help build businesses.
Steve Jobs – The Theft of Wozniak’s Bonus
Steve Jobs is one example of the flip side of this argument. He’d frequently take credit for ideas that his employees came up with, without even acknowledging who came up with the idea. He denied stock options to several of his top lieutenants who were there in the company’s founding but didn’t have the right paperwork. He refused to acknowledge fatherhood and provide child support for his daughter for years.
One prime example of this comes from when Steve Jobs and Steve Wozniak were in the very early stages of their career. Steve Jobs had been contacted by Atari to design Breakout, a new single player version of Pong. Steve passed the gig to Wozniak, asking him to design it with as few chips as possible.
What Jobs neglected to tell Wozniak was that for every chip he saved, Jobs would get a bonus. Jobs pocketed this bonus without telling Wozniak, who wouldn’t find out for years.
There are many, many examples of Steve Jobs’ various lapses in integrity. And yet, there is absolutely no question: Steve Jobs was one of the most successful people in the history of American business.
Facebook vs. MySpace: Mark Zuckerberg vs. Chris DeWolfe & Intermix Media
For another clash of integrity values, let’s look at the two largest social networks in history: Facebook and MySpace.
Contrary to the image of Mark Zuckerberg portrayed in “The Social Network,” people close to Zuckerberg will attest that he’s absolutely one of the most trustworthy people in the world. He has a vision for Facebook that he pursues relentlessly, but everyday still asks himself: “Is this really the most important thing I could be doing in the world? Or could I have a bigger impact by selling Facebook and doing something else?” Today, he’s still running Facebook.
One prominent example that demonstrates Zuckerberg’s commitment to integrity is how he handled the Washington Post’s offer for an investment. Back when Facebook was still raising their initial rounds of venture capital, the Washington Post offered an investment. Zuckerberg said yes.
A few days later, another VC firm offered to invest in Facebook – At a $20 million valuation higher than the Washington Post’s. Someone who wasn’t committed to integrity would have just dropped the Washington Post and gone with the higher valuation. But Zuckerberg had already given his word.
The fact that he made a promise already gnawed on him for days, until he broke down crying in front of one of the VC partners in the bathroom at dinner. He just couldn’t bring himself to break his word.
Contrast this level of integrity to Chris DeWolfe and the MySpace and Intermix Media team. Intermix Media, which was the company that started MySpace, was heavily involved in many, many underhanded ways of making money online.
They placed adware on people’s computers without their knowledge. This adware would cause popup ads to appear, which sold either their own products or their advertisers’ products. They sold health supplements with dubious health claims and difficult to cancel monthly subscriptions. Tom, the infamous first friend of every MySpace user, ran a porn site.
Even MySpace itself was started as a knockoff of Friendster. It wasn’t an original idea, but a shot at making money.
When Intermix Media and MySpace were acquired by Newscorp, Intermix agreed to cancel half of their employees’ stock options in order to make the deal happen. Essentially they reneged on one of their most essential commitments to their staff.
The history of MySpace is littered with backstabbing, legal theft and immoral decisions all geared for one purpose: To make money.
There’s no doubt that Facebook is more successful than MySpace. However, a $600 million dollar exit isn’t too shabby. By most people’s standards, MySpace was a very successful business and their owners successfully liquidated that business just about at the peak. While it’s not Facebook, by most people’s standards it would still be considered a home run.
The Verdict: Is Integrity Important to Business?
My personal opinion is that integrity is not an essential element of making money. You can absolutely make money without integrity. One look at Wall Street will tell you that. The examples above have illustrated examples of both people who have an extreme commitment to integrity and those without. They can both succeed.
Personally, I think integrity is a matter of who you want to be and who you want to conduct business with.
If you want to invite people into your life who would stab you in the back for the chance at personal gain, then integrity isn’t all that important. If you don’t have integrity, you won’t attract people with integrity into your life or your company.
On the other hand, if you want people who will tell you the truth even when it’s not what you want to hear, people who’ll fight for you when you’re not looking and people who would honor their agreements with you even when it’s not in their best interests, then you have to be that kind of person too.
If making money is your only goal, then it certainly isn’t true that you have to have integrity to succeed. You don’t. However, if you’re like most entrepreneurs, then your business is going to consume a very large part of your life. Do you want to always be looking over your back? Do you want to be trusted? Do you want people you trust to be part of your life?