Is Ratan Tata wrong about startup ethics?

Photo credit: Jungle Ventures.

Ratan Tata is revered in India. As the chairman of Tata Group, he grew its revenue 40 times in 20 years, and did so ethically – a trait many consider rare in the country.

So, on his visit to Singapore, everyone naturally gave him a listening ear. He had a lot to say on the subject of ethics. As I recounted:

Arguably, staying ethical is relatively easier when you’re a massive group with 100 subsidiaries.

Founders asked Ratan: what happens when you’re in a startup which is surviving month-to-month, with no certainty of paying employees beyond a year?

And shouldn’t the survival of the company and feeding your employee’s families be the priority, even if it means knifing someone in the back, or paying bribes in Indonesia or Vietnam?

Ratan turned pensive. “I’m afraid I have to take a view that there’s no difference. Because it’s not a band that you cross, it’s a thread. You cross that line, and you’re on the other side.”

Ratan may have decades of experience running a massive business, but there’s one flaw in this equation: he’s never led a startup. He’s never had to survive on ramen while worrying whether his company might be around tomorrow.

When he took over Tata Group, it was already a sprawling conglomerate. If you’re as big as Tata, you can weather the cost of doing good. Yes you might lose some big deals, but you’ll stand at the end of the day.

It’s different when you’re a startup. Not paying a small bribe might mean missing out on that $500,000 deal which could mean the difference between life and death for your firm.

Indeed, when you’re clawing for survival, it’s bound to get bloody. Ethics play second fiddle to putting food on the table.

Enter the pirates

Photo credit: Joi Ito

Everyone’s doing it