Leaving Las Vegas With Software Consulting Ethics Intact

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What would you do if you found out that a project you were working on was going to be used in an unethical or illegal manner?

This is the sort of question that K. Scott Allen asks via a hypothetical scenario he proposes. At least I hope it’s hypothetical. Scott, is there something you want to confess? ;)

While his situation is hypothetical, I think enough time has passed for me to tell you about a real situation I had the pleasure of dealing with atVelocIT. Some of the minor details have been changed to protect the guilty.

This story starts a couple of years ago in the primordial days of VelocIT. Like many bright-eyed start-ups, spirits were high, but cash flow was low. We were hurting for more clients.

So it seemed providence smiled on us when I received an email from a former coworker who was employed by a gaming company in Las Vegas.


Because of my background in online and mobile gaming, he was interested in hiring me, via VelocIT, to help build out the back-end server infrastructure for their upcoming multi-player mobile gaming platform.

His company flies Micah Dylan (our CEO) and me out to Las Vegas where we have some meetings to go over requirements during the day. In the evening, we head out for a few (ok many) drinks and dancing at a club. He eyes a woman he goes gaga for, but won’t approach because she’s “out of my league”.

I tell him that “league” is a frame of mind and nobody is out of his league unless he believes they are. I proceed to play wingman and approach her, strike up a conversation, then conveniently introduce her to “my friend” who happened to have conveniently just returned with our drinks.

It’s client engagement management in true Vegas fashion.

At this point, I’m feeling pretty good about my sales skills and feel I did a pretty bang up job in sealing the deal. We talk a week later and this guy is dating the girl from the bar! Sure enough, he wants to work with us, but there’s this small eensy weensy tiny little problem. His budget is a fraction of our estimate.

But he has a solution!

He wants to pay us $20,000 US to have a group of Eastern Europeans do the work. To clarify I call him back and ask,

So you want to pay us to manage the offshore team? We can do that.

He clarifies. He’ll pay us $40K and we’ll turn around and hire some Eastern Europeans through him for $20K.

Uh. What happens to the other $20K?

Oh, I pocket it for being an intermediary.


Micah and I start brainstorming scenarios in which this could possibly be legal. We debate and debate looking for ways that this situation might be kosher. Surely there must be some way to arrange this so it is legal. Perhaps we are misunderstanding him. Nothing legitimate comes to mind. We’re in real need of a client so we have a lot of motivation to see this in some sort of positive light.

Being too close to the situation, I call my friend (and our company lawyer) Walter to provide an objective outside opinion. After I explain the situation, he points out this is a classic example of a kickback and is in no way legal nor ethical. Not even close. No amount of convoluted reasoning will take the stink of this crap. We would be helping him to steal from his own company.

While we could really use the business, Micah and I conclude that we don’t want to start our company off on the wrong foot with an illegal or unethical dealing. In fact, even if it was legal, we wanted to run our company with a higher standard than just legal. Our business is a reflection of our values and we want it to be held to the highest of ethical standards. Sure, we struggled this time. But we’d never need to struggle again by following one simple ethical rule:

If it doesn’t pass the smell test, we pass.

VelocIT has stayed true to that direction ever since. I think it is a great way to run a business.

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8 responses

  1. Avatar for Karthik
    Karthik June 17th, 2007

    Ethics are a pretty important part of consulting. During my stint at Deloitte, I went through hours of mandatory Ethics Training just to make sure I was very clear on what to do when situations like this inevitably come up.
    For me, I think it boils down to whether you get a good feeling about the deal. You clearly came away from the first meeting with a bad feeling and had the good sense to contact your lawyer before proceeding further. That was a smart move, much better than just letting your feeling convince you without validating that you were right.

  2. Avatar for Christopher B. [christb@MSFT]
    Christopher B. [christb@MSFT] June 17th, 2007

    I've had a couple of situations with my young company as well. Not to this level though. Nevertheless, I am very concerned with operating my business with integrity, not just in letter of the law but in spirit as well.

  3. Avatar for Jacob
    Jacob June 17th, 2007

    I agree that you did the right thing, though I'd have taken it one better and notified the other company's management that their employee was attempting to steal from them. That extra step carries some very real risk with it because many are happy living in denial and exposing the creep will set off a stink bomb--some of which can spatter your way. Still, keeping the consequences of bad behavior small only serves to delay, not prevent, it happening again.

  4. Avatar for Chris
    Chris June 17th, 2007

    In 1998 I was a third party contractor developing a product for online recruiting. It was myself, the primary contractor and someone we agreed to hire to take care of the html grunt work. Based on our initial 5 month effort, for which we were paid $60K total, that company raised between $8M and $13M in venture capital (the reports vary, but they all fall within that range). They also agreed to pay us an additional $55K for additional programming / effort that we had put in over those 5 months. After their second venture capital fund raising event (1998 - the money was FLOWING), they "hired" one of their VC contributors - who was a high powered CTO for a Fortune 500 company, who had set up another company with the CEO of the company we were doing the development work for, as a partner. They then fired us, squelched on the $55K they agreed to pay us (actually they dared us to get lawyers because now they had MILLION$ to battle us with), and started channeling all the development through the newly formed company. Fast forward to 2000, the company ran through their $8M to $13M in financing (in "development" costs no doubt) and the company folds. I later (2001 or so) ran into a fella that worked for the company and he told me that the CEO had folded the company, but he was a $MILLIONAIRE$ and that he just bought a new mansion. His reputation was shot, but frankly, he was probably laughing all the way to the bank.
    It seems we've all had our run-ins. :)

  5. Avatar for Haacked
    Haacked June 17th, 2007

    @Jacob - I thought about it, but didn't want to take it that far. This person was someone who was sort of a coworker before (long story), so I felt a slight degree of loyalty in that respect.
    We simply told him we didn't feel comfortable with the job because it was effectively a kickback and didn't want to partake in any unethical dealings.
    We left it to him to take that message and hopefully make better decisions in the future.
    We found out later that he owed "an associate" a *lot* of money hence the urgency to do business this way. This only served to convince us even more we wanted to stay the hell out.

  6. Avatar for Scott Allen
    Scott Allen June 17th, 2007

    Phil: Purely a hypothetical question - I have nothing to confess :)

  7. Avatar for Jayson Knight
    Jayson Knight June 17th, 2007

    A little fear and loathing eh?

  8. Avatar for Jon Limjap
    Jon Limjap June 18th, 2007

    Let me rephrase your ethical rule:
    If it passes gas, we pass.
    Hehe :p