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Running An Internet Company vs. Running For President
I remember an incident back in 1988 when Mike Dukakis was running for President against the senior George Bush.
There was a debate and a question was asked about how he'd feel about the death penalty if his wife was brutally raped and murdered. As described in Wikipedia, it went down like this:
The issue of capital punishment came up in the October 13, 1988 debate between the two presidential nominees. Bernard Shaw, the moderator of the debate, asked Dukakis, "Governor, if Kitty Dukakis [his wife] were raped and murdered, would you favor an irrevocable death penalty for the killer?" Dukakis replied coolly, "No, I don't, and I think you know that I've opposed the death penalty during all of my life," and explained his stance.
It was the end of Dukakis' chances at the Presidency as he showed no emotion and anger at the thought or the question. He came across as the cold bureaucrat his opponents had made him out to be.
Fast forward to last week. Terry Semel was being interviewed at the D Conference. I was in the audience. The subject was censorship in China and Yahoo!'s willingness to look the other way in order to do business there. Semel stated Yahoo!'s position that it was better to engage with China and push them at every opportunity to become more open than to leave the country entirely. It was a good position, in my opinion, and he made it well.
But then someone from the audience got up and asked a question. The question was what would Yahoo!'s position be if it was the Nazi Germany and Hitler instead of China. Semel said something to the effect that "I wasn't even alive then, I don't honestly know what we would do".
Wrong answer. As Joe at Techdirt explains, when Hitler the Nazis come up, the best thing to do is end the discussion. Semel was clearly annoyed with the question but he should have refused the answer it instead of saying anything. Because that was a "why do you beat your wife" kind of question and there is no good answer to it.
This brings me to a larger point. Running a technology company in the Internet age requires a lot more political skills than it used to. The Internet is way more than a technology and companies that participate in its commercial development are in the political space as much as the tech space.
So Terry and his colleagues had better get used to questions like this and get some help in answering them (or not answering them).
Comments (17) | Posted June 4, 2006 in Venture Capital and Technology
Comments
I think that it's less a question of being a technology or internet company these days then it is the size of Yahoo and the flow of information in today's day and age. People are going to also question Google because of their size and reach but I'm guessing that it won't be often asked of del.icio.us or flickr or you tube.....even though in many ways they could be extremely effective methods of spreading dissident information in a repressed society. Why aren't they going to be put on the spot, they are internet/technology companies after all....it's because, quite simply, they aren't as big as Yahoo or Google and don't make as easy of a target.
The same "type" of questioning was leveled on Nike re: the use of cheap and borderline slave labor in the Far East. A similiar question could be asked of Rupert Murdoch as he tries to bring BSkyB service across the face of the known world - how is he going to deal with local governments that don't like his programming. Both of these companies have the global brand and bulk to be interesting people to poke a finger at and ask these questions of.
So, long story long, I don't agree that it has anything to do with being an internet or technology company and has much more to do with the companies size and notoriety (wrong word but you know what I'm mean - right?).
r.
Posted by: rob | Jun 4, 2006 10:44:13 AM
I use Yahoo email, and recently paid for the upgrade so I could easily export my yahoo mail for use elsewhere (they charge to give you the ability to export--a terrible policy that dropped them far down my list as a loyal customer).
I'm thinking about leaving because of their China policy. I don't feel I can personally support that kind of complicity--they execute democracy advocates, imprison religious leaders, and enslave millions.
But my business uses Overture--Yahoo's search marketing. It's an important source of leads, and we spend a few grand a month on it. Google is more important to us, but yahoo is still not a bad source of leads. The problem is we pay them. Which means my company--a socially responsible business--is supporting Yahoo's China policies.
Tough choice for a startup.
Posted by: Charlie Crystle | Jun 4, 2006 11:24:37 AM
Hey Fred -- I was in the audience too and I agree -- you can't imagine a worse response to this question. This seems like a variant of "Reductio Ad Hitlerum" -- http://en.wikipedia.org/wiki/Reductio_ad_Hitlerum -- and a wise and politically astute CEO would have rightly pointed out the vast differences between China today and the abhorrent Nazi past and left it at that.
Posted by: marc | Jun 4, 2006 2:29:01 PM
Well, finally a political opinion with which I agree.
However, I don't think the moral of your anecdote applies just to internet/technology companies. I think all CEOs need to (1) anticipate these types of questions and (2) be able to respond appropriately.
China's government doesn;'t just affect internet companies; they're only the most visible player in the human rights debate because of the primacy of communications in their business model. All companies that operate in China need to heed the Chinese government's dictates, and all companies should be aware of the extent to which their ability to communicate with employees, customers, and shareholders is constrained, to some extent, by the Chinese authorities.
Posted by: Dave | Jun 4, 2006 3:21:05 PM
Rafat Ali:
"Chairman and CEO Terry Semel was hammered for Yahoo’s policy at the D4 conference this week. You can listen to his comments and the full line of questioning in this audio recording I made for notes…"
http://www.paidcontent.org/uk-journalists-union-calls-for-yahoo-boycott-over-china-actions-our-disclosures
Posted by: Dimitar Vesselinov | Jun 4, 2006 4:17:05 PM
No, Fred, he damned well should have answered it. This was not an effort to play the Hitler card. This was an effort to find some context in which Semel would finally address the ethical issues he has been ducking in regards to Yahoo's behavior in China.
What are his limits? That was the question they were trying to get to. And clearly he still does not have an answer, though he has been asked essentially this question innumerable times (I heard him flub it less spectacularly only the week before at a New Yorker event and last year at Web 2.0). He keeps repeating the company line (which you report here) and then runs on empty.
So pick another example: Would Yahoo have done business in apartheid South Africa? That's a legitmate question, I'd say. Don't like historical hypotheticals? Fine. Would Yahoo do business in Saudi Arabia and allow women to drive the mouse and protect the identity of dissidents? Would it hand over the IP and identity of a blogger in Iran, where bloggers also get arrested for their speech?
Yahoo has choices. They can say: Yes, we'll do business anywhere, business for business' sake, which is what I hear Semel saying when he speaks as he does. Or he could refuse to do business in countries under threat from dictators. Or he could at least put up a fight when the dictators dictate.
But this is by no means just a political question. And it is not even just an ethical and moral question -- though it is, Lord knows, that. It is very much a business question. For this shows the character and soul of Yahoo. And people will start deserting it if they do not trust it and do not like it and what it stands for (aka, its brand). I find boycotts troubling but I'll still note that the National Union of Journalists has now called for one against Yahoo because of its policy on protecting free speech. That is a matter of business.
In this country, we're screaming about net neutrality and trying to find ways to stop or boycott restrictive phone companies. That, unfortunately, looks like such trivial whining compared with the restrictions put on Yahoo users in China. They can find themselves in a Chinese prison for 10 years just for speaking.
We can judge the company that abets that crime accordingly. This is not just an issue of corporate responsibility -- animal testing and all that. When we put our communications in the hands of a company, we put trust in that company. If we cannot trust that company, then we should not work with it. That is about business.
Semel does not have good and politic rhetoric because he does not have a good and convincing answer about Yahoo's policy and moral responsibility to its users and to the principles of free speech and a free internet.
I signed up in support of Amnesty International's pledge of internet freedom at Irrepressible.info. So perhaps that's the question the next person should ask Semel; I'd be happy to. Will he agree to this:
"I believe the Internet should be a force for political freedom, not repression. People have the right to seek and receive information and to express their peaceful beliefs online without fear or interference.
I call on governments to stop the unwarranted restriction of freedom of expression on the Internet – and on companies to stop helping them do it."
That's a fair question, eh? I wouldn't trivialize the question asked of Semel. I'd see the question behind it, which remains unanswered.
Posted by: Jeff Jarvis | Jun 4, 2006 4:33:05 PM
Jeff is right on the money on this one. I wrote about this last week and feel strongly that on both the China question and the Hitler question, Semel should have stepped up to the plate. What he basically said on China was "we don't take positions on political issues; we put our shareholders' profits ahead of ethical or political debates." I can live with that to a degree. As an investor, I'm not in favor of companies pushing the political positions of management, particularly when they don't apply to business issues. That said, when the audience pushed Semel to define exactly to what degree his company takes its position, he punted. Not great.
Posted by: Tim Peter | Jun 4, 2006 6:01:34 PM
Fred, A timely topic on the 17th anniversary of the Tiananmen Massacre of June 4th 1989. A good reminder of what the PRC government (and any government that is not accountable to the people it governs) is capable of....
Posted by: John McCarthy | Jun 4, 2006 7:30:48 PM
Wrong answer.
Agreed.
As Joe at Techdirt explains, when Hitler the Nazis come up, the best thing to do is end the discussion.
Politically, for your company - maybe - yes. But let's not let 'right and wrong' enter the discussion - lest we forget what drives us all - money and the undying fervor to acquire more of it.
Semel was clearly annoyed with the question but he should have refused the answer it instead of saying anything. Because that was a "why do you beat your wife" kind of question and there is no good answer to it.
I'm not sure how beating your husband has anything to do with this. It's not a leading question - it's a very fair question. How would Yahoo act if dealing with a country that was exterminating millions of humans? China is only jailing and exterminating tens/hundreds/thousands of humans - so far as we know - so why is this an unfair question for Yahoo to answer? There is no 'husband-beating' in this question at all - it's a logical extension to an existing, real life, actual situation. If faced with the Nazis, would Yahoo act like IBM and help in the extermination process, or would they somehow not act like a corporation?
I'm really a bit surprised to hear this kind of sentiment expressed for a CEO-type having to face, you know, tough questions. It reminds me of the Amy Goodman interview of Bill Clinton, when he was finishing his 2nd term as 'leader of the free world', and he and his peeps were crying about getting stuck on the phone with Goodman after they'd try to use her for whatever they thought she was worth. In her own defense, Goodman said, "I'm sure the leader of the free world could decide when he wanted to get off the phone" or something to that effect. You've never heard of Amy Goodman b/c she wasn't a media big-shot - she was an independent radio journalist and Clinton had called into her station unnannounced and then Clinton and his cowardly peeps were all bent that she didn't kneel before the Clenis. What type of subservient mindset must one have to believe that these incredibly powerful leaders deserve to be treated with kid gloves all the time, when their actions directly affect the lives of millions of people - sometimes in very profound and horrific ways?
Posted by: Peter | Jun 4, 2006 11:19:37 PM
I'm getting a bit tired of seeing comments about businesses just doing business. If businesses are going to enjoy the status of "person" and the constitutional rights, priveleges, and protections it guarantees, then they damn well better stand up for the princinples that same Constitution gives them, which enables those businesses in the first place.
Hear hear, Jeff and Peter.
Posted by: Charlie Crystle | Jun 4, 2006 11:26:43 PM
An interesting discussion. I am a New Zealander living in China and have seen many changes since first working in the Internet industry here back in 1997 - some not so good but overall many positives as over a 100 million are now able to use the Internet to better understand the outside world better.
You're right that there is censorship here, many websites get blocked and email access can occassionally be a real problem. However, for better or worst, not many young Chinese are interested in political issues and so they don't find the whole censorship issue particularly relevant. Change is happening and and will continue to happen, regardless of whether Yahoo chooses to do business here or not.
In many ways China is more liberal than the U.S. For example, whether or not you disagree with it, the fact is that in China you can freely surf porn and download pirate movies and music. While its technically illegal, in practice no one is going to stop you. Compare that with the U.S. and other western countries where the recording and movie industries have used their muscle to brand people who don't agree with them criminals and coerce ISPs into revealing customer info.
I just got back from a trip to the U.S., I like most Americans, many of my views are pro-American but I don't think that Americans always have the right to claim the moral high ground. Why is no one calling for a boycott of Israel because of what they do to the Palestinians? Would the U.S. treat Saudi Arabia differently if they didn't need their oil?
Posted by: David | Jun 5, 2006 2:45:42 AM
i find it distressing that people who cry out for civil liberties at home, do not do so for all human beings. how... self-centered? hypocritical? smug? the US justice department and some telcos are vilified here for (allegedly) mishandling phone number databases but the undeniably repressive totalitarian chinese regime is just a business partner. mr. semel spent far too much time smooching celebrity butts as agent-in-chief of warner brothers and i suspect you will his lipstick smeared all over the posteriors of the celebrity-like chinese regime leaders.
i am as much a capitalist and as eager to make a buck as anyone, i think, but i also want to feel like my life and work may have larger purposes and effects, specifically, to try to spread, even by the smallest increments, the incredible gifts of civil liberties and social mobility that have been given to my family and i to the vast majority of human beings on this planet who can not attain such precious gifts by themselves.
and if that means sacrifice, so be it. so bring on big gas taxes and massive government underwriting of aletrnative energy programs and yes, military programs, to try to wean us off foreign oil and starve to death the oil-drunk fascist regimes. and bring on the lost business opportunities that may come when we tell the chinese, we will not enable your murderous orwellian repression.
Posted by: steve | Jun 5, 2006 9:47:31 AM
When a VC invests in a company, what is the #1 thing they look at (along with competitive advantage and market size)? Management, right? Why is that? Because more than any product feature or market condition, companies are made up of people. Anyone who has ever run a business will tell you that the quality of your management team is the #1 factor in whether or not a business succeeds. So when a C-level executive is asked to comment on the company's policy regarding a dominant political atmosphere that directly impedes his manager's ability to communicate with one other, with their regionally-based employees, and with their Chinese customers, why is that question out of bounds? This seems to me to be at the center of how American Business's overseas expansion will take shape.
Posted by: Megan Cunningham | Jun 5, 2006 9:56:03 AM
Jeff is wrong, and I've decided to coin a new law to explain why.
"Anything that increases the amount of quality information available to citizens has a net positive impact on society."
Yahoo operates in an imperfect world, but they are, on balance, increasing the amount of quality information in China. For this reason, I would've advocated they do the same thing in apartheid S. Africa.
More here
Posted by: Derek Scruggs | Jun 5, 2006 10:00:13 PM
I'm glad the S.African parallel was raised. Here's an insider's view ...
First, this is a difficult issue and it cuts to the core of the sanctions debate; it's hardly peculiar to technology.
I grew up in South Africa under the apartheid regime where we lived under the harshest global economic sanctions any country has ever incurred while not at war with the west. If I learned one thing about sanctions, it's that they DONT WORK; if anything, they make their "victims" stronger.
During sanctions, South African businesses built a substitute for every good and service that we were "deprived of". Local companies diversified and thrived under the lack of global competition (much of this false brand recognition persists today, 10 years on).
Sanctions actually put money into the pockets of the conservative old guard in S.A. who already had a strangle-hold on the country's economy. No-one complained about not being able to drive a Ford ;-). Greed in the (N) West guaranteed ongoing demand for our diamands, platinum and gld so, income wasn't a problem. They say that "what doesn't kill you makes you stronger"; that was never more true than in the case of "economic sanctions".
China has the added security of earth's largest workforce. They own the most productivity & (soon) consumption on the planet. S.Africa's population was < 35M during sanctions. China's billion-plus consumers could turn their back on the rest of the world and do just fine and "protect" communism permanently.
If yhoo or goog don't do china, the chinese will simply create & adopt substitutes and those portals would eclipse their US counterparts in under 10 years.
So, I'm convinced that we (yahoo, MS, goog, etc.) need to be in China. I'm also convinced that it's a commitment that comes with onerous & costly responsibility. Responsibility to invest $$$'s in creating change - to risk market share by putting forth unpopular messages of freedom - to invest $$$'s in the poorest members of society just because the government won't - and to use the local system & their deep pockets to legally challenge the rule of law wherever possible. Change comes from within; but no-one said that its agent has to.
We must go to China, get embedded and then free our new neighbors. We are powerless from a distance; whether it be the 2-day journey to Sanghai or even the short stretch from Key West to Havana.
Posted by: David G | Jun 5, 2006 11:10:25 PM
Both David G. and Jarvis are right. Jeff's position cannot be denied. Semel needs to, and should feel obligated to answer the question. Why? Because their product is communication and information, not farm equipment. Their product's use, if used in it's American fitness for purpose could land a Chinese citizen in jail. I think sweeping China's civil rights atrocities under the rug of capitalism is wrong (yes, jailing someone for looking something up on the internet is an atrocity).
I think David G., Derek, etc... provide good responses to the question, but here's the hypocrisy catch. Haliburton/Brown & Root have share holders too. I really fail to understand the heaps of shit slung their way from liberal capitalists. Is there a CEO reading this blog that wouldn’t take a call from the Whitehouse for lucrative work? Just asking?
In the end, giving the Chinese a sip from the cup of freely shared information will do more to inspire Chinese dissidents to demand more freedoms than putting a sanction in place as David G. accurately states. We’ve got third graders here in America hacking into the most secure networks of the world. I can only imagine that once the Chinese have Google and Yahoo!, they’ll find away to get access to uncensored information and are probably doing it right now.
Posted by: Tony Alva | Jun 6, 2006 10:43:10 AM
Derek, i agree with you conceptually, I suppose, but as a practical matter, "Anything that increases the amount of quality information available to citizens has a net positive impact on society" makes Dr. Goebbels the equivelent of Guttenberg?
Posted by: steve | Jun 6, 2006 5:59:17 PM
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