A Betrayal of Honor

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Hewlett-Packard has always been at the top of any short list of high-tech companies with a strong sense of direction and purpose on the issue of privacy.

Where many companies have avoided wading into legislative and policy battles, and others have compromised their credibility by adopting whatever anti-consumer privacy position is promulgated by the Direct Marketing Association and other industry trade groups, HP has taken a different path.

One of the first major companies to hire a Privacy Officer and to give her a prominent pulpit from which to preach, HP has taken a strong stand in favor of sound privacy practices, and provided industry leadership to drive other companies towards responsible practices.

Right up until their Board of Directors chairwoman started spying on people, that is.

It has been reported in recent weeks that HP’s chairwoman, Patricia Dunn, used ethically questionable – and possibly illegal – methods to obtain copies of the telephone records of her fellow board members and journalists who covered the company.

Dunn claims that she was simply trying to ferret out the source of leaks about internal company matters in the wake of recent corporate upheavals at one of Silicon Valley’s oldest and most respected companies.

In an effort to track down the leakers, Dunn apparently hired the well-known Silicon Valley law firm, Wilson Sonsini Goodrich & Rosati, to snoop into the private affairs of her fellow board members.

The investigators allegedly used a well-known tactic, called “pretexting,” to trick telephone company personnel into turning over the private phone records of the investigation’s subjects. Pretexting is a favorite tactic of stalkers, identity thieves, and other fraudsters.

It’s also one of many privacy-invading tactics that are the subject of several proposed pieces of federal legislation – all of which appears hopelessly stalled in Congress, as Republican leaders express concerns that it could impose undue burdens on phone companies.

Who knew it was such a burden to not assist in violating someone’s privacy?

Meanwhile back in “Sillycon” Valley, the reverberations from the HP privacy debacle are being sharply felt. Chairwoman Dunn is being tossed out on her keister, along with another board member who, it was discovered through the fraudulently obtained phone records, to have been a little too chummy with a newspaper reporter.

Another board member, the venerable Thomas Perkins of the legendary venture capital firm Kleiner Perkins, resigned in disgust. Indeed, it was the publication of his complaint letter that first alerted the world to Dunn’s shenanigans.

What long-term effects will HP’s privacy problems have?

First and foremost, it has tarnished – perhaps permanently – HP’s efforts to position itself as a champion of sound privacy practices. The speed with which Ms. Dunn is being ejected from the building, and whatever ramifications will be visited upon those who facilitated this mess may help to close the credibility gaps. But for years to come, HP will be a privacy punch-line.

On a deeper level, the HP situation shows the depths to which personal integrity and honor have slipped here in the cradle of high-tech.

In the circles of power – board rooms, venture capitalist offices, and sometimes the back patio at Il Fornaio Restaurant in Palo Alto – some of the biggest deals are still made on the basis of someone’s honor.

Of course there is still a billion square feet of lawyers’ desks up and down Highway 101, producing enough legal agreements on a daily basis to wallpaper the Great Wall of China. But before the lawyers paper it, the deal has to be done by people who trust each other.

The denizens of Silicon Valley aren’t a naïve bunch. To borrow a favorite phrase about politics from former Chicago Mayor Harold Washington, those who do business here know that high-tech “ain’t beanbag.”

Especially in these somewhat leaner and meaner times in the Valley, it’s the hard-nosed who have survived and thrived in this environment, and many of them owe their success to a tough, and sometimes ruthless, competitive spirit.

Along with that toughness comes the need for a thick skin. Indeed, the oldest and wisest in the Valley have seen it all, and have such thick skins to prove it that they can shrug off circumstances and situations that would stun a bull elephant.

So what is it about the HP board snooping that struck a nerve?

While many can succeed here through the sheer force of will, deep down everyone who does business in the Valley knows that those who make it in the long run have a consistent common trait: a deep commitment to personal integrity.

Even in the midst of the most cut-throat high tech and high finance deals, very little works if you can’t trust someone’s word. And while a sleazebag might get one deal done, it doesn’t take long for someone to build a reputation that will cause doors to be slammed in their face all up and down Sand Hill Road.

Moreover, when you get into the rarified air of corporate board rooms and executive suites, there’s still a sense that it’s still an “old boy’s club” of sorts where a certain level of decorum is expected.

Sure, it’s a much more multicultural and progressive club than in some other industries. But there’s still a simple, if sometimes quaint, sense of right and wrong that guides the men and women who inhabit those circles.

In that world, talking to reporters about the inner workings of the company is by no means acceptable and could get you thrown off the Christmas Decorations Committee.

But snooping into your fellow club member’s private affairs? That is so off the charts that your kid may be blackballed from the country day school!

It’s hard to say what long-term impact HP’s collective embarrassment will have, either on HP or on Silicon Valley as a whole.

My guess is: probably very little.

In my experience, there will always be executives whose propensity for sniveling pettiness will drive them to do stupid things.

Much as I feel the death penalty isn’t much of a deterrent to a crazed homicidal maniac, I doubt that even the most painful corporate scandal will deter the truly stupid from completing their self-appointed rounds.

In the end, it’s just one sign of lost innocence, one more layer of “shiny” that’s been rubbed off my beloved Silicon Valley.

Now, please pardon me while I drown my sorrows by shopping for a new Maserati.

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