The Corruption in Silicon Valley


Lauren Bulanek, Op/Ed Editor


Silicon Valley (SV) is located in the southern San Francisco Bay Area of Northern California and is known as the center for high technology, innovation, and social media. Though Silicon Valley originally earned its name due to the silicon chip innovators and manufacturers in the area, over the past few decades the technological focus has shifted; out of the 143 tech billionaires around the world, half of them live in Silicon Valley according to a report from Wealth-X. The area is home to some of the world’s largest high-tech corporations, such as Apple Inc., AMD (Advanced Micro Designs), Google, NETFLIX, Facebook, and TESLA Motors, to name a few. A grand total of 39 businesses have their headquarters located in the valley. Silicon Valley is also home to thousands of startups, making it a competitive region for scientific development. The area even employs about a quarter of a million information technology workers, as of 2013. Due to the massive amount of businesses located in Silicon Valley, SV accounts for one-third of all the venture capital investments in the United States. The startup ecosystem has allowed Silicon Valley to grow massively since the 1970s. Silicon Valley has become one of the most well known technological hubs world wide, but at what costs?

It cannot be ignored that the businesses in Silicon Valley have worked for their success and wealth; however, the means by which this has been achieved hasn’t always been ethical. The private sector has repeatedly taken advantage of their investors and public needs, shrouding their work in secrets and non-discloser agreements (NDA). For example, Elizabeth Holmes, CEO of Theranos, raised more than 700 million dollars in capital from investors for her blood testing company. Holmes accomplished this impressive feat by using vague language and never clearly addressing her work. In an issued statement she said, “over time, we’ve been optimizing our clinical lab to bring up tests that are more commonly ordered, and in some cases move resources off the proprietary tests that are less commonly ordered to get to a point where the ordering patterns we are seeing can all be accommodated through our finger-stick technology.” Through the elementary use of diction, Holmes managed to gain investors by saying nothing notable. When people did question her for her vague language and secrecy, she could only say she was protecting trade secrets. Trade secrets are commonly used in business to gain an economic advantage over competitors or customers, so Holmes was able to conceal her work from the public. It has also been reported that the company went as far as keeping departments isolated to prevent employees from discussing projects with one another. However, when 700 million dollars are at risk, the investors should be entitled to transparency about what their money is being used for. When there were whistle blowers in the company, they were simply dismissed as disgruntled former employees, allowing Holmes to continue taking advantage of her investors. After years of slipping by undetected, the Securities and Exchange Commission (SEC) exposed Holmes to the public. They charged her with “elaborate, years-long fraud in which they exaggerated or made false statements about the company’s technology, business, and financial performance.” In those few moments, Holmes went from a 9 billion dollar Silicon Valley elite to a disgrace that used fraud as a trade secret. Despite the corruption demonstrated in Silicon Valley by Holmes, both the other companies in SV and investors moved on rapidly, blindly running towards the next scandal waiting to happen.

Mike Cagney, a chief executive, was outed by the board of Social Finance, an online lending company, due to sexual misconduct. The board’s investigation found that Cagney was romantically involved with an employee. He had previously told them that he was not involved in any workplace relationships. This isn’t even the first time Cagney has been caught committing sexual misconduct; years prior, Cagney was found having affairs with employees. After he was caught, he promised he would never do it again, so obviously the problem was fixed, at least for a couple of years. The idea that all a rich man has to do is apologize for his behavior and promise not to do it again is undeniably ignorant. All the “boys will be boys” mentality really does is let immature and unhealthy behavior slide because of hegemonic masculinity, a practice that legitimizes men’s dominant position in society and justifies the subordination of women, and other marginalized ways of being a man, has become a social norm. The action, or lack thereof, that the board took the first time Mike Cagney was caught committing sexual misconduct only seemed to convince Cagney that he could get away with his harmful behavior again and all he had to do was hide it better, not change it. By letting Cagney get away with only a slap on the wrist, the board allowed the toxic culture of gender-related discrimination and harassment to continue. Claims from former SoFi employees have described the atmosphere to be like a frat-house, full of inappropriate behavior towards women. It was claimed that female employees had even reported to their superiors that sexual harassment had been occurring, but it was simply dismissed.

The Me Too Movement helped make it more comfortable for women to speak out about Mike Cagney and the environment of Social Finance, but nothing happened until a man spoke up. Former Social Finance employee, Brandon Charles, filed a law suit claiming he had witnessed coworkers sexually harassing female employees and had been fired for reporting it. The company had claimed they did investigate Charles’s report, but found it had “no merit.” Later in the month, Charles updated his claim, implicating Cagney for his actions in creating a “toxic corporate culture.” Part of the updated claim reads, “certain male-dominated startups have developed an unchecked arrogance with a laser focus on growth and financial success while ignoring workplace regulations. Mr. Charles quickly became aware of the corporate culture fostered at SoFi by CEO Michael Cagney and other executives at SoFi. The culture of male bravado filters down from the leadership team at SoFi headquarters in San Francisco throughout the company, empowering other managers to engage in sexual conduct in the workplace. Not only is sexual harassment permitted, but employees who oppose it, such as Mr. Brandon Charles, are vilified.”

It wasn’t until all of this that the board finally outed Cagney for his sexual misconduct. It is clear that they used him as a scapegoat for the toxic environment they helped create by failing to take action against Cagney the first time they found out about his sexual misconduct. The board of Social Finance put their interests above the safety of their employees by only taking action when it was the best option for them. Despite the massive amount of proof Cagney that committed numerous acts of sexual misconduct, it didn’t hurt him. Months after Cagney left SoFi, two venture capitalists invested 17 million dollars into Cagney’s new startup. Recently, he has gained an additional 41 million dollars in investments towards his lending startup. Cagney’s ability to quickly recover despite being out for his actions of sexual harassment and assault demonstrates a terrifying principle rooted deep in Silicon Valley: if you are an elitist in Silicon Valley, it doesn’t matter what you do wrong. You will be able to simply get away with your actions and move on with your life, while leaving your victims scarred.

Silicon Valley is known for being a technological hub that produces high-tech innovation and scientific development. However, with the constant scandals of the elitists in Silicon Valley that manage to hurt those around them and get away with it, such as Jeff Bezos and Elon Musk, whom both have too many reported scandals to list, one must question the environment of Silicon Valley. Is being provided a new gadget to play with worth turning a blind eye to corruption and greed? At what point did societies wants allow us to ignore the basic needs of soon to be victims? What is the point of technological innovation and scientific development if our morals don’t improve as well?