Though it might be a bold statement to make, it seems that we are living in what some might consider an “age of dirty laundry.” The inclusion of the Internet into our daily lives has allowed for an overall transparency of things, especially when it comes to people living under the scrutiny of the public eye.
No industry is safe from this scrutiny, even the likes of the intelligent and “respectable” sorts working in Silicon Valley. This tale uncovers some of the sordid misdeeds by these brilliant, and allegedly troubled individuals and the attempts of the industry to glaze over them in lieu of higher profits.
The board of Silicon Valley-based lending company, Social Finance (SoFi), was meeting for a second time on the subject of its chief executive officer, Mike Cagney. They had some questions about alleged sexual misconduct on Cagney’s behalf. Apparently, he had engaged and persisted in engaging in a sexual relationship with an employee, even after he’d been warned.
They had given Cagney the benefit of the doubt of course. He had helped found the company in 2011. SoFi was designed as a means to refinance student loans online. It grew rapidly and eventually was worth upwards of $4 billion. Not bad for a startup. Still, a year into the company’s existence, the board heard some startling news.
Cagney’s personal behavior had apparently been sending some rather sexually explicit text messages to an executive assistant in his employ. Texts that they asserted were completely unwarranted. Separate from that incident, they also learned that Cagney was in a relationship with another woman, an employee in SoFi’s marketing department.
Despite the potential consequences, Cagney ended up acknowledging the relationship with the woman in the marketing department, though he made no mention of the other alleged accuser. Nevertheless, he promised the board he would not have any affairs with any employees again. It was a sort of “fidelity pledge.” Problem was, it didn’t really stick.
Despite his promise, Cagney’s behavior was still under severe scrutiny by the board. He had promised them that he would not engage in any sort of intimate behavior with anyone but his wife, who also happened to work at Social Finance. But they couldn’t simply take him at his word, not with the fledgling company’s reputation hanging in the balance.
As anticipated, Cagney eventually reversed himself. The board found ample evidence of the continued extramarital affair after the fact. There was more than enough contained in the form of emails, hotel receipts, and the manifests of private jet flights to show that he had continued the relationship. He’d even recommended his paramour for a job as the chief financial officer.
Cagney was convinced to exit the company and after his departure, they hired Anthony Noto to replace him as the new CEO. They also added two women to the board and instituted a revised ethics police to prohibit any sort of intimate relationships between supervisors and subordinates. It took SoFi some time to once again find its footing, but Cagney bounced right back.
Mere weeks after leaving Social Finance, Cagney began his campaign to pull some of his old employees at the firm into his newest venture. He met with at least two of them before SoFi began sending him to cease and desist notices. He did, but he didn’t stop trying to form his own new company.
Months after departing his old firm, Cagney began working on his new startup. He raised $41 million from others in capital and $17 million of that was lent to him by two venture capitalists who had been on SoFi’s company’s board. Within four months of his being let go by SoFi for sexual misconduct, he was already on his way to further fortune.
Moving Past It
The fact that these two investors, knowing full well what he had done and why he had been ousted, felt completely comfortable lending him millions for a new company is quite telling indeed. It is a stark illustration of the nature of the technology industry and its ability to overlook something as serious as sexual harassment allegations.
If you asked Cagney or any of his new investors about how he has changed since the allegations first arose, they would tell you that he has learned his lesson. He admits that it had been a mistake to lie to the board and to engage in a relationship with two subordinate employees.
All Employees Treated Fairly
Cagney has explained that he would make certain that he did not make the same mistakes at his new company. His goal, as he put it, is to create a workplace “where all employees are being heard and treated fairly period,” he explained. As for his former board members and new investors, they believe he’s learned his lesson.
Learned a Lesson
“There was a relatively long process of them understanding how I thought about it: ‘Did I really learn a lesson from SoFi? Was I really going to try to do things differently?’” he explained in an interview with The New York Times. Nevertheless, his newfound success even after such damning accusations still brings up several issues and further questions.
There are conflicting reports, though. Cagney has admitted to wrongdoing at some points but at others, he has disputed the workplace relationships. He also states that he resigned from the company on his own and can rejoin SoFi anytime he likes. As one of the company’s biggest shareholders, he is likely correct. Cagney isn’t the only culprit in Silicon Valley either…
There have been a number of Silicon Valley entrepreneurs and investors, besides Cagney, who have found themselves under scrutiny in the wake of the #MeToo movement. Regardless of their indiscretions though, these folks also seem to be rebounding from their brief foray as pariahs with astounding speed.
Years of Harassment
Justin Caldbeck, another venture capitalist, recently resurfaced after hiding out following some sexual harassment claims. Today, he gives public talks about the resurgence of Silicon Valley executives and the start-up ecosystem that is in place there. Investors and entrepreneurs are plenty and those who can make money are sought after; despite their indiscretions.
Steve Jurvetson is an investor who left his venture firm in the Fall of 2017 thanks to some allegations of inappropriate workplace misconduct. A year later and he is back in the spotlight as a member of a new investment fund. It seems that these situations, even if they are fairly recent, are something of a marginal factor when it comes to investing.
Nicole Sanchez, chief executive of a consulting firm in Berkeley, California explained, “The way the big boys do business is that nothing is ever personal.” It all comes down to who can make those executives the most money. “It doesn’t really matter who gets hurt,” Sanchez added.
No Clear Procedure
Thus far, there is no clear agreement in Silicon Valley as to how businesses should think about reinstating people who have engaged in overt sexual misconduct. Professor Joan C. Williams, who teaches at the University of California Hastings’ College of the Law, has explained that the complexities of each case and differing circumstances, each present their own factors.
Nevertheless, she believes that investing in Cagney’s new company despite being aware of his past misdeeds is taking a big risk. Ultimately though, as with most of the world today, it seems more about making money than observing social niceties and if that’s the case, then our society has a lot more to worry about than most of these executives care to notice.