Is Harassment Okay If It’s Not Sexual?

Another day, another Silicon Valley start-up sex scandal. SoFi, the darling of American fintech, began with such promise as a start-up offering Ivy League graduates cheaper options for refinancing their student loans. In the process, they forced us all to consider the human tragedy that is an HBS grad paying 7% interest. SoFi has since raised over $2 billion and broadened into personal loans, wealth management, and mortgages. They have even set-up a hedge fund to buy their own loans – as sound a business strategy as ever I’ve heard. But, alas, just as SoFi was inching toward an IPO, they fell victim to the plague of Silicon Valley: middle-aged men with hands.

One would think that, in 2017, most managers would know that you probably shouldn’t send lewd texts to assistants, comment on a female job applicant’s breast size, or touch employees without their consent. But you’d be wrong. When asked about the accusations of unwanted touching, former SoFi CFO Nino Fanlo responded, “I would have said, ‘Geez, I’m sorry’ had those gestures been interpreted in that [sexual] way.” So problem solved. Clearly, any woman who received unsolicited shoulder rubs from Fanlo had no reason to feel uncomfortable: the man would have said “Geez.”

While the accusations against Fanlo have been damaging, as have employee reports of a “frat house” office culture, what has truly shaken the company is the ouster of CEO Mike Cagney following the release of details related to alleged sexual harassment. SoFi’s Board of Directors, which demanded Cagney’s resignation, had long known about the allegations against him. But Cagney had previously assured them that his behavior hadn’t been sexual. And the Board was satisfied with this oh-so-convincing explanation until details of the allegations were made public, suggesting that the Board has about as much ethical compunction as Cagney.

But what is more interesting than the story of yet another tech bro (or, in Cagney’s case, tech grandpa) abusing his power is the excuse that Cagney and Fanlo both used when confronted with accusations of workplace malfeasance: if their behavior wasn’t sexual, it wasn’t a problem.

Both continue to deny all allegations of sexual harassment (despite the mounting evidence), but they freely admit that they regularly screamed at employees, kicked trash cans, and threw telephones – behavior they consider the inevitable result of start-up stress. Now, if you saw a friend’s husband repeatedly scream at her or trash furniture in a fit of rage, you would probably consider calling the police. You probably wouldn’t consider it the inevitable result of daily stress. But somehow this type of behavior is not only tolerated in start-up culture; it’s celebrated. It’s just a sign of how much these men care.

Descriptions of working at SoFi make it sound like a nightmare. Not only were employees allegedly uncompensated for significant overtime, but they were also expected to willingly take part in a collective panic disorder. Cagney is quoted as having said of his employees, “if they’re not waking up in a cold sweat twice a week, they’re not working hard enough.” I imagine he left that detail out of his job postings.

When asked about the high stress, verbal abuse, and general hellishness, Cagney claimed that the only thing that mattered was the company’s mission to serve its customers. Let’s remember that this company isn’t eradicating a disease, increasing crop yields, or developing an innovative product. They are securitizing loans made to successful graduates. If they went out of business tomorrow, nothing would change, except that a Yale Law School graduate might have to refinance through CommonBond instead. I think we’d all survive.

What underlies many stories of start-up excess is the belief that broken telephones, harassed assistants, and panic-stricken 24-year-olds are all part of a “hard-charging,” results-driven culture. This is Stockholm syndrome as company policy. First, there is no evidence that abusing employees results in superior performance – and plenty of evidence that turnover and burnout can negatively affect company growth. Second, this argument should make one ask what this suffering is for? Saving millenials a few dollars here or a few minutes there?

Is anything likely to change at SoFi? I doubt it. Although Cagney has resigned, he will, like Travis Kalanick before him, probably remain a significant behind-the-scenes presence at his former company. While the new CEO might change the frat house environment, the company’s tolerance for alpha male excess is likely to persist as long as employees are taught to expect it. And while I wouldn’t be shocked if investors abandon SoFi, it will likely not be because of concerns about the company’s culture so much as concerns about the company’s tendency to lie about its capital levels and underwriting practices.

Although the Trimalchio-on-the-Bay story is currently garnering attention with its lurid details of bathroom hookups, this focus is likely to shift as soon as the next start-up founder behaves badly. And if SoFi is able to solve its funding issues, investors and the public will probably forgive and forget. So little is likely to change.

But there’s no need to worry. Because even though the cortisol levels of SoFi employees may remain high, Ivy League graduates’ interest rates are sure to remain low. And what could possibly be more important than that.

Leave a Reply