Startup Life/Opinion/

Why startups need to stop reacting to every news cycle

Nearly two-thirds of employees want their CEOs to voice opinions on political and societal issues, so what are startup founders to do? 

Zed Tarar
Zed Tarar

By Zed Tarar

With Russia’s war on Ukraine, inflation at a 30-year high in the UK and the US Supreme Court decision reversing 50 years of precedent on abortion rights, it may seem impossible, and even impractical, for companies to stay apolitical and avoid taking positions on controversial issues.

But considering that nearly two thirds of employees want their CEOs to voice opinions on political and societal issues, what are startup founders to do? 

Founders should tread carefully

Perhaps your executive team is considering issuing a statement on a political issue that your employees are passionate about. 

Ask yourself: is this a conversation we are equipped to enter? Do you have a firm grasp of the actors involved? What impact does taking a political position have on your business operations? 

While it might momentarily boost employee morale to take a position on a contentious issue — for example, refugee policies in Europe — founders need to consider whether their voice meaningfully changes the landscape and what operational consequences might follow. For example, are you alienating potential customers? 

As a founder you don’t need to react to every news cycle. When considering a political position, it should be on an issue that relates to your business.

Perhaps your fintech takes a stand on financial inclusion and wealth inequality but stays away from other political matters. Or maybe your alternative protein startup highlights the problems with industrial farming or the ethics of lab-grown meat.

In any case, startups need to have a roadmap in place before entering new territory and to keep politics from distracting employees from the company’s core mission. 

Ignore at your peril

For tech firms the era of “move fast and break things” is firmly behind us — especially in Europe. 

With increasing scrutiny from governments, regulators and civil society, startups need to have a well-designed policy to navigate complicated geopolitical issues. 

This means linking your core company values to real-world actions. You might say your startup empowers underrepresented groups by offering them access to credit — yet your hiring practices favour a few elite universities. Or perhaps you put “we stand with Ukraine” on your company blog while you try to replace your Ukrainian development team. This goes beyond mere hypocrisy — failing to extend your company values and brand identity to real issues has consequences on profitability and talent retention. 

Beyond the obvious dissonance between a startup’s values and its actions, founders should develop a written geopolitical risk policy. This has the benefit of keeping new hires on the same proverbial page and signalling maturity to investors. When drafting this policy, founders should, at a minimum, think through three factors: 

1. Have a plan to address potential regulatory scrutiny

Founders should be proactive and look for potential regulatory shifts before they happen. Having legal counsel is obvious: less obvious is understanding how certain internal practices might need to be altered.

Don’t get caught out by changing regulations: have a member of the founding team dedicated to understanding future regulatory actions and, crucially, have contingencies in place should the landscape shift.

2. Understand when to speak publicly

Having a written strategy on public statements that the founding team agrees on is key to avoiding time-consuming case-by-case discussions, or worse, thoughtless reactions. Founders should have clear guidelines on what types of issues the startup will discuss publicly.

It would make sense for a startup working on machine learning models to have a stand on AI safety and ethics, but the details of that stance are what matters. Conversely, establishing clear boundaries will save busy founding teams time — not every geopolitical issue will require a corporate stance, nor should it. This will keep cofounders and executive teams on the same page. 

3. Recruit advisers

No founding team can be expected to navigate fundraising, product-market fit, hiring, scaling and the myriad other priorities pulling them in opposite directions while also navigating political issues on their own. This is where having a set of advisers dedicated to geopolitical risk is key. Your board can help with many issues, as can other founders, but neither can replace informed practitioners. 

Founders should avoid advice from enthusiastic amateurs and seek out seasoned operators who have practical knowledge of international political issues. This is precisely what the largest tech companies have done, routinely employing former diplomats. High-risk ventures need even more help — blockchain startups should be extra cautious as they face increasing political headwinds. 

Zed Tarar is a career member of the US foreign service, currently serving in London. 

Disclaimer: While Zed Tarar is a career US diplomat, the views expressed here are his own and do not necessarily reflect those of the Department of State or the US government.

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