How to start an ethical company: What moral integrity means for founders

The integrity of a business is the first thing I look at. I'm not alone with that — it's becoming increasingly important. In fact, research shows that 84% of consumers are willing to make personal sacrifices to purchase from ethical brands.

But I've noticed that the topic of ethics is often sequestered to the realm of big biz, with the exception of privacy issues which have recently gone mainstream. And I think it's crucial for us to have the conversation at every level, all the way down to the solopreneur and even the future entrepreneur. Big companies aren't changing. They're just [name a cause]-washing to help their bottom lines. But we can help where they fail. After all, it's a heck of a lot easier to avoid those slippery slopes when ethical practices are baked in from the get-go.

So I've been really digging into the topic lately, and I figured I'd save you all from corporate blowhards waxing poetic about the importance of this ethics document, that code of conduct, and any number of other ways to waste your time while patting yourself on the back.

Here's what I've found so far in relation to indie hackers, makers, startups, small businesses, and the rest of us. It barely scratches the surface, but I hope it helps.

What does moral integrity mean for founders?

So first off, what are we talking about here - how are we defining moral integrity? In short, it means consistently sticking to your principles, even when it's hard.

The word "integrity" itself basically means "whole". Like an integer in math is a whole number (rather than a fraction), integrity refers to something that is sound and complete. When a building has integrity, its foundation is sturdy, it has no weak spots and for this reason it is strong in the face of elemental stress.

In an individual, integrity means acting from a similar place of embodied wholeness. It means taking your principles and values with you, even into that all-important client meeting. It means maintaining your sense of wholeness and "uprightness" when things take unexpected turns.

One thing to note before I continue: In my mind, integrity is not one-size-fits-all. What is out of integrity for me is not necessarily going to be out of integrity for you. Sure, there are a few universal (or at least near-universal) values. But others are subjective, and integrity is about staying within our own values — not someone else's.

Getting started with ethical entrepreneurship

Here are a few steps that can help any early-stage company get started on the right foot.

  • Start by defining your core values. Bullet points are fine. This does not need to look pretty.
  • Hire according to those values.
  • Make sure everyone knows and owns those values.
  • Hold people accountable to those values.
  • Create a culture that welcomes dissent. I've seen this way too many times — if people are scared of losing their jobs (or something else of value), a toxic environment is created where people avoid questioning things that really oughta be questioned.
  • Be a leader and set an example. Raise concerns and discuss with your team. Show that you care about this stuff.
  • Be humble and be curious. You're going to get it wrong from time to time. Own it. Learn from it. And in so doing, be an example for the rest of the team.
  • Follow those who are doing it well. Get inspired.
  • Avoid conflicts of interest.
  • Ask yourself how each decision — big and small — will affect the world around you. And make sure that decision is within your values.
  • Review your progress. After a big decision, check in about its impact.

Major concerns in organizational ethics

Here are some specific areas that you may want to keep an eye on.

Unsustainable practices

Even companies without physical products need to consider their footprints.

Your footprint includes that of your suppliers, by the way, but more on that later. It also includes your office, your tech stack, and other processes

As far as your office, it's pretty straight forward. Reduce, reuse, recycle. Check out the sourcing on everything you buy. Consider using renewable energy like solar. Go paperless or use recycled paper. Use eco-friendly cleaning products. Use TP made from recycled paper. Munch on snacks that are good for you and the planet — support organic/sustainable/regenerative agriculture. Watch your energy usage by turning off your electronics and even unplugging them (or turning of the power strip), as idle electronics are a huge energy drain. Rely on natural light instead of turning on electronic lights whenever possible.

The list goes on, but the point is to be conscious of your impact, and take responsibility for it.

There are also tools to offset your carbon footprint, like Get Offset by @FranCresswell and Oco by @bensterne.

Lack of inclusivity

Make it a priority to work with people from different backgrounds, whether you're hiring or partnering up. Be inclusive in your marketing content. Use inclusive language in your day-to-day and in your content. Include pronouns in your email signatures. Check in with teammates and ask how you can do better. Get to know everyone on the team and learn what feels good for them and what doesn't. Hold each other accountable.

Make sure your product is reasonably accessible to all. Account for purchasing power parity in your pricing to make sure your price point is appropriate for different countries. You can also offer scholarships and the like.

Unethical marketing

Marketing gets a bad wrap. Why? Because so many companies use it in an unethical way. In my view, the key to marketing is simple: Have respect for your customers — for their time, for their attention, for their energy. And make it about giving, not taking.

Indie hackers like @markosaric of Plausible Analytics have shown that you don't need shady marketing practices to grow. Check out his article on growing 1000% in 6 months while staying in his integrity. According to the article, they don't take demographic information or do any remarketing with spy pixels from Facebook or Google. In fact, they don't do any paid advertising at all. They don't buy links, track clicks, or throw intrusive popups or CTAs. They don't pay for recommendations or otherwise manipulate, trick, or addict people. And the list goes on.

This stuff isn't inherently bad, but it's well worth considering whether or not you feel good about it before you do it, because none of it is a necessity. You can grow without it. If you choose to do any of it, just be upfront. Ask for permission to track a user's clicks, for example.

A few other considerations that I'll add:

  • Don't buy followers or likes.
  • Give credit (links) where credit is due.
  • Don't contact people without consent.
  • Avoid scarcity tactics and fear tactics.
  • Yes, sex sells, but don't use it.
  • Don't misinform people or exaggerate.
  • Be transparent. Own what you do and what you don't do. If you don't want to share something with your customers, that probably means you should do it differently.

Privacy concerns

Privacy is top-of-mind for businesses and consumers alike right now. I am in no way an expert, but here's what I've gleaned from the articles I've read.

Be transparent with customers around your data collection and allow them to choose what they want to share with you. Never sell their data. Make sure their data is secure — this is a whole thing that I'll leave for more technical minds. Cleanse and remove unwanted customer data. If you don't have a very good reason (and consent) for having it, get rid of it. And back up your data.

Inattention to supply chains

I'm always asking about the materials used to make a thing — nine times out of ten, the company doesn't have a clue where their products really come from, and I buy elsewhere.

As consumers and entrepreneurs, we have a responsibility to vote with our dollars. If you buy products created with unethical practices, they'll makee more products using unethical practices. That's how capitalism works.

For SaaS companies and the like, this may not seem applicable, but it is. You are undoubtedly working with companies, even if it's just for hosting.

Do your due diligence. Make sure that they are being ethical (so that you can be too).

Charitable giving

Giving does not just mean money. You can give your time, your knowledge, your product, you name it. But one great option is to donate a portion of your revenue to a cause that you feel passionate about (and preferably relates to your offering in some way). You can find some good options here with organizations like CharityWatch.

There are a lot of causes out there, all of which are important, but resources are limited. And in truth, it's generally best to champion one cause anyway, as you can have a bigger impact with it and you may also become known for that cause.

Here are a few questions to ask yourself when prioritizing:

  • What is your business directly impacting? We're talking employees, community, society, customers, suppliers, the environment, and on and on.
  • What are your strengths as a business? Figure out how you can help best.
  • What are the most pressing needs in the community where you do business? This includes online communities.
  • How can you differentiate your causes from your competition? Of course, this is less important than choosing the right cause.
  • What resources do you have that you can contribute? Again, it doesn't have to be money.

Warning signs

As your company grows, you're likely to run into ethical issues. Even with the best of intentions, things can take an unexpected turn — particularly when you take your eye off the prize (the prize being your integrity, not profit). Be on the lookout for these signs from Harvard Business Review:

  • Fear and urgency. According to HBR, after scandals, leaders tend to talk about the necessity of what they did for the company's survival. When you're in a pinch, it's hard to stop and ask the necessary questions, but that's when you need to do it the most.
  • Isolation. Humans are influenced by their immediate surroundings so it's easy to fall out of step with the team's values when people are isolated. It'll be interesting to see how this one rears its ugly head with everyone working from home these days.
  • Silos. Silos allow leaders to get off the hook through plausible deniability. Remember that everything that happens in your company, regardless of your position in it, is your responsibility. Create the right culture, and share the journey with your team.
  • Success. If someone is super successful in what they're doing, that's awesome. But it's not out of line to be curious about how they're doing it.
  • In-group language. Inside jokes, euphemisms, and terminology that removes the bite from the truth of an action are indicators of unethical behavior. Also, keep an eye out for turns of phrase involving war — they're everywhere in business (e.g. on the front lines, plan of attack, etc.) and they involve a viewpoint that might be less than ideal.

But ultimately, it shouldn't be rocket science, as long as you keep your eyes open. At least for small businesses, that is.

Small businesses are the ethical choice

In my opinion, if you're an indie hacker, you're already doing so many things right. Small businesses are exactly what we need. They're good for founders, employees, customers, and the world in general.

While it's true that big businesses are held accountable by stricter regulations, that they have a lot of eyes on them, and that they may contend with whistleblowers, they also have expensive lawyers helping them to find loopholes and workarounds.

Small businesses (especially local) are held accountable by their own teams and their communities. Since it's small, the founder has no plausible deniability, so the buck stops with them. And that's manageable because they're also able to be really present in the everyday actions of the business. The barrier between customers and founders is smaller, so customers are less likely to be treated as numbers. Purpose and values remain closer to the heart. There are fewer stakeholders demanding profit at all costs.

The list of ethical benefits goes on, but the point is that small businesses hold many of the answers to unethical practices. When a business is small, the moral integrity of the founder can steer the ship. When it crosses a certain threshold, the business begins to steer the founder. And the world suffers.

Redefining "success"

Just a final thought here. I think it might be time to redefine "success". I get that profit is a big part of it, particularly for founders, and that'll continue to be the case. But what about impact? Perhaps redefining success on a personal level will subtly change the way each of us does business.

What did I miss?

This is a huge topic and I've barely scratched the surface. I'd love to hear what you'd add.

  1. 4

    Great read on a neglected topic James!

    Ethics is only an obstacle for companies that prioritize short-term gains.

    For long-term minded businesses ethics is often an overlooked advantage. Apply Kant's idea of acting according to the principle which you would want to be a universal law to marketing. Call out bad practices in your industry, show the contrast between them and you.

    Trust is hard to earn and scale, but in an industry filled with dark patterns and insulting pricing practices (https://www.derrickreimer.com/essays/2019/07/01/dont-insult-me-with-your-pricing.html.html) ethics should be easy.

    1. 2

      Love this. Well said. 💯

  2. 1

    What did you miss? That you are sending this message to the wrong audience.

    Greenwashing meets IndieHackers, fantastic.

    This is just so, so ridiculous... I'm sorry. This is how major corporations guilt powerless individuals into saving the environment while they are the ones in control.

    The vast majority of IndieHackers are barely able to support themselves through their personal projects, constantly doubting themselves and procrastinating their launch dates by months.

    And now you are claiming moral superiority by adding a bunch of non-sense constraints for success that you just made up on an already struggling segment.

    Let's redefine success? I think most people would rather focus on reaching ramen-profitability or even launching a product, sir.

    Oh and by the way, if you actually follow any of this advice and don't use an exit-intent popup (god forbid)...

    Please do so because you're being ethical. Please don't create a 2,000 words perfectly SEO-optimized page with 7 internal links to your other blog posts.

    And if you really really need to tell the world about how ethical you are, please don't reference your product or have any call-to-action to start a trial on your blog page.

    My 2 cents.

    1. 1

      Hey @FarouqAldori, I don't mean to claim moral superiority. I do mean to say that IMO keeping an eye on ethics is important for every business owner, no matter the size.

      As an indie hacker myself, I know it can be a struggle. I get that this could add extra pressure. But I think it's a valuable conversation to have nonetheless.

      And I 100% agree with you about big biz guilting individuals into trying to do the work that they should be doing themselves. It's messed up.

    2. 1

      And this is the problem with pure capitalism and a dog-eat-dog world. It breeds this type of outlook on all levels of society, infecting and harming our entire world. It doesn't take much for one to realize the implications on the world, society, and human culture/tradition when the world is full of people operating like this. Sad.

      On the upper levels, it is fear and gross materialism that lead to perspective like this.
      On the lower levels, it is fear and survival.

Trending on Indie Hackers
Tell me about your product, and I'll tell you how I'd market it. 49 comments We’ve grown an open-source project from $1k to $10k MRR in 9 months, AMA! 19 comments I just got blocked from r/startups... 16 comments Lurkers are not lurkers, they are people who consume and participate in different ways. 14 comments How to use React useReducer hook like a pro 7 comments After 4 years & $1M in revenue, I'm FINALLY quitting my full-time job. 4 comments