Eugene Soltes | Harvard | Managing the Gray Area - The Fine Line Between Puffery & Lying

Summary

CMO Confidential Podcast Episode Summary
Episode: Eugene Soltes | Harvard | Managing the Gray Area - The Fine Line Between Puffery & Lying
Release Date: June 10, 2025
Host: Mike Linton

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Introduction

In this compelling episode of CMO Confidential, host Mike Linton engages in an insightful dialogue with Dr. Eugene Soltes, a distinguished professor at Harvard Business School and author of "Why They Do It: Inside the Mind of the White-Collar Criminal." The conversation delves into the intricate gray areas that marketers navigate, particularly the thin line between ethical advertising (puffery) and deceptive practices (lying), as well as the broader implications of white-collar crime in the marketing sphere.

Understanding White-Collar Crime in Marketing

Dr. Soltes introduces the concept of white-collar crime, emphasizing that these offenses are often committed by thoughtful and strategic individuals who succumb to various biases and pressures. He explains that white-collar criminals are not inherently malicious but make a series of errors that lead to significant consequences for their companies and stakeholders.

Notable Quote:
"The people in my book are thoughtful, reasonable, strategic people that made a series of errors, and that's what led them down the slippery slope that ultimately had these extraordinary consequences."
— Dr. Eugene Soltes [05:23]

The Thin Line: Puffery vs. Fraud

A significant portion of the discussion focuses on distinguishing between puffery and fraud in marketing. Puffery involves exaggerated claims that are generally understood to be untrue (e.g., "It's raining cats and dogs" in an advertisement), whereas fraud entails deliberate deception with intent to mislead consumers.

Examples Discussed:

• Puffery: An oil company's ad stating "put a tiger in your tank" — a clear exaggeration meant to capture attention without misleading consumers about the product's functionality.
• Potential Fraud: Promoting a cereal box with claims like "boost your immunity," which may subtly mislead consumers into believing unverified health benefits.

Notable Quote:
"The line between puffery versus fraud is so hard... sometimes it's not even clear whose fault it is."
— Dr. Eugene Soltes [18:12]

Regulatory Arbitrage and Its Implications

Dr. Soltes elaborates on regulatory arbitrage, where companies exploit gaps or outdated regulations to innovate, often pushing ethical boundaries. He cites examples like Uber and Airbnb, which initially operated in legal gray areas until regulations caught up. The rise of cryptocurrency presents new challenges, with some practitioners facing legal repercussions despite arguing that existing laws are outdated.

Notable Quote:
"If one looks at the kind of the origins of Uber Airbnb businesses we celebrate today... there's a lot of crypto people that have gone to prison that have paid some very large fines."
— Dr. Eugene Soltes [10:09]

The Role of AI in Marketing Ethics

The integration of Artificial Intelligence (AI) in marketing introduces complex ethical dilemmas, particularly concerning data usage and personalization. Dr. Soltes discusses the tension between leveraging AI for personalized marketing and respecting copyright laws, highlighting ongoing lawsuits against AI companies for training models on copyrighted material without proper authorization.

Notable Quote:
"Which side is right here is, I will say, a great example."
— Dr. Eugene Soltes [12:46]

Reputational vs. Legal Risks

A critical theme in the conversation is the interplay between reputational and legal risks. Dr. Soltes argues that reputational scrutiny often precedes regulatory action. He emphasizes that maintaining reputational capital is crucial, as it acts as a safeguard against potential legal challenges.

Notable Quote:
"If you have a lot of reputational scrutiny, that's when regulators or enforcement agencies start looking at you."
— Dr. Eugene Soltes [20:12]

Case Studies: When Marketing Crosses the Line

Dr. Soltes shares real-world case studies to illustrate how marketing strategies can veer into unethical territory:

1. Pharma Company Fraud: An executive at a pharmaceutical company exaggerated secondary trial endpoints, misleading patients and prompting government investigations for fraud.

2. Social Gambling Innovation: A proposed business model combining crypto, gambling, and influencer marketing raised significant ethical and reputational concerns, highlighting the potential for regulatory fallout.

Notable Quote:
"That's why you can't actually differentiate it like everyone would like to think they can."
— Dr. Eugene Soltes [08:11]

Practical Advice for Marketers

To navigate these gray areas, Dr. Soltes offers strategic advice for marketing professionals:

• Understand Reputational Capital: Regularly assess how marketing practices impact the company’s reputation, as this can preempt regulatory scrutiny.
• Ethical Frameworks: Develop and adhere to robust ethical guidelines that go beyond legal compliance to foster trust with consumers.
• Critical Decision-Making: Encourage a culture of humility and resilience, where setbacks are managed transparently rather than concealed.

Notable Quote:
"Little humility goes a long way."
— Dr. Eugene Soltes [25:35]

Conclusion

The episode concludes with a reflection on the inherent challenges marketers face in balancing innovation with ethical responsibility. Dr. Soltes underscores the importance of vigilance and ethical consideration in marketing strategies to prevent the descent into deceptive practices. The conversation serves as a crucial reminder that maintaining integrity is not only a legal obligation but also foundational to sustaining long-term success and trust in the marketplace.

Closing Quote:
"Sometimes we all have setbacks. People that don't have setbacks... never wanted to show a loss. Little humility goes a long way."
— Dr. Eugene Soltes [25:35]

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Key Takeaways:

• White-Collar Crime: Often results from a series of strategic errors rather than inherent malice.
• Puffery vs. Fraud: Understanding the distinction is essential to maintain ethical marketing practices.
• Regulatory Arbitrage: Innovators must navigate evolving legal landscapes responsibly.
• AI Ethics: Balancing personalization with respect for intellectual property is increasingly complex.
• Reputational Vigilance: Proactive management of reputation can avert legal challenges.
• Ethical Marketing Practices: Foster transparency, humility, and integrity to sustain trust and success.

This episode of CMO Confidential offers invaluable insights for marketing professionals aiming to navigate the ethical complexities of their roles, ensuring their strategies not only drive business success but also uphold the highest standards of integrity.

Transcript

[Podcast Announcer]

The CMO Confidential Podcast is a proud member of the I Hear Everything Podcast network. Looking to launch or scale your podcast, I Hear Everything delivers podcast production, growth and monetization solutions that transform your words into profit. Ready to give your brand a voice then visit iheareverything.com welcome to CMO Confidential.

[Mike Linton]

The podcast that takes you inside the drama, decisions and choices that go with being the head of marketing. Hosted by 5 time CMO Mike Linton.

[Eugene Soltes]

Marketers have been working on personalization since the dawn of the Internet and actually even earlier than that. Now, with AI, you can deliver ads made for each of your customers. Publicist Sapient is committed to faster, better personalization and is proud to introduce SlingShot and Bodhi AI. Now these AI platforms are designed to customize every key touch point and reduce creative timelines from weeks to days. With Publicis, Sapient marketing isn't just fast, it's personal. Smarter marketing, happier teams. Wow. Worthy customer moments. Upgrade your [e-mail] welcome marketers, advertisers and those who love them. The Chief Marketing Officer Confidential CMO Confidential is a program that takes you inside the drama, the decisions and the politics that go with being the head of marketing at any company in what is one of the most scrutinized jobs in the executive suite. I'm Mike Linton, the former Chief Marketing Officer of Best Buy, ebay, Farmers Insurance and Ancestry.com here today with my guest, Dr. Eugene Soltis. Today's topic, Managing the Gray Area, the Fine line between Marketing and lying. Now Eugene is a professor at the Harvard Business School where he has been teaching for nearly 16 years. He also authored a book titled why they do it and here it is. It's Inside the Mind of White Collar of the White Collar Criminal. Now I couldn't, I picked up this book and I couldn't put it down. Finish it in less than three days and we thought it'd be great to hear what Eugene has to say about marketers who often find themselves in the gray space. And he has graciously accepted our invitation to join the show. Welcome, Eugene.

[Dr. Eugene Soltes]

Thanks. Thanks Mike. Real, real pleasure to have a chance to join you and discuss an interesting topic. I won't say a fun one, especially if you're on the other side here.

[Eugene Soltes]

It's fun to read about, though probably not so interesting to be involved in your book, but fun to read about it. So before we even go into the, into the, into the topic, ground our listeners in what you teach and the book you wrote, just give us a writ large Overview of the whole space of, of this whole white collar crime thing.

[Dr. Eugene Soltes]

Yeah, I mean any of us that reads like the newspaper, we see these giant cases on the front page of the Wall Street Journal and I think we're curious what, what happened? How did you get there? We read most recently, you know, the Theranos, the FTX is these huge cases back. I mean it's, you know, 16, 17 years ago at this point, I had that same question and I maybe went one step further than most people do. It's pure personal curiosity. I just started reading some of the people whose cases I'd been following the news, asked to speak with them. Turns out when you're a former executive that's now incarcerated, you have a bit more time on your hands. And several were gracious enough to make themselves available to become pen pals or literally meet them in prison. And that, that's what started my, I'll say journey into this whole area.

[Eugene Soltes]

So I just want to make sure I hear that's right. While other people were immersing themselves in say, fantasy football or something else, you decided, you know what I'm going to do? I'm going to write Bernie Madoff a letter and have a, have a chat with him. Is that right?

[Dr. Eugene Soltes]

Yeah, I mean it really, it wasn't that much more thought out. I was actually watching a TV show at like three in the morning while I was actually finishing my graduate school degree and running some regressions and frankly was flipping through the TV channels and was inspired by this like called Lockup. This cross between a reality TV show and a documentary and watching that show where they're interviewing people that are generally convicted felons of generally in a medium security prison. I was saying, hey, the guys that I've been following, people From Enron and WorldCom, soon enough, Bernie Madoff, how did they get there? They didn't come from gangs or broken homes, drugs. They had these amazing backgrounds. What happened? And so yeah, that was, that was just my curiosity got the best of me. You could say to start this journey off.

[Eugene Soltes]

And so this becomes a something you decide to teach. How do you even think about structuring it and then teaching it?

[Dr. Eugene Soltes]

Yeah, well, I should, I should be very careful because oftentimes I'm introduced and it says Eugene teaches white collar crime. And so I want to be very clear, I don't teach white collar crime. In fact, most of the work that I do now is how we try to prevent such those things from occurring. But, but I think to understand what to, how to prevent it from occurring in the future, we need to first understand how it occurs. So we want to get into the mindset of people who engage in these offenses. And I will say, by and large, the people in my book, they're thoughtful, reasonable, strategic people that made a series of errors, and that's what led them down to the slippery slope that ultimately had these extraordinary consequences. But, I mean, the preface in the second edition of the book was called why We do it, because we're all susceptible to certain kinds of biases and pressure that can lead us down this path. So really what I'm focused on with our participants in our exec Ed programs and our students in our MBA programs is trying to understand, like, how do people succumb to these environments that ultimately lead to these extraordinary ramifications? And why don't they see it earlier and manage to stop before it upsets both everything that they've built, their companies and obviously the huge externalities this has on investors and other stakeholders?

[Eugene Soltes]

And so when you, before we even get into the root of this interview, like, what is the structure of that kind of class or that kind of teaching? Because what I hear you saying is almost anybody can fall down this road if you don't have a little bit of awareness, sturdiness or whatever, that the temptation is sitting there almost all the time. Is that fair?

[Dr. Eugene Soltes]

Yeah, exactly. I think. Well, well, well, well put. I taught an MBA class called Borderline. It's exactly what you think it is. It's about conduct that's somewhere in the gray zone between moral, immoral, legal, illegal. And I think what surprised many of the students that that took the class is several people were. Were prominent, prominent executives who made some pretty serious errors that led them to be in the headlines for a very different reason than they expected. And I think a lot of people have the sense that I'm the good apple. These people we read about that are executives that fall from grace are bad apples. And they're going to seem really sinister. It turns out when they come to class and spend some time, they don't look very different from most of the current executives that we have as they talk about, you know, the challenges and stresses that they have. And I think that's pretty humbling and actually pretty scary to most people because you realize you can't actually differentiate it like everyone would like to think they can.

[Eugene Soltes]

And you could be the other thing I took away from the book is you could be in a situation where there is pressure on you to cut the corner or like, take a step it could be personal, it could be your company, it could be the industry. And it's easy to take. Sometimes it's easy to take that first step. Is that fair?

[Mike Linton]

At Publicis Sapient, we're not just talking about AI, we're delivering real results. Today with Sapient AI, we speed up software development and save clients thousands of hours. We revolutionize how travelers discover their perfect getaway and even turn a simple fridge can into a personalized meal plan. Making AI work for you, it's what we do.

[Dr. Eugene Soltes]

Yeah. I mean, one of the people in the book actually said we all think we effectively, we all think we know when that big ethical, consequential decision will come and we'll make the right decision. But I didn't see the decision when it was in front of me because a lot of time it's one of the hundred other decisions you're making. People are giving you similar feedback, advice. So you kind of lull yourself into these decisions that sometimes have these extraordinary ramifications. Oftentimes, as I know, we're going to get into probably the line between, you know, I will say, where there's potentially a lot of value created and a lot of money to be had and it will be celebrated, rewarded, and then the other side of the line, which could send you to prison. Oftentimes that is a very fine. It's not even a line. It's like it's a gray zone. And people operate in that gray zone, actually oftentimes quite a bit of the time. And that's murky.

[Eugene Soltes]

Well, let's talk about some of those gray zones. You know, we talked in the, in the, in our pre call about regulatory arbitrage. Let's talk about regulatory arbitrage and then go into a case study about that.

[Dr. Eugene Soltes]

Yeah, this is, I mean, this is, this is how tech operates, a lot of tech, and it's innovative. It's where there's a regulation that someone will say it's either outdated. It's simply the regulation hasn't been created in the right way to benefit consumers. And so you ignore the law initially and then you hope you get a large enough following that what you're doing is not illegal. And if one looks at the kind of the origins of Uber Airbnb businesses we celebrate today, I mean, the effective origins of their business would say would, would, would not pass. I will say, let's say clear muster of what the prevailing law at the time. But the idea is you build a base, you have millions of customers, and the laws will adjust and change. It's what crypto is actually you could see arguing now, but in the process there are a lot of crypto people that have gone to prison that have paid some very large fines. Some of them think that that's because the regulations outdated. Other people think because what they're doing is simply like wrongful and should be forbidden. And that's that murky area where you could say it's extremely innovative or it's really, really sketchy.

[Eugene Soltes]

And like let's. And I has to be on the edge of a lot of this, right? I mean with how they're training the models and everything. Tell us about the risk there because that's like a real life unfolding in front of us case, right?

[Dr. Eugene Soltes]

Yeah. I mean easy, easy lowing example here. I mean we all are learning a lot and it's extraordinary what's being accomplished with some of the Gen AI. But where's all the material coming from? As a lot of the lawsuits are coming out now, I mean it's being trained on images from Getty, it's being trained on the New York Times articles. I mean that's required journalists like decades. It's a century of information that was gobbled up over a couple years effectively for free. Obviously, if you're in an AI company, you're saying the copyright law is outdated and this is general use and it's how we're building the models. Obviously if you're a photographer and you've made an entire livelihood of taking photos that are being digested now, someone can literally modify and create something new in six seconds. You get no proceeds from that. It seems absolutely outrageous. Which side is right here is, I will say, a great example. And obviously the AI companies are relying on, you could say a version of regulatory arbitrage. They think the copyright law is simply outdated and as Gen AI gets enough use, the copyright law will adjust. I don't think a lot of people, let's say the New York Times and Getty are saying the same thing though.

[Eugene Soltes]

Yeah, we're going to talk about how companies make these decisions, but I want to unwind a couple more of the gray areas. One of the favorites for marketers and agency puffery versus fraud or lying. Tell us about that. And the gray area there.

[Dr. Eugene Soltes]

Yeah, I mean puffery is supposed to be the idea that statements that we all believe to be untrue, they're, they're, they're just a pure form of advertising. Now what gets interesting, when there was a famous oil company that once had an advertisement that said buy our Gas. It's like putting a tiger in your tank.

[Eugene Soltes]

Oh yeah, sure.

[Dr. Eugene Soltes]

And I think we can all appreciate that, that if you go to the gas station they weren't physically going to take like a live tiger and jam it in your tank. Okay. That's a good example of huffery. Now there's another case and actually I bought a cop a box. It's amazing you can get off ebay. It actually empty a 10 year old empty cereal box from, from Kellogg. And on the COVID they had a, of the cereal box, they had boost your immunity. If I think it was for Rice Krispies.

[Eugene Soltes]

Oh yeah.

[Dr. Eugene Soltes]

And I will say the question is will, will eating Rice Krispies actually boost your immunity? Tiger, the kink we kind of all know now. Boost your immunity. I will say. I mean I have two young kids at home. I mean they get like the winter, they get cold. Anything that could get them a little bit less cold. I mean my wife and I will buy, I don't know, maybe that could motivate me. It probably motivated someone. Is that fraud or is that puffery? And I think the world where we operate right now, where information and disinformation, what's real news is fake news, it's even more complicated or nuanced. I think that line is even murkier. And a lot of it doesn't look like the tiger. A lot of it looks like really subtle information that's really hard to know the basis of. But this puffery versus fraud, I give one other context. A number of companies have actually been sued in the last several years for making statements which when investors go back, they look at their code of ethics or code of conduct and said, you literally said you would not do that and then you engage in that. So it's fraud because you told us you would not do that in your code of ethics. And what if companies said. And I, I appreciate the legal defense here, but it also kind of, also kind of offends my soul a little bit. At the same time is that companies have then said, well, our code of conduct, our code of ethics is also a puffery. It's, it's not actually. And your reaction is exactly like mine. I mean, I, I see why. I mean it's not, it's a general statement. But should we really think the code of ethics is like a marketing document? I genuinely hope for all our sake that's not how employees see it and read it.

[Eugene Soltes]

And our courts upholding that as puffery.

[Dr. Eugene Soltes]

Yeah. I will say they've had success. They've had success. With that argument, which again I find on one hand I can see why because you're parsing every word in a very technical, legalistic sense. But we can't intuitively see it like that. I mean I will say that's deeply prominent. I don't know what we're doing in our compliance programs if employees are supposed to see that like a marketing document.

[Eugene Soltes]

Right. That was okay. Give us a time where the marker has crossed from puffery into fraud or into lying.

[Dr. Eugene Soltes]

Oh, this is. Well, I'll give someone, I will say not someone in a leadership position. There was a well known executive at a pharma company named Scott Arkadov. So he was actually the CEO of the company obviously but with his other leadership leadership at the company. They were excited about the results from a trial, a new trial they had for a disease which had no cure. And literally they wrote one line about a potential finding that they had which was a secondary endpoint. It's actually something that actually the government went after is actually alleging fraud because they said hey, patients would see this and actually not draw the subtle statistical conclusion but instead run out there and try and it's government fraud. They run out there and try to get the government to pay 50 grand or whatever the medicine cost even though it was unproven. They went after with the criminal law after both the leadership of the company around this. I think it's a really interesting example because on one hand from a commercial side and you can say all the things the company wants to share in a positive way. Result for something that could be pretty exciting and actually transformative people's lives. The question is how do you share scientific results? And there was actually nothing fraudulent, there was nothing lying or deceptive. But the government alleged because it was placed there, it could convince people in some way. They wouldn't read all say the scientific paper that it was fraudulent.

[Eugene Soltes]

So the government put it in the context of the user versus the context of the truth of the statement and looked at, and looked at the puffery as a lot more than puffery given the user was desperate for a cure. Is that. I don't know. That's in your book.

[Dr. Eugene Soltes]

Yeah, but. Well, I guess the question is how much information are people people digesting? There was a study that just came out in the last couple of weeks. I read about that. The average person before they make a decision to. To buy a stock, the average individual investor spend. Spends something on the order of like it's like 10 seconds.

[Eugene Soltes]

Yeah, I was in the wall Robinhood.

[Dr. Eugene Soltes]

Yeah but I Mean, on one hand, I would say all the allegations of fraud that one are making against companies, if the average person is only spending 10 seconds making decision, the best defense a company would have is that the investor hasn't read actually anything about our company. They've read the name and they see the price. They don't even know our business does. I mean, that's obviously a kind of a caricature, a perverse caricature, but people are not digesting the depth of information. Now the question is, when people digest just little snippets, if they draw the incorrect inference, is that the fault of the company for not laying it out more or the marketer of not giving it more transparently, or is that the fault of the consumer or the investor for not, frankly, just taking their time and doing the appropriate due diligence that you would expect? I will say that's what makes this puffery versus fraud distinction so hard. I guess sometimes it's not even clear whose fault, you know, ultimately it is.

[Eugene Soltes]

So when I'm sitting there in the company, I'm looking at this gray area. How do I even think about it as a company? Like, do I actually understand it or am I really aware of it? Like, talk about the gray area and how companies should play in it.

[Dr. Eugene Soltes]

I mean, there's two areas that I think of and when I think of all my work, there's both the legalistic and regulatory and there's also the reputational. I suspect actually on a marketing side, I will say in those two are increasingly closely connected. If you have a lot of reputational scrutiny, that's when regulators or enforcement agencies start looking at you. So actually the reputational test is actually a pretty good first pass to have. If this is on like what I call the TikTok of the world and being trained on LinkedIn is something that's controversial, sure enough, someone else is going to look, is it simply offensive or does it go one step further and it was deceptive?

[Eugene Soltes]

Yeah.

[Dr. Eugene Soltes]

I mean, ultimately from the regulatory enforcement side, they're looking at was this deceptive? Not just was this, this offensive? I mean, every year there's always one super bowl ad that I don't know what happens because they cost a lot of money and they go through a lot of people's hands. But every year there's always some, some ad that manages to set the world ablaze for being offending seemingly everyone. And the question is, well, I mean, where does, I guess presumably inside viewed as very edgy. That edginess went so far as to Offend people generally. It hasn't gone to the deceptive. But actually the crypto companies are pretty interesting here because you have a big star go online, you know, a big football player, a big, a big, you know, someone with a huge following and they say I'm buying Coin X or when those NFTs were all the rage. I'm going to sell you an NFT and it's going to be a big hit. It's going to go up a lot of value, obviously. Why did you buy that thing? Because your influencer is selling it to you, not because they frankly know anything about it. And I think that's where it's starting to get beyond just informing people, which you could say in the best case, what is marketing doing? It's helping inform people about the aspects and the quality of the products and why that's a good fit for them. It's not trying to trick them into something that's not true about that product.

[Eugene Soltes]

That's. So if I'm sitting there in the company and I'm looking at some of these because I think the crypto is an excellent one like Fortune Favors the Brave and Curry is selling, is talking about this and everyone's saying you're going to miss out if you don't do this. And also I think betting is another area that is really super interesting here in terms of the money back you get from betting and we'll stake you with this. How do I look? How do I even see the reputational risk or cliff if I'm in these discussions and how do I get a good feel for where, where I'm. When I'm on the edge and when I'm not on the edge.

[Dr. Eugene Soltes]

Yeah, I'll give you, I'll give an example that we ran into, I ran into recently and, and I will say this one I will say was so far over the edge but someone brought this idea called social gambling. I suspect you and any, any listeners will. It'll be. I think New York Times will be writing about this in a couple of years. It was present is take the best parts of crypto, draftkings and onlyfans and put them all together. So you're going to have your favorite influencer which generally if it's something like OnlyFans, there's a sexual attraction. They're going to run gambling tables like DraftKings and bring you in. So you'll play a game of poker with the influencer and you'll do this with crypto. Why crypto is useful is when you Lose money because it's crypto. It doesn't actually have the same feeling. It's like, why do you use chips and not dollars when you lose? It doesn't have that same feeling as losing money. And it said, we're going to bring this together. I can see how this is going to be a billion dollar business. It's taking like every human instinct and putting it all together. Now this was a very edgy idea that what I call the gambling companies are even staying away from the crypto companies that are much more libertarian kind of minded, saying, if you want to spend your money in this way, more power to you. It also probably will help circumvent, I suspect, some money laundering laws, which is where it gets really, really sketchy.

[Eugene Soltes]

And then Matthew McConaughey will drive up in a Lincoln with a Salesforce tower behind him.

[Dr. Eugene Soltes]

But it's going to make a ton of money and it will lobby. I will say this doesn't pass the test where I would say I see in five years how we're going to see a pile of like 15 year olds like on these, on weird sites with like, you know, older people basically that they're attracted to losing a pile of money gambling. It doesn't pass. I don't even if you could technically figure out some offshore way to do this legally, I know what that headline is going to look like in five years and I wouldn't want my reputational capital to be even near it. That's an example. It's like, do I want my brand? In this case, it was presented me as a potential project to work on. Anywhere near that and I would say the answer was no. And I think that's one easy way to start thinking about is what is the reputational capital? Because reputations are very, very easy to lose. And I think a lot of the I will say decisions that I've seen that are described in the book are people that are doing very, very well and they don't know how to ever say no or ever lose. Sometimes, like things don't go the way the business isn't growing. You just need to. Sometimes we all have setbacks. People that don't have setbacks, I will say that was Enron. Anytime they had a setback, they found a way of kind of hiding that setback under some special vehicle or some other way because they never wanted to show a loss. Little humility goes a long way.

[Eugene Soltes]

So, you know, you watch a lot of companies walk right to the edge of the existential risk or they're Going to risk the whole company and they still take that risk. Sometimes maybe that's the only choice they have. But other times you think why? Why? And you watch companies like, you know, all the vape companies that, that ended up selling so much to teenagers and everything, you could kind of look back and see it. Why do they take the risk when they can even see it?

[Dr. Eugene Soltes]

Some of that I think motivated reason. I mean I always think so. You asked at the beginning about the teaching. I mean what case studies are really easy in a classroom also frankly in a corporate training exercise is because you spend in a half an hour hour debating them. You put the one decision right in front so it's isolated from the hundreds of other decisions. Induce a room in a room with people with different views and opinions. In practice none of those things exist. You have hundreds of decisions in a day you're making around people that think like you. And you don't isolate that decision in and you do it fast. So I mean you can sit around a room and you can find a lot of ways to justify and kind of rationalize your way into why things are okay. Like I will say the spirit of people can do what they want with their own bodies. I mean sitting back, that's a, I will say a very well accepted actually positive statement that the government shouldn't be controlling your body. You can apply that to some one context. You can then switch and say well let's apply that to vaping. Why should, why should the government tell me that I can't have gummy bear flavored vapes? I think there might be some good reasons, like your 14 year old doesn't have a lot of self control and they're going to get access to that. Maybe that's why we need to actually intervene. But I will say you can step back from that. I'll give an example because I think it's what I see some of my friends that operate in social media. So I've been working on a project now into really kind of, I will say challenging areas of business. One of those is arms trafficking. So I've spent some times with people that traffic in arms and what all of them describe their business model is no one says I'm moving weapons around to, to dodgy people. What do they say? I'm in the transportation business. Yeah and they, I think they generally after decades say they believe they're in the transportation business. They move something from A to B and it's not their responsibility. And actually they're discreet, they're kind of like an old Swiss banker. They don't actually look in people's baggage. That's actually that that would be almost impolite to do for their customers or clients. It's that same kind of mentality that can go into a lot of other places when we say we're doing a social media business and our job is simply just connect one person to another that's friends and we don't want to put, you know, overly surveil or put restrictions on that. That's when you also let a lot of really dodgy people. That's how you know someone that's a pedophile, that's older starts connecting with a very young kid because you don't put any restrictions on access and you allow people to take on other identities because you don't want to look in into the package. You don't want to look into people's conversation. So I always think the arms dealer logic. I'm just in the business, I've thought about that a lot because I genuinely don't think why they're so good at their job. They're not lying to someone else when they say that because I think they truly have convinced themselves that is actually what they do. It's the best way of deceiving someone if you don't have to deceive yourself.

[Eugene Soltes]

Yeah. So don't be a CMO at an arms transportation company.

[Dr. Eugene Soltes]

Join us next week for part two.

[Podcast Announcer]

Of our discussion with Harvard Business School professor Eugene Soltes.

[Eugene Soltes]

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