Rob Chesnut on corporate integrity and ethical business

In this episode of Lessons I Learned in Law Scott Brown speaks to Rob Chesnut. Rob retired last year after spending more than 5 years as General Counsel and Chief Ethics Officer at AirBnB. During that time he grew the legal team from 30 to over 150 legal professionals in 20 offices around the world.

 Rob is a graduate of Harvard Law School and the University of Virginia, and previously worked at the US Justice Department where he prosecuted bank robberies, kidnappings, murder, and espionage cases. He also led eBay’s North America legal team and is the author of Intentional Integrity: How Smart Companies Can Lead an Ethical Revolution. 

 Rob reveals some of the lessons he learned in law including:

·      Integrity matters in business. There’s an expectation now that businesses do good, not solely exist make money. 

·      There can be ‘creative’ solutions to ethical problems, which means integrity can actually be subtle and isn’t always an absolute. 

·      Diverse organisations actually perform better than homogenous ones. The best person for the job, is the person who brings a different perspective to the team. 

Rob also shares some fascinating social experiments on the subject of integrity. How honest and trustworthy, are people in everyday life?  You might be surprised by the findings!!

Presented by Scott Brown of Heriot Brown Legal Recruitment. 

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Transcript

Scott Brown  (0:03)

Hi, welcome to the lessons I learned in law with me Scott Brown, founder of Heriot Brown In-House Legal Recruitment. For those regular listeners to the show, you'll know that on each episode, I've got the pleasure of sitting down with a top legal mind and I dissect their three key lessons that they've learned from working in law. I really hope that this can help you be inspired and help you find fulfilment in your own career and help you be armed with more knowledge in your own career path as well. My guest today is Rob chestnut. Hi, Rob 

Rob Chesnut  (0:34)  

Scott, how are you? 

Scott Brown  (0:35)  

I'm great. Thank you. Thanks for joining us. I'll give you a bit of a brief overview of Rob's career, which is super impressive. So Rob retired in 2021, after five years as Airbnb’s General Counsel, and he also held the position as Chief Ethics officer. He previously also led eBays North America legal function, founding his trust and safety team. And he has also worked as General Counsel for live ops at Chegg. Prior to this, he served 14 years with the US Justice Department where amongst other things, he prosecuted the CIA employee, Aldrich Ames for espionage. Not many people can say that. Really interesting, can't wait to dig a bit more into that time spent with the US Justice Department. Rob is also author of Intentional Integrity: How Smart Companies Can Lead An Ethical Revolution. Rob, really keen to hear your lessons today and discuss a little bit more around the book. So we'll kick off Rob with lesson one, please.

Rob Chesnut  (1:32)

So lesson one would be that integrity matters in business. And this is something that I've noticed that the world has really evolved particularly in the last five to 10 years, you know, when I was growing up, and you know, for decades, earlier, in my career, business really had one job, and that was make money for shareholders. And that was the entire focus, a company was successful, if it made money, exactly how it did, it was less important. But the world's changed. We are now increasingly connected as a world, there's a level of transparency that's unprecedented. And with that, I think has come a recognition that government isn't sufficient, that they aren't sufficiently equipped to handle a lot of the big problems in the world. And we are increasingly turning to companies to solve some of our world's biggest problems, I think there's an increased recognition that we want companies to do good, not just make money. And that's, that's an expectation that's being put on companies, by its own employees, by customers, by governments and communities. So, you know, the world is looking more closely at the behaviour of companies and their executives. And, look, this is a two edged sword, Scott, you know, on the one hand, companies that don't get it, right, it can wreck their brand. And we've seen numerous examples of companies being called out for bad behaviour. We were Thera knows, you know, we're in the line where it can, it can derail your company. What I've also learned as part of this process is that integrity can drive your business. If you get it right, it will turn your customers into ambassadors. It will energise your employees, it will build trust with communities. You know, the data shows that companies that get ethics right, by according to neutral standards actually outperform the stock market. And they outperform their competitors. So if you can get this stuff, right, it can be a really powerful force for your business.

Scott Brown  (3:44) 

Yeah, interesting to see those insights. I've read a lot recently about Patagonia and the recent news around ownership around the business and I looked into the history of, of them as a company in their values. What are your thoughts on that?

Rob Chesnut  (3:59) 

Patagonia takes this further than really anything I've ever seen. And we've seen the power that that has for their brand and how that's helped given them an advantage in their business. I mean, I think the owner of Patagonia literally turned the company over to be managed by non-profits, for all the profits to go to non-profits. You don't have to go that far in today's world. But what I think you do you do need to do is you need to recognise that you have an obligation beyond just your obligation to shareholders, that you've got an obligation to do right by your employees, and to do the right thing for the world. You know, we're seeing this with an increased emphasis on ESG or require requirement that companies report these things. And I think this is a distinct shift in the world that we've seen just in the last five years. A lot of people that went to business school and who are leading companies today, this isn't how they were raised. This isn't how they were brought, you know, they're literally the ground is shifting under their feet. And it really does require a different type of leadership. I think it's both a big challenge for leaders today. But I think it's also a terrific opportunity for those that can embrace it.

Scott Brown  (5:21)  

Within those organisations that you mentioned are those that you see as being so leaders in this space, and you mentioned the word leaders, I guess a lot of our listeners are from a legal background, like how important is the role of a lawyer or general counsel within that integrity piece, and really keeping the company on track or shaping it

Rob Chesnut  (5:39) 

It's huge, you know, the data, I did a lot of looking into the science behind integrity, or getting ready for the book. Integrity is contagious. And what we found is that leaders are responsible for setting the environment at a company. I think in the book, I talked about this idea that leaders are a thermostat. Not a thermometer, you know, thermometer takes the temperature of a room, but a thermostat sets it by their words, and by their actions, leaders are setting the integrity temperature at a company that everyone in the company lives in. And everyone is influenced by, and a general counsel. Now their role really is in many ways, the integrity conscience of the company. They are leaders in making sure that a company complies with the law. But I think it goes beyond that. I think it's they are responsible for setting a tone within the company, that doing the right thing is important, because it's the right thing. But does it complies with the law? And also, I think because it makes good sense his business. So when I look at the people who are most responsible within the company for this time, when I say the board, obviously, the CEO clearly. And then after that, I think it's the general counsel. And I think it's something that at Airbnb, I was really encouraged to grab it known it because there's not necessarily a clear owner. Integrity isn't something that fits into traditional job descriptions. I think all leaders have to have it as part of their job description. But I think in particular, members of the legal department and the general counsel have to embrace.

Scott Brown  (7:26)  

We'll move on to lesson two.

Rob Chesnut  (7:27)

Lesson Two is going to be a corollary of lesson one. And lesson number two is I thought that I had integrity. And I thought that most people had integrity. What I've learned is that it's not that simple. So I spent some time with a guy by the name of Dan Ariely, who is a professor at Duke University, and then studies dishonesty. And so in order to learn about this subject more, I went to went to Duke and spent some time with Dan, he told me about an experiment that he does, where he fills up a room with people, and gives them a sheet of math problems. And he tells them, look, I'm not gonna give you enough time to do all the math problems. But I want you to start when I say stop, put your pencil down. So people start doing the math problems. Dan says stop, people put the pencil down. He then says, I want you to take your piece of paper, come up to the front of the room one by one and take your sheet that you've been working on and put it in the shredder. And then as you leave the room, tell the proctor how many math problems you did. And the proctor is gonna give you $1 For every math problem that you say that you did. So that's what people do. They put the pencil down, they go one by one, they shred the paper, they head out the door, they collect their money. What Dan doesn't tell them is that he modified the Shredder. It only shredded the outside of the piece of paper. Dan actually knew exactly how many math problems everyone had done. The question is, what percentage of people lie in this circumstance for $1? For $1 a problem? And the answer really surprised me. I don't know though, Scott. What do you think?

Scott Brown  (9:10)

So the demographic of the of the room is-

Rob Chesnut  (9:14)

-it doesn't change, do this with over 10,000 people around the world, demographics are irrelevant.

Scott Brown  (9:23)

So what percentage of people told the truth? I don't know. I think yeah, I mean, I think not far off 50%.

Rob Chesnut  (9:32)

It was 70%. Right. And the numbers shocked me, really. But what they have found is that most people don't lie by very much. They do what he calls fudging. So fudging is we are all tempted to do things that are in our self-interest every day all the time, we're confronted with situations and we all naturally want to lean toward the thing that benefits us the most. So what keeps us from going all the way every time and, and just doing things that are, you know, way off the charts in our favour is we all need to feel good about ourselves. We all want to feel like we're a good person, we all want to feel as though we're as good if not better person than those around us. So that keeps us from going too far. So what ends up happening is that people fudge by a little bit, you know, because they can come up with excuses. Like, Oh, I saw that people were still doing a problem after I put my pencil down, or they didn't pay me for parking here, right? Well, they're not paying me very much because, you know, so you end up fudging a little bit to the extent that you can rationalise your behaviour, right? That's why Dan told me that organisations that have a lot of creative people, or a lot of really smart people are actually more prone to integrity problems. Why? Well, because smarter, more creative people are able to come up with more creative rationalisations for why what they're about to do is okay, and the more you fudge, it actually conditions your mind. So you start to fudge, nothing happens, it all works out, and then you do it a little bit more. And it becomes easier and easier within your brain to do it more and more. And that's how some we've seen some of the big ethical scandals in our lifetime, around companies, they started with little things. So when I asked Dan what to focus on, he said, focus on the little things. ambiguity is the enemy of integrity. Silence is the enemy of integrity. The way to set the right message here is create an environment where people believe that the leaders care about integrity, and then everyone around you is acting with integrity. And if people believe that those around them are acting with integrity, then they're less likely to fudge more likely to act with integrity. So my second lesson really is integrity is a lot more subtle than I thought. It's not a yes, no button. And it's something that is contagious. Something that's influenced by your surroundings.

Scott Brown  (12:10)

Yeah. There's a really good, really interesting anecdote. I hadn't thought about it that way in the past, I mean, it had always been on there. If you're gonna tell a lie, tell a big lie. Go big!

Rob Chesnut  (12:22)

But most people don't go big. You know, they, one of the things that Dan taught me about was there was an experiment where they put wallets, they put together these wallets and put money in wallets with ID contact information. They then dropped the wallets in different locations around different cities in the world, and waited to see what percentage of the wallets actually got returned to their rightful owner. And there were two real interesting factors. One, the percentage of wallets that were returned varied quite a bit, depending on the culture in the particular country. And the level of trust in government and trust that people had in each other, and they varied from like a low of 30% to a high of 80%, depending on what city in the world, you left the wallet. The other really interesting thing, though, Scott was, the more money that they put in the wallet, the more likely it was to be returned. So wallets with a small amount of money were less likely to be returned, because people can rationalise just keeping the money. And it wasn't a big deal. But if there was a larger sum of money in there, people had a much harder time telling themselves that it was okay. And they were more likely to call and report that they had found the wallet.

Scott Brown  (13:47)

Right. Interesting. So what would be your top tip for a business or a business owner, like myself that was looking to instil that as a value. What's your, what's your starting point?

Rob Chesnut  (13:57)

Talk about it, as a leader. What we ended up finding is that most leaders don't talk about integrity. Now you hear me talk about the numbers. And they'll be like, I'll give you an example. Ben Horowitz, who I talk to for my book. Ben had a habit when he was a CEO. Every quarter, he would sit down with his chief financial officer to go over the numbers, and they'd print out the numbers. They'd have the financials right in front of them. Ben would always look at a CFO and say, is there anything in these numbers that makes you feel uncomfortable? Anything in these numbers that you felt pressure to do, anything in here that you felt might be misleading? Because we might miss our number and our stock price might go down? But we're not gonna go to jail, and we're not gonna break the law. Now, contrast that kind of messaging with a CEO that says, We need to hit this number no matter what. I don't care. What'd you do? Get us there? Right? That sets a very different temperature on the thermostat. So I think my advice to someone would be, as a leader, openly talk to the company about the importance of doing the right thing. And the highlight, you know, the fact that when you're aggressively trying to hit goals, the goals may be important, but nothing is more important than doing the right thing.

Scott Brown  (15:27)

And to lawyers out there that maybe are working in a business, they feel the need to push back on this point, or they're not to the right standards, how would you advise them to address this with perhaps an unreceptive CEO or leader within that business?

Rob Chesnut  (15:42)

Well, you know, what I would do is I'd pull together a list of all of the examples where corporations and their leaders have been called out for bad behaviour in recent years, because they're everywhere. I mean, you can't go online without seeing a new story every day. And so I would walk into an executive team meeting, and I would talk about the issue openly and say, Look, we have to recognise that the world's changing, and we have to recognise that the standards for what's right and wrong, and what's expected of companies and expected of leaders is changing. And it's important for us to have a conversation about this as a leadership team for the good of the business. And let's recognise that if we get this right, it will actually help drive the business. So you can appeal to people who care deeply about the financial aspects, you can actually appeal to them by pointing out that this isn't costing us money to do the right thing. In the long run, it actually pays us more and will be more financially successful by intentionally operating this way.

Scott Brown  (16:50)

That's great advice. Very interesting. Thanks for sharing that one, Rob. So Espionage Prosecutor, the Justice Department to working in tech in the West Coast, how does that happen?

Rob Chesnut  (17:01)

It's an unusual career move. And I did it, it was almost unheard of. You know, what I think it is, is, I believe in changing things up. I think that it's important in life, not to get stale. to challenge yourself. Be curious. And look, prosecuting people was it was interesting, for sure. But it was a little negative. Right here. I mean, putting people in jail is kind of a downer. Yeah, you're, you leave a courtroom. And you see the you know, the someone that's going to jail for 20 years going to go into jail for life. I really wanted to put a more positive stamp on my brand. And on my career. And I always loved business, I felt that business was a tremendous way to to make a positive impact on the world. Businesses as a such a powerful ability to change laws for bet for the better. So I started looking around, how can I transition and it wasn't obvious like I, I sent resumes to a lot of companies who said, Well, you're a great prosecutor, but we don't prosecute people here. So but I got lucky Scott, there was a small company in my jurisdiction, I was a prosecutor in Northern Virginia. And there was this little company in my jurisdiction called AOL. Now some of your listeners may remember AOL, AOL, America Online was the way that a lot of consumers first got onto the Internet back in the in the old days. But back, back when I first heard of them, I heard of them as when I was a prosecutor, because prosecutors wanted records from this company. They even wanted to prosecute this company. I'm like, why am I getting these phone calls about this little company? So I started looking into it and joined AOL in order to figure out what it was. And that's when I was like, Wow, this internet thing, this looks pretty powerful. I bet this insane power. And one of the companies that I found when I was looking around on the internet was eBay. And I had a photography hobby. So I decided I would test it out and see if this eBay thing works. I started buying photography equipment on eBay. And then it hit me one night. Wow, I bet eBay has got problems with fraud, illegal items and regulation. I wonder if they could use somebody like me. So I said that eBay, by the way, I was employee 170. They were a small little company. A lot of my colleagues thought I was nuts to give up a secure job with the federal government to go to the west coast. But I thought eBay had the best business model I'd ever seen. I sent them a resume to jobs and ebay.com, the email address, they didn't even have a job posted, thought I'd never hear from them again. And I got a call the next day and I think that sense of curiosity, and not giving up and sort of having a vision of where I wanted my career to go really changed my life. That's

Scott Brown  (20:02)

amazing. You almost defined your own role there, eBay in terms of looking at the skills that you had acquired as a prosecutor.

Rob Chesnut  (20:08)

Yeah, they will. They saw they were having a lot of profit as I suspected they were having problems with all those issues. My first job my first week at the company, Meg Whitman looked at me and said, Rob, it's your job to figure out what we allow on eBay. Should we allow guns? Can we sell alcohol? Can people scalp tickets? What are the rules here? And that was actually kind of intimidating, because we had customers all over the world. So I was, in essence, sort of creating internet law, back in the early days of eBay, and deciding what we could allow and what we should allow. The good news was, I came to the company, knowing when I was a customer, I think that really impressed them. They liked the idea that I was passionate about their business, and got what they did. And I think that made me a more attractive candidate to the company. And yeah, they were seeing the need, but just hadn't thought about what type of person could do the work. And it turned out to be a great transition.

Scott Brown  (21:14)

Lesson three,

Rob Chesnut  (21:16)

lesson three, let's do this one, I learned about the power of diversity. So I think I kind of grew up in a world where, you know, people said, well hire the best person for the job, right? Get the best qualified person for the job. And that always appealed to me. But then I started thinking a little deeper. And I read a book by a guy by the name of Matthew said, called Rebel ideas. And what I learned was the power that diversity brings to organisations, diverse organisations actually perform better than homogeneous ones. Why? Because we all bring our different perspectives, our life experiences into work. And, look, if I walked into a room with five people, and they all looked like me, and they all went to the same type of law school that I went to, it struck me, Well, why do we need five like that one person could can represent that type of thinking and background. But where you really start to, to get powerful is five people from very different backgrounds, five people who grew up differently, who have very different life experiences, who went to different types of schools, they actually have perspectives that I've never thought about. And so I'll tie this back to eBay. In the early days, I've made all the decisions about what you could sell on eBay. And one day… I would always get calls from customer support. Well, Rob, can you look at this item. One day, I looked at an item, and it was somebody who had gone to the Vatican, and they had gotten communion with the Pope. But only when they got the wafer from the Pope, instead of putting the wafer in their mouth, they put the wafer in their pocket. And then they came back and put it on eBay. And so my response was, Pope gave it to him. Why do you think it’s illegal to sell a wafer, if somebody wants them, somebody's crazy enough to buy this. Why, don't buy it right? That was not the right approach to the problem. The Catholic Church was quite unhappy. In fact, they started a national, international boycott of eBay. Because to the Catholic Church, we were selling the body of Christ, it literally was blessed by the Pope, the equivalent of the Body of Christ and deeply offensive. I wasn't Catholic, I didn't understand that. So what I learned was, one person really shouldn't be making those decisions. What we need is a diverse group of people with different backgrounds, different cultures, different ideas, to give me a different perspective so that we can make better decisions. And so I think the lesson really is diverse organisations make better decisions. And the best person for a job isn't necessarily the one that has the background from the top law school, but it's one who brings a different perspective to the team, one that isn't already represented, and whether that be gender, race, socio economic background, whatever it is, when hiring, look to bring a new dimension, a new voice, a different voice to the room than the one you've already got. So instead of trying to artificially define what best is, recognise the best may be defined by what you don't all Ready?

Scott Brown  (25:01)  

Yeah, yeah, looking beyond hiring managers, in my experience, often, often the starting point is looking at themselves as a as the Hallmark and then and then working from there. But there's a massive subject for us to discuss it in a short period of time. But it's obviously something that's very important in the recruitment world. Was there anything again, being at eBay or Airbnb or some of the others? Any practical tips and things that you did to make those hires?

Rob Chesnut  (25:27)  

Sure. I mean, I think one thing I heard early on when I started emphasising diversity and hiring was, well, we're wrong. You know, we, we put out the job recommendation, but we didn't get any candidates, any diverse candidates. And my response was, a lot of hiring comes from your network, right? So what I did with my direct reports one day, I said, I want everybody to come in and pull up your LinkedIn profile. And I want you to look at your LinkedIn profile. And I want you to tell me, give me diversity numbers on your profile. And it brought a lot of sheepish grins when people started recognising that their profiles weren't very diverse. So well, how can we expect to attract diverse candidates if our own networks aren't diverse. So what we did was we developed, we went on a campaign, a multi-year campaign to diversify our networks, we all each of us went out and committed to do a certain number of speaking events, at organisations that were diverse, different than we were with the goal of widening our networks, so that we could start connecting with people who were different than we were. And then in turn, that network would help us recruit into the company. And Airbnb, it was interesting. We, when I took over the legal department there, the previous general counsel was a woman. And we were 50:50. Gender, which was really good. And we kept it that way, during my during my time there, but we weren't very diverse from a perspective of minorities. During the time, because of the intentional efforts we made to diversify our own networks. By the time I left the organisation 26% of the legal department was black or Hispanic, which was a significant improvement. But it only happened because we recognise the value, not just from a number perspective, but the value in terms of the ideas that we were bringing into the organisation by diversifying.

Scott Brown  (27:44)

Excellent. Thanks for sharing that. I think. Yeah, it's, it's a very, it's a very different I think the landscapes in the US and the UK are very different. But it's a question that we're often asked. And I think that proactive approach to going out and making it on your agenda when you're hiring is just as the starting point, definitely. So there's this series, Rob, I'm, I'm asking all my guests as a final question, What lesson that you've learned during your career, do you do you wish you maybe hadn't learned or hadn't applied? Is there any in hindsight that you would have?

Rob Chesnut  (28:17)

Yeah, you know, what I'll think early in my career, I think I was, particularly when I, when I first went to eBay. I think some people stay in your lane, or you're a lawyer, you deal with the legal stuff, let the business people deal with this stuff. And I think early in my career, I was a little reticent to speak up on businessman say, wow, these people were really smart. They went to business school. This is what they're, so I'll do the legal stuff. But what I came to realise is, again, the value of diverse thinking. My background was different than their background. But it was no less valuable. And what I found was that a lot of times I did have a different perspective, or a different point of view that was really valuable to the business had nothing to do with law. It was important that I wanted when speaking about business matters, that I made it clear, I was not speaking as lawyer. We didn't have to do this. There was a legal issue. But why don't we do things this other way? And I think the best lawyers are ones who add value in ways that aren't even necessarily legal. They're voices that people within the company gravitate toward, because they've got good judgement. They've been around and seen some things, some different things, even if the advice isn't purely legal advice. It's still good advice. And so I think one thing I would shy away from, is the advice stay in your own lane. I actually think life's a lot more interesting when you can get out of your lane a little bit and recognise that you've got more value to offer than just the one that is on your business card.

Scott Brown  (29:57)

Yeah, that is great advice. Advice avoided brilliant thanks for sharing that that says running at a time Robert could talk more and if people wanted to learn more about your background and to acquire a copy of the of the book, where can they get in touch or find out more?

Rob Chesnut  (30:13)

Good news, Scott. The book is widely available at finer bookstores, Amazon, Walmart and the like. It's called Intentional Integrity: How Smart Companies Can Lead An Ethical Revolution. It's available on Audible books, Kindle, all major bookstores. I also do a post on LinkedIn on a regular basis, and people are welcome to reach out to me there, as well as a regular column for Bloomberg. Bloomberg Law. I'm in there as well.

Scott Brown  (30:44)  

Fantastic. We'll share links to those in the podcast links. But thank you for your time today. It's great to hear about the variety you've had in your career and all those lessons. So thanks again.

Rob Chesnut  (30:54)

Thanks for having me, Scott.

Scott Brown  (31:02)

Thanks again, that was Rob chestnut, ex general counsel and chief ethics officer at Airbnb, amazing, varied career that he's had, I'm sure you'll agree, from the time as a prosecutor, working on espionage cases, to working in big tech in Silicon Valley, not for the faint hearted. I was really interested to hear about the stuff around curiosity and building your career and being curious. And that was really what led to his move away from working in government to work in in tech and the rest is history. So if you've enjoyed my conversation today, why not go back and listen to a couple of old episodes from seasons gone by, such as my chat with tax associate of Taylor Wessing, Kaleem Khan, who also goes by The Legally Blind Guy, he shared a warning about comparing our career paths with people around us, and also had some concrete ideas about making the law more accessible for disabled colleagues. You can search for that episode on Apple podcasts, Spotify, and all those other great listening platforms or head over to heriotbrown.com/podcasts. If you've got any feedback, or you'd like to appear on the podcast, or if you'd like to suggest anyone that might want to talk to me, then please drop me a line scott@heriotbrown.com or come over and connect with me on LinkedIn. See you next time.