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Former Netflix executive convicted of receiving bribes from contractors

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Re: Former Netflix executive convicted of receiving bribes from contractors

#21

Post by vxNsr »

anonymous4828 wrote: post #5
csmythe15 wrote: post #2

Hey, I'm the author of the article -- just wanted to point out that what made this story interesting to me is the implication that this kind of conduct could be very widespread. Prosecutors definitely hinted at that. If anyone knows of any similar stories, I'd be very interested in hearing them. christie.smythe@businessofbusiness.com

Doesn't this sort of thing happen in government all the time?

Yes, but there are controls in place to limit it, many large corps have similar controls the problems usually arise when you get unicorns which grow faster than they can build processes to account for stuff like this. I’m sure now Netflix will work on the issue, possibly this case started bec they began working on preventing stuff like it.

Re: Former Netflix executive convicted of receiving bribes from contractors

#22

Post by jshen »

luckydata wrote: post #13
joshstrange wrote: post #11

> There was just one catch to landing that deal: It had to hire the streaming company’s vice president of IT operations, Michael Kail, as a consultant and an advisor, and pay him with fees and stock options. I completely get how a startup would take this deal, however gross it is, but what I don't understand is how the exec got away with it from Netflix's side. And the fact this wasn't just 1 but 8 other startups he…

HR and rules are for the little people. VPs can do pretty much whatever they want for a LOOOONG time at large tech companies before any consequence catches up with them.

This isn’t true at the big company I’m at. I’ve seen several VPs fired in the 10 years I’ve been here.

Re: Former Netflix executive convicted of receiving bribes from contractors

#23

Post by namdnay »

anonymous4828 wrote: post #5
csmythe15 wrote: post #2

Hey, I'm the author of the article -- just wanted to point out that what made this story interesting to me is the implication that this kind of conduct could be very widespread. Prosecutors definitely hinted at that. If anyone knows of any similar stories, I'd be very interested in hearing them. christie.smythe@businessofbusiness.com

Doesn't this sort of thing happen in government all the time?

there's a long road from "I'll buy from you but don't forget that I retire in 5 years' time, I hope there's a cushy job waiting for me" to "I'll buy from you, here's my bank account, make me a consultant wink wink"

Re: Former Netflix executive convicted of receiving bribes from contractors

#24

Post by groby_b »

earthscienceman wrote: post #7
autarch wrote: post #6

Earlier quoted context omitted.

The first sentence of the second paragraph says: "There was just one catch to landing that deal: It had to hire the streaming company’s vice president of IT operations, Michael Kail, as a consultant and an advisor, and pay him with fees and stock options." That seems pretty clear to me.

It seems very unclear to me. I don't understand why that's illegal or wrong. Someone was hired and paid using fees and stock options? Seems fine to me. I don't understand corporate structure enough to understand why that's problematic... “leveraged his status as a leader of the IT community in Silicon Valley to subvert the trust of Netflix and others to profit at their expense” How did he leverage it in a way that wa…

"I will only sign this contract on behalf of my company if you give money to me personally" is not in any way ambiguous in terms of morality.

If you don't understand why that's wrong, I strongly suggest maybe taking a few philosophy or ethics classes.

In short: He was supposed to be acting on behalf of his employer - that's what being an exec means. He instead used the resources of his employer (not his to use, except on behalf of the employer) to dangle a lucrative deal in front of a much smaller company - which, at this point, is akin to exercising quite a bit of force, because these deals can be make-or-break especially for small places.

He then made that deal contingent on enriching himself personally.

That's about as crooked as you can get without inflicting physical harm.

Re: Former Netflix executive convicted of receiving bribes from contractors

#25

Post by tyingq »

csmythe15 wrote: post #2

Hey, I'm the author of the article -- just wanted to point out that what made this story interesting to me is the implication that this kind of conduct could be very widespread. Prosecutors definitely hinted at that. If anyone knows of any similar stories, I'd be very interested in hearing them. christie.smythe@businessofbusiness.com

I've definitely seen a fair amount of brazen stuff like this over several decades in IT. One path that's pretty interesting to follow is announcements about new board members at software providers.

Often, you can see their prior (or even current) job, and press releases about them selecting that software some short(ish) time before.

Re: Former Netflix executive convicted of receiving bribes from contractors

#27

Post by dboreham »

joshstrange wrote: post #11

> There was just one catch to landing that deal: It had to hire the streaming company’s vice president of IT operations, Michael Kail, as a consultant and an advisor, and pay him with fees and stock options. I completely get how a startup would take this deal, however gross it is, but what I don't understand is how the exec got away with it from Netflix's side. And the fact this wasn't just 1 but 8 other startups he…

This was a vendor/customer relationship. Once that's set up, the only communication would be via accounts payable and technical staff, and probably wasn't frequent or deep. It's perfectly possible that nobody ever mentioned it.

Re: Former Netflix executive convicted of receiving bribes from contractors

#28

Post by kvathupo »

anonymous4828 wrote: post #5
csmythe15 wrote: post #2

Hey, I'm the author of the article -- just wanted to point out that what made this story interesting to me is the implication that this kind of conduct could be very widespread. Prosecutors definitely hinted at that. If anyone knows of any similar stories, I'd be very interested in hearing them. christie.smythe@businessofbusiness.com

Doesn't this sort of thing happen in government all the time?

This does remind me of Deloitte winning a contract for building a website using technology only Deloitte could use [1]. Surprise, surprise: the website sucked.

[1] - https://news.ycombinator.com/item?id=25975636

Re: Former Netflix executive convicted of receiving bribes from contractors

#29

Post by tweedledee »

This is so common it’s hard not to do. Not doing it definitely stunted my startup but it’s a lifestyle company and I don’t mind building slower.

Edit: I should add that while I was working at a FAANG (before doing a startup) the team I was on would constantly be blocked from building X only for a VP to buy a company that said they did X but didn’t. Because we still needed X we would buy a new company each year. We could tell the VP was setting them up to sell to us. We would joke about leaving to do a start up for the VP to not only make more money but so we could finally have a working X in the company.

Edit2: With my current start-up it's not uncommon that we are instructed to sell to a customer via a nominated 3rd party. We don't know for sure, but we strongly suspect, that the 3rd party markup is how the executives are skimming off extra money. At least it keeps us out of it.

Re: Former Netflix executive convicted of receiving bribes from contractors

#30

Post by geofft »

earthscienceman wrote: post #7
autarch wrote: post #6

Earlier quoted context omitted.

The first sentence of the second paragraph says: "There was just one catch to landing that deal: It had to hire the streaming company’s vice president of IT operations, Michael Kail, as a consultant and an advisor, and pay him with fees and stock options." That seems pretty clear to me.

It seems very unclear to me. I don't understand why that's illegal or wrong. Someone was hired and paid using fees and stock options? Seems fine to me. I don't understand corporate structure enough to understand why that's problematic... “leveraged his status as a leader of the IT community in Silicon Valley to subvert the trust of Netflix and others to profit at their expense” How did he leverage it in a way that wa…

Michael Kail worked for Netflix as VP of IT ops.

Netskope wanted Netflix to be a customer.

Netflix (or, more specifically, whoever they talked to at Netflix) said "Sure, we will buy your product, but you have to pay Michael Kail."

Nine other companies were told the same thing by Netflix.

The question here is whether Netflix paid Netskope because that was genuinely the right thing for Netflix, or whether Netflix paid Netskope because Michael Kail, who had the authority to make purchases using Netflix's money, personally benefited from the deal. It's a conflict of interest.

Maybe a simpler example, and possibly easier to understand: Suppose Michael Kail, in the evenings after he got home from Netflix, started a company called Kailcorp that provided IT services. Then when he got back to the office, he said, "We should sign a deal with Kailcorp and pay them lots of money." Is it clear why this would be illegal / why he would be profiting at Netflix's expense? (Genuine question - maybe it's not.)

If so, then the only distinction here is that Kail didn't start the company himself, he subverted ten other companies (with real products) into the same thing.

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