Talk: "Hubris and Ethical Fading" at Yale School of Management

How far would you go to close the deal?

That was the question posed during negotiations classes at Yale School of Management earlier this week, where I had the opportunity to discuss the role of ethics in negotiations and offer a real-life look at ethical fading.

During the class, students engaged in a role-play case study, negotiating a real estate deal that presented a dilemma: one side had to make serious ethical compromises in order to close the agreement.

In the end, more than 80% of participants had no problem misrepresenting their intentions, muddling material details, or outright lying in order to close the deal.

Some laughed, shrugged, and said they were just doing what they needed to do to get it done. Many pointed to the idea that "everyone does this" in the real estate universe they were dropped in to.

It’s a fascinating window into the phenomenon of ethical fading, and it’s also a near-perfect study in hubris.

Because hubris doesn’t always look like arrogance. Sometimes, it’s the quiet belief that you’re the exception, or that your motives are good enough to justify the means.

That’s where it's common for founders, investors, and negotiators alike lose sight of the line.

This played out in the operation of my adtech startup. Small compromises felt harmless at first. But one rationalization led to another, and soon, those decisions compounded into catastrophe. What started as confidence became delusion.

Ethical fading and hubris are deeply intertwined. Both can be slow, invisible processes. Both erode objectivity. And both thrive in isolation, when you stop letting anyone challenge your assumptions.

That's why my first-hand experience is such a strong fit for this case - we were able to discuss how those justifications were made and what can happen next in a situation like this.

The truth is that hubris is part of every startup's undoing. It convinces founders that rules are for other people. And by the time it's visible, the damage is done.

What I Told Students at Yale School of Management

• Ethical fading is a slow, incremental process where small justifications accumulate until the line between right and wrong is blurred or obliterated. I worked myself into a situation where I could no longer find the line. Every small decision matters.
• Ethical preparation should fundamental to all startups. The pressure of a startup environment is very real, and if you wait until you're in a challenging situation to decide what lines you won't cross, it's already too late: ethical decision-making requires preparation, and cannot be improvised. It's equally important to decide what you won't say or do as it is to decide what you will say or do.

This talk, which is part of my work on the patterns of startup failure, has been delivered at Yale SOM in February 2025, September 2025, and November 2025. Thank you to Dr. Erin Frey (who is currently engaged in a Professional and Personal Restoration Study) and the Yale School of Management for hospitality and to the students for their attention.