I work for a small startup (< 10 people). We're all "white-collar" folks that live in apartments or "normal" sized homes in a city with a population of about 70K. My co-workers and I have typical salaries for our area (we're not paid 6 figures). Our CEO, however, is very wealthy (from other startups) and owns a mansion. I have been to our CEO's house and it is very lavish (e.g. a room dedicated to their collection of 100s of pairs of shoes).

Recently, we found out that our CEO and a sales person on our team are hosting one of our existing customers at the CEO's house for the day. We only found out about it because our sales team let us know that they'd be unable to take sales calls.

A co-worker and I agreed that this feels "weird" as it doesn't accurately represent our whole company. I personally think it's flaunting of their wealth to make us seem larger than we actually are (or even worse to boast). I think to myself: why couldn't they host the day at a different location?

Is hosting a customer at our CEO's mansion appropriate/ethical? How can I properly evaluate if my CEO is doing so is appropriate or if I have a valid concern that I should take to our Board of Directors?

  • Comments are not for extended discussion; this conversation has been moved to chat. – enderland Aug 26 '17 at 0:03

One of the reasons people like this have those lavish houses is to impress clients and potential clients and investors. That is why they host things there. It is also why they host the same sort of people on their boats. Showing actual wealth gives clients and investors a feeling that this is a successful CEO and his businesses aren't fly-by-night and thus are less risky to do business with.

Since he is legitimately wealthy from start-ups, that speaks to his track record to the customers or potential investors. There is nothing at all unethical or even unusual about this. Sales is all about making the client feel comfortable about doing business with you.

  • I'm not against making the customer feel comfortable about doing business with us. But isn't this still a bluff about out company? That's what feels weird to me. It doesn't paint an accurate picture of our company. This feels deceitful to our customers... – John Doe Aug 25 '17 at 13:49
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    No it isn't. Your CEO has the wealth, he can funnel it into your company if need be. That fact that he got it from other start-ups shows the client that he knows how to make a company successful, so if your company isn't there yet, this gives them confidence that he can take it there. It is probably even more critical to do this when you are in a situation like this where the company itself is not yet successful and the only way to get it successful is to sell more product and you do that by showing you have the capability to build this new business into a successful one. – HLGEM Aug 25 '17 at 13:53
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    I should also point out that large customers expect to be wined and dined, so not to take them to his home or someplace very expensive would look suspicious to them. – HLGEM Aug 25 '17 at 13:54
  • Some very good questions are whether the client is disclosing to their companies that they are being personally entertained, and whether the CEO's company has liability if the client slips and falls down their marble staircase. But these are not John Doe's direct concerns. Very possibly the CEO has made arrangements to be covered by the company's liability; they may well be expensing the hospitality to a corporate account, and they are very likely claiming some use of their home (and yacht, and country club) as a perfectly valid business expense on their income tax returns. – CCTO May 14 '20 at 17:27

Is hosting a customer at our CEO's mansion appropriate/ethical? Should I do anything about this or are my feelings unwarranted?

Yes it is appropriate. If the CEO has a nice place, which is not unusual, why not use it to host a prospective client or current customers and save the company some money?

I have been with multiple companies where a C level executive have hosted potential client sales meetings, current customer appreciation events, and company (employee only) events at their homes.

As a matter of fact, I have been to at least 2 such events hosted by a C level executive of fortune 500 company. If there were any ethical or legal issues I assure you these folks are not stupid enough to put themselves at risk.

Your CEO probably has a successful track record, which would be backed up by his nice home (display of wealth). I think this would make customers feel more comfortable betting on your start up ( and your CEO ).

  • To clarify: they are not a prospective client they are already a paying customer. – John Doe Aug 25 '17 at 13:37
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    While none of this information is bad and I am not claiming it is incorrect I am also unclear on why these details would make it appropriate for the CEO to host customers at their personal home. – IDrinkandIKnowThings Aug 25 '17 at 14:38
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    @IDrinkandIKnowThings I would argue its so common that if it were a problem, there would be regulations / rules against it. – Neo Aug 25 '17 at 14:43
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    Your answer still does not clarify why it is appropriate. I am sorry – IDrinkandIKnowThings Aug 25 '17 at 14:57
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    @IDrinkandIKnowThings, Actually, the question doesn't clarify why it's even inappropriate in the first place. And no, saying that it is "deceitful" doesn't make sense whatsoever. The client surely knows he's visiting a private mansion and not the company. By that logic, wearing a suit when meeting clients is deceitful, wearing a tuxedo/fancy dress during a wedding is deceitful, fancy corporate HQs are deceitful (when the bulk of the work is done in factories and factory workers get paid very little), 99% of marketing materials are deceitful, our entire human society is deceitful, etc. – Stephan Branczyk Aug 25 '17 at 19:44

If I get you right, you feel this is unethical because the location doesn't represent your company, so implicitly this is could be considered a lie about the state of the company.

While I can understand where you're coming from, this is ethics in ignorance of reality. Did anyone currently working at your company dress up when they interviewed with the company? Made sure not to eat garlic for lunch even though they love garlic? Clean their shoes on the day of the interview when normally they only do so once a week? Get a haircut 3 days before the interview? Maybe even wear a suit the first time in 5 years?

Even in grade school, students who dress better get better grades on average. Salesmanship is to a large part exploiting this effect - dress yourself, your company, and your product to look attractive. If your salespeople and executives don't do this, your company will make fewer sales, your company files for bankruptcy, and you lose your job.

  • ethics in ignorance of reality hit home to me (as did your examples of things we do to "impress"). I think it's one of the things that I have to accept as standard practice when doing business (even if it does feel weird to me). Maybe seeing how sales work in the business world shows that running a business this way just isn't for me. From looking at everyone's comments on this question, it seems like it's ok to attempt to impress without substance... since in reality you won't survive if you don't. – John Doe Aug 25 '17 at 14:26
  • @JohnDoe You got the point. The one thing I omitted is that to make things look more attractive it's not always necessary or even beneficial to go the expensive/luxury route. – Peter Aug 25 '17 at 14:38
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    Right that makes sense. Thanks for your civility and teaching me to think differently about my problem. It's something that a lot of users on the SO network don't understand. It's a very hostile environment here. And I'm guessing because I learned something from you, you're being serially downvoted... – John Doe Aug 25 '17 at 14:43
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    I read all the answers but will give Peter the +1 because was the one reaching the OP sentiment. John my two cents. I was on the same boat as others because I thought the question was very naive, but is probably because we have more live experience. Peter in other hand go back to basics and understand a way to explain something we seen obvious. And I agree don't let negativity affect you, because even when some discussion were rude I could see the content they try to transmit because I wasn't emotional involve, but you were looking it with a hot head. – Juan Carlos Oropeza Aug 25 '17 at 16:16

Depending on the nature of the business, it may be commonplace that the CEO invites clients to his house. It will likely be done to impress clients rather than deceive them. I wouldn't say it's unethical. The fanciness of your house and the size of your company / companies are not necessarily related.

If you overhear the CEO saying things like "this is all thanks to my 300 employees at my latest start-up...", then you should be worried. It could be very easy for the client to fact-check this and land the company and CEO (not you specifically) in trouble!

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    Just because "Everybody Does it" does not make it right or appropriate – IDrinkandIKnowThings Aug 25 '17 at 14:44
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    @IDrinkandIKnowThings That's what I'm trying to understand here (and why I'm feeling so uneasy about it). Just because every company wines and dines does that mean that our company should? – John Doe Aug 25 '17 at 14:46
  • @IDrinkandIKnowThings I was simply remarking that it may be commonplace but not supporting the 'everybody does it' reason; more that the CEO may be just trying to impress rather than lie. – user34587 Aug 25 '17 at 14:56
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    @Kozaky - So is it appropriate? How can the OP evaluate if it is in his case? – IDrinkandIKnowThings Aug 25 '17 at 15:00

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