#MeToo is beginning to hit the bottom line

Who said popular movements don’t make a lasting difference?  The #MeToo Movement has claimed various scalps with astonishing speed, prompting the old guard to hope it is all just a passing wave of feminist hysteria.  But this wave has now been growing for eighteen months and shows no sign of abating.  Indeed, its premise – that sexual harassment is an abuse of power and prevalent in every walk of life – is becoming mainstream.

So we applaud the new practice, reported today in the Financial Times, that tech investors are increasingly including “#MeToo” clauses in deals with start-ups, forcing entrepreneurs to disclose any past complaints of sexual harassment and warranting against future complaints. (“Tech Investors include #MeToo clauses in start-up deals,” 18 March 2019)

In the past, directors of companies have been able to sexually harass their subordinates highly confident they wouldn’t be reported, out of fear of retaliation and the difficulty of securing a new job without a glowing reference from a former boss.  If they were sued (very unusual), they could always pay off the individual, while insisting upon on an all-encompassing non-disclosure agreement to protect their reputation and prevent victims corroborating each other.   

If these clauses become commonplace – and since investors offering all-important cash are insisting on them, this is likely – the men in charge will have an even more powerful financial incentive to behave properly and not break the law.  If they sexually harass they might have to pay back start-up funds to investors, and depending on timing, this could cause their whole venture to collapse. 

#MeToo was never the product of feminist hysteria, but hopefully that charge can be put far behind us now that the movement’s premise is not only felling former corporate titans like Harvey Weinstein, Les Moonves and Andy Rubin, but shaping corporate finance from the ground up.