Written and read by John-Miguel Mitchell

Think of your startup’s culture like a building’s foundation. Yes, here we go again with foundations, but please be patient.

You can skip the rebar. Pour thin concrete. Tell yourself you’ll “fix it later when there’s budget.” For a while, everything looks fine. You’re adding floors. The building’s growing. Investors are impressed by how fast you’re moving.

Then one day, someone notices the cracks.

Not hairline cracks. The kind that make structural engineers go pale. The kind that mean you can’t add that next floor—or even occupy the ones you’ve already built. The kind that turn your IPO dreams into an emergency evacuation.

Startup culture loves the myth of the ruthless founder. The one who “does whatever it takes,” who “plays to win,” who cuts corners and calls it “execution.”

Then reality arrives in the form of a federal investigation.

According to The Wall Street Journal, the Justice Department opened a criminal probe into allegations that Deel—a $17 billion HR startup—recruited a mole inside competitor Rippling. We’re talking grand jury subpoenas. Federal prosecutors. The whole enchilada.

Deel denies everything. The facts will play out in court.

But here’s what won’t play out: their IPO timeline. Because nothing kills a public offering faster than the phrase “ongoing federal criminal investigation.”

The Deel investigation reveals what most founders miss: culture isn’t an HR initiative—it’s your largest unhedged liability. One rogue employee, one Slack message, one ethical shortcut can turn a $17B valuation into a federal case study.

This is what happens when founders confuse aggression with strategy. When they pour a weak foundation and hope nobody notices until after the exit.

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The Real Cost of a Weak Foundation

The FBI estimates corporate espionage costs U.S. companies about $300 billion annually. But those are other people’s problems, right? Until they’re not. Check out these numbers:

• Uber paid $245 million to settle trade secret theft allegations with Waymo.
• Kalder Inc. CEO and Forbes 30 Under 30 alum charged last week with defrauding investors of $7 million through fake revenue numbers.

In Deel‘s case, court documents allege a Rippling employee was recruited to steal internal documents. Money allegedly moved from a Deel-linked account to the COO’s wife’s account, then straight to the spy—all within seconds. Later payments? Cryptocurrency, to cover the tracks.

This isn’t Ocean’s Eleven (great film by the way. This is amateur hour with felony consequences.

Here’s the part that should terrify you: even if the building doesn’t collapse, the cracks still destroy your value.

You know what happens when a structural engineer finds foundation problems? The building gets shut down. Immediately. Doesn’t matter how beautiful the lobby is. Doesn’t matter how many floors you added. The foundation determines everything.

Weak compliance oversight creates liabilities. Not potential liabilities. Actual liabilities that show up on your balance sheet, in your legal bills, and in your valuation markdown.

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Why “Getting Away With It” Still Destroys Your Company

You know what’s expensive? Not the espionage itself. It’s what comes after.

Around $11.9 trillion of S&P 500 value is tied to corporate reputation. One scandal and it evaporates overnight.

Any hope of Deel aiming for an IPO this year or next? Please. They’re hiring a new CFO, president, general counsel, chief compliance officer, and chief risk officer—basically rebuilding their entire leadership team while under federal investigation.

That’s not “moving fast and breaking things.” That’s discovering your foundation is crumbling while you’re trying to add the penthouse suite. Good luck explaining to buyers why they should invest in a building that might not be standing in six months.

Research on 935 IPOs found that companies with strong cultures get better valuations when going public. They literally grow 4x faster. Companies with weak cultures? They get a “pass” from investors—literally, as in “we’re gonna pass on this one.”

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Your Actual Playbook: Reinforcing the Foundation Before It Cracks

Most founders wait until they’re facing an investigation to build these systems. Don’t be most founders.

Here’s what actually works when you’re still small enough to course-correct:

How to Not Be an Idiot: The Implementation Table

TIMELINE	WHAT TO DO
WEEK 1	• Document what crosses the line (one page max: customer data, competitor intel, what’s fireable) • Set up anonymous reporting (Google Form works) • Tell everyone: “We don’t do this”
MONTH 1	• Lock down who can access sensitive data • Get third-party security audit. • Hire ONE person who’s done this before.
MONTH 6	• Get your first independent board member • Run scenario training: ‘A competitor’s employee DMs you on LinkedIn offering to share their product roadmap in exchange for yours—do you respond?’” • Document everything in writing.

That’s it. Three checkpoints. Not 47.

You wouldn’t build a skyscraper by ignoring the foundation and hoping for the best. Why would you do that with your company?

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“But Everyone Else Does It”

No, they don’t.

Stripe, Figma, and Notion didn’t plant spies. They won by building better products. The “everyone does it” defense is what mediocre founders tell themselves to justify cutting corners—right up until the building collapses.

Here’s the legal reality: competitive intelligence (reading public filings, talking to ex-employees, attending conferences) is legal. Corporate espionage (recruiting moles, stealing trade secrets) violates the Economic Espionage Act and carries federal prison time.

And when you get caught? Viral missteps spark portfolio-wide brand contagion. Your investors don’t just lose money on you. They lose credibility across their entire portfolio.

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The Choice: Pour Concrete Now or Call Lawyers Later

Build the company you’d be proud to have audited by federal prosecutors. Not because you’re a good person—because you’re not an idiot.

Keep in mind that culture debt always comes due. Always. The only question is whether you’re building governance on your timeline or the DOJ’s timeline.

Since the Deel investigation started, they’ve had to rebuild their entire C-suite under federal scrutiny, with their IPO timeline imploding and legal bills piling up. That’s the actual cost of “scrappy.”

It’s like realizing you need to reinforce your foundation—except now you have to do it while the building is occupied, inspectors are crawling through every floor, and potential buyers are watching through the windows. Everything costs 10x more. Everything takes 10x longer. And everyone’s wondering why you didn’t just do it right the first time.

The rules matter more as you scale, not less.

You either learn this now, or you learn it when prosecutors show up with subpoenas. Your call.

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Questions For Every Founder

• If federal prosecutors subpoenaed your Slack channels tomorrow, what would they find?
• When your top performer crosses an ethical line to hit their number, what actually happens?
• If you had to pitch investors in 18 months under federal investigation, could you still hit your projections?

Article was read & written by John-Miguel Mitchell who is the Founder and Lead Consultant at Ekipo LLC. If you’d like to learn more about how to design and build out the ideal workplace culture for your business, email him at jmitchell@joinekipo.com.

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