It's also a demonstration of an ethical failure. It was theft.
I would reason to 'non-theft' based on an argument that AOL gave access to the building (badge) and provides services for people with access to the building, therefore giving access was tacit agreement to the use of the facilities. Other employees no doubt sleep there on occasion and that it also tacitly allowed. Therefore non-theft.
I would reason to the 'theft' conclusion that AOL provides services to incubators and to employees but does not explicitly extend employee benefits to incubator attendees. Using services and consumables that are provided to AOL employees is outside the scope of services offered to incubator participants. Therefore Theft.
Eric was aware of this grey area, clearly trying to stay outside the regular patrol of security, and thus actively trying to not force a resolution on the question of allowed or not allowed. His response when the resolution occurred appears to be 100% compliance.
If I were considering investing in Eric's activities I would consider both parts of that story, the first where he exploits a grey area and the second how he responds to being discovered.
In my experience it is people who take Eric's approach of interpreting grey areas in the most optimistic way until shown otherwise, and being 100% rule following on explicit rulings, are successful. There are thresholds of course, if there were signs that said "No one is allowed to sleep in this facility" or "At no time will anyone spend more than 12 out of 24 hrs in a day in this facility" or even more general guidelines that define a standard for defining 'living on site' and a express a prohibition against it. Something which might say "You would be considered to be living here if you spend more than 100 hrs a week or do more than 3 loads of laundry or sleep more than 12 hrs a week or eat more than 12 nominal meals at the facility" etc. AOL could call it out, but they haven't. And that leaves it open to interpretation.
In the business world that is sometimes called 'moxie' or 'stones' or any number of euphemisms and its generally respected.
What is not respected is explicit exploitation. So for example when I worked at Google the mini-kitchens all had refrigerators that were full of beverages. A small number of employees were found to be exploiting this 'perk'. An example of that which was given was an employee that prior to the weekend, would take an empty back pack and fill it with anywhere from 20 to 50 beverages to take home. That was 'theft' in the sense that the intention was for the beverages to be enjoyed at work not at home, even if you were working from home. But it was theft because of the quantity not because of the taking. Taking one beverage to drink while riding the shuttle home? Not a problem although you were not 'technically' at work any more.
I think Eric intentionally interpreted the situation in a way that would support his actions, and recognized that those actions might not be completely inline with the intent, and waited for AOL to express its intent. I don't think he ever believed AOL would 'endorse' his living on campus while he worked on his startup (incubator participation not withstanding) but I could see a case for it being an open question if not explicitly disallowed.
If someone leveraged this kind of "moxie" in interpreting a gray area of a contract with our corporation, I'd hesitate to do business with them again -- they couldn't be trusted to ethically consider both sides of a moral/ethical/legal quandary and resolve those gray areas to our mutual benefit.
But to respond to this point: "I'd hesitate to do business with them again -- they couldn't be trusted to ethically consider both sides of a moral/ethical/legal quandary and resolve those gray areas to our mutual benefit."
When evaluating a series of events involving grey areas its always useful to try to understand the principles that are in play. Different sets of principles would lead you down two different paths.
You state your goal is to "resolve those gray areas to our mutual benefit." If you were an investor in Eric's startup you would see that his actions did exactly that, he resolved the grey area to the benefit of the startup which mutually benefits him and the investor. If he had been living for free in AOL's facility so that he could play Diablo III all day on their fast internet connection he would be resolving the grey area to benefit only himself.
So it seems that Eric's guiding principle is 'make the business successful.' And that is a good principle to invest in, but you have to consider 'at what cost.' And that is where people spend thousands of hours in business ethics classes. A typical ethics class might raise the question "Who was harmed?" and how. And the other party here is AOL, so it is up to AOL to determine how they would calculate the harm here. They could use a metric of "What would be different if this hadn't happened?" Would their network bill have changed? Would their food bill? Water bill? Since I've got visibility in to the way these things are costed I can tell you that no, there was probably zero difference in AOL's overall costs with Eric living there and had he not lived there. There was however potential liability on two counts, one the zoning laws don't allow for people to live in buildings zoned for commerce/industrial so AOL has a legal obligation to stop it when they find it, and two there is some injury liability if Eric managed to injure himself while living there. Some of that would be covered by their blanket policy on their facilities with respect to 'guests' and some they could be on the hook for if it could be proven that they knew he was living there and had done nothing about it. Since they clearly acted as soon as they became suspicious he was living there I don't think they incurred any legal liability at all.
Now Eric could use a similar line of reasoning to rationalize his action, I don't know one way or the other. I am just looking at the facts we know and observing what was at stake.
From a business perspective, if you have a potential partner who is focused on making the business successful you can be pretty sure they will resolve questions to your mutual benefit. On the other hand if they tend to resolve those questions to their personal benefit, without regard to the impact on the business then I agree they are not worth doing business with.
So what you really mean is:
"I prefer to work with people that resolve ethical questions according to my personal, subjective ethical standards."
It's not like ethics is some simple, black and white thing, where every question has an obvious "right" and "wrong" (or "good" and "bad" ) answer. If ethics weren't subject to debate and controversy and analysis, the field would have become completely stagnant centuries ago, with no new philosophical work being produced.
There's quite a bit of debate and philosophy on moral relativism, too. Which is the rhetorical baseball bat you're trying to apply here.
http://lesswrong.com/lw/uv/ends_dont_justify_means_among_hum...
E.g. your reasoning would call Robin Hood evil. My conscience would call Robin Hood good. A full game-tree analysis would require investigating whether wealth concentration is good or bad for the tech progress that will cause the Singularity.
If the district attorney's office in Santa Clara County wanted to, it is more likely than not that they could get a conviction for illegal lodging (misdemeanor).
If I were the district attorney, I'd tend to let something like this slide when the doer is as young as this guy is. It bothers me a little though that he is speaking openly about it to the press because that suggests that he has no shame about it. If he really has no shame at all about it, I would prefer that he be dragged into court.
If your reaction to this report is to excuse the behavior because the guy is an entrepreneur, I think your reaction is no better than, "It's OK because he's a member of our club."
I mention the risk of violating zoning laws below but I also asked a public defender their take on that aspect as well. They said pretty much that unless you could prove that AOL both knew and allowed this to occur, or could prove that they didn't actively try to discourage such things, you could not convict them of violating the rules. She related a case of a homeless person who was charged with loitering and the business was charged for allowing people to live at their facility in violation of zoning laws, but the case against the business was dismissed for lack of evidence that the business knew about the activity or allowed it. I expect AOL would use a similar defense in this case.
His security clearance was never revoked. Nobody directly informed him he couldn't sleep there. I'd say this is perfect 'grey area' since he didn't knowingly commit any crime and AOL didn't knowingly allow it.
It's not a grey area - he's just lucky people like him.
Entering into a search engine the phrases "California penal code" and "illegal lodging" should allow you to find the text of the law.
I learned about this law when someone I knew was charged with illegal lodging for sleeping in one of the building at Stanford long ago. (He pled no lo contendere, had no priors, and was fined $100.)
No offense, but I do not want to discuss it with you anymore.
Steve Jobs dropped out of college and attended classes free of charge. Would you argue that he should never have started Apple, despite getting a free ride on a few classes?
If I rob a gas station, steal a thousand dollars, and invest that into Las Vegas Sands when it's $1 / share in 2009, ride it up to $60, liquidate out, and then help children that are dying from cancer, surely it's perfectly OK given the benefit to society.
AOL is probably going to up their security because of this. It was something they should have done in the first place if Eric was allowed to do this the whole time. He's an entrepreneur, he got a few free meals and lifted some metal weights around at AOL's petty expense. I think people need to lighten up and appreciate the resilience and creativity, rather than scrutinize the individual who wasn't doing any real harm.