Editor’s note: Nancy Hauge is Chief Customer Advocate and Senior Vice President of Human Resources at Ruckus Network, a digital entertainment service for universities. This column is the latest in The Entrepreneurial Spirit series done in partnership with Local Tech Wire.
_______________________________________________________________________________________My experience with big companies has taught me that sex has no acceptable role in the workplace. My experience with start-ups has taught me that you cannot separate sex and the workplace. Start-ups are often held together by stock options and sexual tension. In fact, it is my theory that the sexual tension in start-ups is a key contributor to their value.

Twenty-one years ago a young woman, we’ll call Judi, came to me to for HR advice. It seems one of our accountants was being very aggressive in pursuing her for a date. She didn’t feel she was being harassed, but she was not interested. It struck me as odd that they had ever even come into contact with each other. She was a technician on our assembly line and he was assigned to sales. When I asked her about this, Judi replied casually, “Oh, we haven’t ever really met, but I went skinny dipping with him and a bunch of folks from sales in the hotel pool at the last company party and we fooled around a little bit.”

My expression must have communicated my thoughts, because Judi rushed on to say, “Please, it was the product launch party, we were celebrating–.I would never date anyone at work!” So, getting naked, swimming and “fooling around a little bit” with coworkers is OK, but dating is out. “Before that party, I hadn’t had a date in four months,” Judi later told me. “I had been working 70 hour weeks! So, we go to this party and things happen! That is just the way it is in start-ups!”

The company went public a year later and became the fastest company in America to grow organically to $1billion in revenue.

The Formula for Sexy Companies

Why are start-ups so sexy?

1. Start-ups are about new stuff–a new technology, a new market or a new way to make money. You spend a lot of time focused on the future in a start-up. You talk about your business model a lot. You talk about bleeding edge technology. You talk about what the competitors are doing wrong, and what you are doing right. Start-ups make you feel smart. The intellectual exercise is sexy.

2. Start ups are, by their nature, risky. In a start-up you are trying to do something that has never been done before or you are trying to do it in a way that has not yet been done. You are flying without a net. In a venture backed enterprise, you actually plan for the day you will run out of money. You plan for the day you go broke, while you bet that you will have increased the value enough to secure another round at a better price. Start-ups are a gamble. The risk makes your heart beat fast. Risk is sexy.

3. The rewards are big. Start-ups are where you go to make money. You don’t go just for the salary, you go to accumulate wealth! You join a start-up looking for the great valuations that come after the market testing, product launches, interim rounds, bridge loans, break even and all the hard work. They don’t call it “sweat” equity for nothing. Sweat is sexy. Money is sexy.

4. Youth. Start-ups are most often populated by a majority of young people. Sure there are a few of us with grey hair hanging around to make the investors feel confident. But the heavy lifting is often done by folks at the beginning of their careers. You need the youth for their energy and their untarnished optimism. Young people often succeed because they do not realize what they are attempting is impossible. Youth is fearless. They are attracted to the risk. They don’t need to be told to think outside the box, because they haven’t yet seen the inside of the box. Let’s face it; young folks are, by definition, sexy.

So, start-ups are really sexy. They are turbo charged with a kind of energy that doesn’t exist in an established enterprise. There is a focused, but breathlessly excited, quality to a start-up that is not that different from a romantic rush.

Let’s look at the recipe we have: Intellectual stimulation, a heart stopping risk/reward ratio, and hormone laden youth. Start-ups are a freakin’ aphrodisiac! Young, passionate people, working long hours on engaging business problems, the clock is ticking, the risk is growing, the pressure is building–all we need is a cut-away scene to waves crashing on a beach or a train disappearing into a tunnel and you can see where this is leading.

The sexiness of start-ups gives rise (pardon the pun) to a variety of issues. There is no “balance” in the life of a start-up. There is no time for a life outside of work. Without any social life outside of the office and all of those sexy attributes in the office, is it any wonder that employees sometimes get confused about what they are feeling? This leads to complications and drama (like the skinny dipping story above), which the writers of Desperate Housewives couldn’t dream up.

Maintaining ‘Office Chemistry’

My current company has had to respond to the situation with an “Office Chemistry” policy that specifies the rules of social engagement with colleagues. It covers all sorts of situations; May you ask a colleague for a date? (You get one ask), What if they say yes? (Mazel Tov!), What if they say no? (Don’t ever ask again.) What if they work for you? (Don’t even ask the first time!) What about traveling together on business? (We are going to pay for two rooms–You are on business!) Working offsite? (Never only two people alone, and go to Starbucks, not your apartment) and then the policy goes on to read:

“Remember, you have both a career and a love life you might be trying to balance. It can be wonderful to have someone in your life who really understands what you experience every day at work. However, it can be pretty darn uncomfortable to have previous liaisons work with you everyday. It is your call how to conduct your personal life, but we suggest you really think about all of the consequences of an office romance before embarking on this road.”

I have been with three start-ups that went “all the way” to an IPO. Let me share a fun fact from my vantage point in the HR function: At each of these companies, the number of millionaires created on the day of the IPO, was just about equal to the number of babies born to the employees in the year after the public offering. I wonder how much skinny dipping went on at the IPO parties.

Didn’t I tell you this was sexy stuff?