Silicon Valley founders fight back
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Illustration: Tiffany Herring/Axios
Across Silicon Valley, entrepreneurs are clashing with the professionals hired to oversee the companies they founded — and they seem to have the upper hand.
Why it matters: In Silicon Valley, entrepreneurs are known as "founders" and are broadly exalted. Hired hands, by contrast, are seen as "professional fakers" who often "drive the company into the ground," as venture capitalist Paul Graham put it in a controversial essay this month.
- There's a tenuous degree of consensus around the idea that founders and professionals do run companies in significantly different ways — even if there's much less agreement on which one might be superior.
Driving the news: 23&Me founder Anne Wojcicki declared herself "surprised and disappointed" this week that all seven of the company's independent directors, including Sequoia chief Roelof Botha, had resigned en masse, declaring they were fed up with waiting for her to come up with a take-private proposal they could sign onto.
- Wojcicki's "concentrated voting power," they wrote, effectively meant that they had no control over the company's fate.
- Even though 23&Me's share price is languishing at 35 cents and its market capitalization is below $200 million, Wojcicki — the ex-wife of Google co-founder Sergei Brin, and a signatory to the Giving Pledge — seems to be unwilling to pay a premium to shareholders in her attempt to take her company private.
Between the lines: Wojcicki's governance fight echoes the battles at Bolt Financial and OpenAI, where founders Ryan Breslow and Sam Altman have faced similarly vocal opposition to their leadership.
The big picture: Silicon Valley is coalescing around the idea that professional management does more harm than good.
- "How to run a company if you're merely a professional manager," writes Graham, "is so much less effective that to founders it feels broken."
The other side: The problem isn't the professionals, says Dave Karpf of George Washington University in an impassioned rejoinder. Rather, it's Paul Graham himself.
- Where Graham says that CEOs are very good at managing up and therefore "include some of the most skillful liars in the world," Karpf makes exactly the same claim about OpenAI's Altman, a Graham protégé, who has demonstrated a "remarkable flair for failing upward."
Where it stands: The archetypal Silicon Valley heroic founder is Steve Jobs, and Graham explicitly says that founders should "run their companies like Steve Jobs instead of John Sculley," the hired CEO who replaced him at Apple.
- Karpf, by contrast, says that "young-Steve-Jobs was a horrendous manager" and only became good at running Apple after he left, learned more about management, and returned as a hired CEO with no founder shares.
- The VC-dominated Silicon Valley of today, says Karpf, tends to reward non-technical founders like Altman or Peter Thiel, rather than technical hacker-geniuses like Aaron Swartz or Steve Wozniak.
The intrigue: Perhaps, writes author Dan Davies, founders are best thought of as keepers of the corporate soul.
- So long as they have that position, he says, "whether you get rich or not will depend on whether your founder is a genius or a dud."
The bottom line: Professional CEOs like Satya Nadella at Microsoft and Tim Cook at Apple have created trillions of dollars of wealth. But they'll never receive the reverence afforded to Bill Gates or Steve Jobs.
