Sep 23, 2019

Silicon Valley's fraying cult of the founder

WeWork CEO Adam Neumann. Photo: Cindy Ord/Getty Images for WeWork

For 25 years Silicon Valley has built successful companies by handing control to inventive and driven but sometimes eccentric or reckless startup founders. From Facebook to Google, these leaders often receive special kinds of voting stock that let them sell shares to the public — and become fabulously wealthy — while retaining power over their firms.

Why it matters: As the latest wave of tech startups lines up for its string of IPOs, the pendulum may be swinging the other way — with investors demanding problematic founders step back or cede control.

  • As WeWork's public offering falters amid questions about the company's business model and the behavior of founder and CEO Adam Neumann, Softbank, WeWork's biggest investor, is pushing to replace Neumann, the Wall Street Journal reports.
  • Several stories have targeted detailing Neumann's excesses, from his penchant for alcohol to an epic pot-filled private plane flight to examples of WeWork doing business with other entities he controlled.

Where it stands: For now, Neumann still has his voting stock, but WeWork needs access to cash to keep funding and expanding its growing network of office-sharing spaces.

  • Neumann's troubles come in the wake of founder Travis Kalanick's 2017 ouster from Uber, which he had built and controlled. His board turned on him after accounts surfaced of a culture of sexual harassment, gender discrimination, retaliation and bullying that he'd overseen. 

The big picture: There have been other cautionary tales of placing too much faith in a charismatic founder (see: Theranos). In other cases, eccentric founders remain in control, such as Elon Musk, though concerns remain about his judgment, temperament and ability to adhere to securities law.

Our thought bubble: Entrepreneurial drive doesn't necessarily translate into true leadership, particularly as organizations grow.

  • When control passes from founders, right now it usually goes to professional managers beholden to short-term market forces, and that isn't necessarily a great answer, either.
  • The industry needs to develop a better system for cultivating founders who have ethical values as well as disruptive ideas.

The bottom line: Being an effective CEO requires a range of skills and few individuals have all of them. But when founders are guaranteed to remain in control, they're empowered to be reckless, licensed to misbehave, and difficult to hold accountable.

Go deeper: Why WeWork waits

Editor's note: This story has been corrected to clarify that the Wall Street Journal's coverage reported on only one pot-filled private plane flight by Neumann (not multiple pot-filled plane flights).

Go deeper

Minneapolis unrest as hundreds protest death of George Floyd

Protesters and police clash during demonstration on Wednesday over the death of George Floyd in custody outside the Third Police Precinct. Photo: Kerem Yucel/AFP via Getty Images

Minneapolis police clashed for a second night with protesters demonstrating the death of George Floyd, an African American man who died in police custody.

The latest: Minnesota Gov. Tim Walz tweeted late Wednesday that the situation where the clashes were taking place was "extremely dangerous" as he urged people to leave the area. There were multiple news reports of police firing tear gas at protesters and of some people looting a Target store.

FEC commissioner fact-checks Trump's voter fraud claims

Federal Election Commission Ellen Weintraub during a committee hearing in the Capitol in 2017. Photo: Joe Raedle/Getty Images

Federal Election Commission commissioner Ellen Weintraub posted an extensive fact-checking thread to Twitter late Wednesday refuting claims by President Trump and some Republicans that mail-in voting can lead to fraud.

Why it matters: Weintraub weighed in after Trump threatened to take action against Twitter for fact-checking him on his earlier unsubstantiated posts claiming mail-in ballots in November's election would be fraudulent, and she directly addressed Twitter's fact-checkin of the president in her post.

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 1:30 a.m. ET: 5,695,155 — Total deaths: 355,688 — Total recoveries — 2,351,177Map.
  2. U.S.: Total confirmed cases as of 1:30 a.m. ET: 1,699,933 — Total deaths: 100,442 — Total recoveries: 391,508 — Total tested: 15,192,481Map.
  3. Public health: CDC issues guidelines for reopening officesFauci says data is "really quite evident" against hydroxychloroquine.
  4. States: California hospitals strained by patients in MexicoTexas Supreme Court blocks mail-in expansion to state voters.
  5. Business: MGM plans to reopen major Las Vegas resorts in June — African American business owners have seen less relief from PPP, Goldman Sachs says.
  6. Tech: AI will help in the pandemic — but it might not be in time for this one.
  7. World: EU proposes a massive pandemic rescue package.
  8. 1 🎶 thing: Local music venues get rocked by coronavirus.
  9. 🎧 Podcast: Trump vs. Twitter ... vs. Trump.
  10. What should I do? When you can be around others after contracting the coronavirus — Traveling, asthma, dishes, disinfectants and being contagiousMasks, lending books and self-isolatingExercise, laundry, what counts as soap — Pets, moving and personal healthAnswers about the virus from Axios expertsWhat to know about social distancingHow to minimize your risk.
  11. Other resources: CDC on how to avoid the virus, what to do if you get it, the right mask to wear.

Subscribe to Mike Allen's Axios AM to follow our coronavirus coverage each morning from your inbox.

Updated 1 hour ago - Politics & Policy