Ten years ago, the entrepreneur-savants running Silicon Valley were treated like royalty. Now we know just how badly their bright ideas can backfire.
When Larry Page and Sergey Brin announced they were giving up their “day to day” duties at Alphabet early this month—leaving the heavy lifting to Google CEO Sundar Pichai—an era ended in more ways than one. As much as the news made history for the Mountain View search giant, it was also a fitting end to a cult of founderhood that peaked and crashed during the past 10 years.
At the beginning of this decade, “the Google Guys” were still the flag-bearers of that cult. From the time they started their company in the late 1990s, they gleefully drew the boxes that subsequent founder-savants would later check off: pursuing ideas that conventional wisdom deemed crazy; dismissing traditional business practices; and maintaining control of their company even after going public, bypassing oversight by granting themselves powerful voting shares.
The underlying philosophy was that founders knew better than shareholders what is good, not just for the company but for the world. If you gave them unlimited power, they might even eschew some profits for social good! Or, at the least, they’d postpone quick bucks for a long-term approach that only visionaries would appreciate. When Page claimed that Google was “not a conventional company,” he was speaking for all founders, many of whom would subsequently adopt that convention.
But the decade we’ve just endured has shattered their halos. The 2010s might have begun with Mark Zuckerberg posing for Time magazine’s Person of the Year, a role model for countless behoodied wannabe entrepreneurs. But it ended with him trying to look stoic while absorbing six hours of enraged verbal piñata swings from legislators.
Congress, along with the rest of us, is clearly disenchanted with the claims that founders are engines of wealth creation and change agents for global goodness. While their stated goals might have been lofty, the consequences of founder dreams have been low-paid gig economy jobs, misinformation campaigns, and the theft of our attention. Even Google/Alphabet, fabled for its happy workers, is experiencing employee unrest and regulatory pushback on privacy and antitrust issues.
At least Zuckerberg and the Alphabet dudes run profitable companies with high valuations. Some of the other founders who won glory in this decade are now known for questionable practices while piling up deficits. Remember Elizabeth Holmes, who was going to be the next Steve Jobs? It’s now her prosecutors who are out for blood, and they won’t settle for just a drop. Travis Kalanick, once celebrated as the hard-charging bro who was going to revolutionize transportation, created such a publicly toxic culture at Uber that his board tossed him aside. But even Kalanick’s misdeeds don’t compare to the Barnum-esque antics of WeWork’s Adam Neumann, whose business plan crumbled under the scrutiny of its aborted IPO. And since he had embraced the tactic of loading voting power into the shares he owned, the only way to rid the company of its megalomanical founder was to pay him off.
The founder halo will take another battering when lavishly optioned versions of those tales appear on home screens and in the cinema. These productions will make the satiric HBO show Silicon Valley look like a tourist bureau advertorial for its eponymous location.
In short, we’ve had enough. It once might have been charming that Jack Dorsey showed up for his Congressional spotlight sans tie and with hipster beard, reading his testimony from an iPhone. But what we want to know is, why is Twitter so toxic? Several of the founders who took their unicorns to market and remained in charge are having trouble explaining why their stock prices have plummeted from those high valuations in the private realm.
To be sure, founder-mania is still with us to some extent. After all, the VCs have to spend their money somewhere. During the 2010s, the chance to have an impact on the world, and maybe become a billionaire, placed founderdom at the peak of aspirational careers, much as in earlier times someone might have striven to pen the Great American Novel. (Now the dream is to write the most outlandish S-1.) The audience of wannabe founders is big enough to support best-selling books on starting and running companies; the bard of the field, venture capitalist (and serial founder) Ben Horowitz just wrote a tome urging founders to adopt Ghenghis Khan and prison gang leaders as role models.
And take a look at the startup accelerator Y Combinator. Started in 2005 with six nascent companies, in the early 2010s it began to dramatically ramp up its twice-yearly training program, which nets big seed rounds for almost all of the participants . Now a batch might have 200 companies. Since most of those startups consist of two or three founders each, that’s roughly 1,000 founders a year, unleashed on the ecosystem to fail and start again. But that’s not the full extent of YC’s influence. It also runs an online StartUp School that welcomes future Zuckerbergs and Pages from around the world, at scale. So far over 41,000 aspirants have taken the course. (The very best wind up in Mountain View for its three-month boot camp.) Just this week, YC announced it will run the online course more often.
Even in Y Combinator’s cathedral of founderdom, there’s been a change. CEO Micheal Siebel acknowledges the shift in perception. But he says the ecosystem is course-correcting, with a new wave of founders whose focus is social good. “We’re going to see some new role models,” he says. “Founders, investors, and users all have to live in this society. We’re all seeing the problems. And everyone wants to feel like they can be part of the solution.”
Still, the bloom is off the founder rose. And that’s a good thing. In our wild embrace of founders—and that goes especially for the enablers who threw money at them—we made a big mistake by not accounting for their lack of accountability. And we forgot that no matter how amazing these dudes seemed (yes, too many were dudes, though at least we got talking about diversity in this decade), they were just human, with human frailties. Unlimited power corrupts, even when the power is wielded by people in hoodies.
There will be more Larrys and Sergeys, and of course they will be funded. And we will benefit by their innovations. But in the 2020s, new founders will also be pressed on a question they can no longer avoid by swerving their rollerblades: What can go wrong?
All Rights Reserved for Steven Levy