Why Do We Keep Elevating Horrible CEOs?

Back in 2007, I accepted a job as the IT Manager for tribe.net, one of the first social networks. It was started as part of a triumvirate of websites by three CEOs who had linked up to buy the Six Degrees patent. You see, in the early days of the internet there was one social network called SixDegrees and they patented the equation for graphing how many degrees away from any other person on their social network. This was bought by the founders of Tribe, Friendster, and LinkedIn — Mark Pincus, Jonathan Abrams, and Reid Hoffman. I thought it was pretty cool to work for Tribe at first, and then I realized that the people in charge had no sense of ethics. Working with Andrew Trader (popularly known as AT) and Mark Pincus was a bit like talking to Donald Trump — whatever story they made up that day was reality. I put up with a lot, but I started to have my fill of it when they used the Tribe.net email database to seed Zynga’s mailing list. The final straw was when I realized a program I’d started with the users to get income to upgrade the site was hijacked by Mark and AT to fund Zynga’s Texas Hold’em game. I quit — but not before a close friend of mine alerted me to the fact that Zynga was ripping off artwork of his for Zynga’s VAMPIRE WARS game. Few things get my goat than ripping off individual artists. My angry letter to Mark became the basis for both him and AT filing a restraining order against me and publicizing it via TechCrunch to try to hurt my chances of getting a job.

This was small potatoes compared to the stock shenanigans that only got resolved this year out of the entire Zynga debacle. If you search for “Pincus, Mark” on https://www.sfsuperiorcourt.org/online-service, you’ll see no less than four class action lawsuits against Pincus and Zynga from the past decade about stock irregularities. Pincus has publicly declared that he dropped out of Harvard because he found the ethics class too hard, and this was reflected in every deal in his professional life from that day going forward. He sold Cisco the IP to Tribe.net knowing it was well-nigh worthless. He convinced the organization managing his IPO to let him sell his own Zynga stock early, so he profited to the tune of about $200 million while just about everyone else got shafted. The charitable organization Zynga formed had a cloud of doubt over it from the start because of Pincus. He even initiated stock option clawbacks from people who initially took a lower salary because they wanted stock options.

In Silicon Valley, this is a person people look up to.

Time and again, you’ll see the same story — a terrible CEO runs roughshod over employees and customers and investors to the accolades of everyone. Only when the smoke has cleared do people even think “Why did I give my money to that person?” Part of it has to do with the fact that most of these people are actually not CEO material, but instead are “visionary founders”. This gives them a lot of leeway to do things people in Silicon Valley think of as “quirky”. More often than not, though, it’s because these folks all came to the startup game from extremely wealthy families and knew from an early age that you had to pay to play in this town.

The sad truth is that capitalism in the USA today is infested with these insect-like CEOs, from the smallest startup right on up to the President of the United States. There is little difference between Mark Pincus and Donald Trump — before you can make a lot of money in this nation, it seems, you have to have the wealth to get started (drop out of Harvard much?) and a complete lack of ethics.

It’s not limited to men. If you’ve been following the news around Theranos, you’ll no doubt know how Elizabeth Holmes duped investors with fantastic stories that everyone seemed to swallow. This is how Silicon Valley works — if you lie a big enough lie and back it up on paper then people fund you. The extent of your downfall is proportional to how much money you make for the people who backed you. Theranos had no expectation to be profitable from the start so it was easier to get a lot of money for it — and the fall of Ms. Holmes is infamous exactly because there was no profit. But you’re not reading about the problems of Mark Pincus because there is a cashflow, however ill-gotten and predatory it may be.

The same is true of Jack Dorsey and Elon Musk. Twitter is a huge company that doesn’t seem to ever be profitable, but the impact it has on the lives of everyone is immeasurable simply because it practically won the 2016 election for the Republicans. Dorsey infamously refuses to deplatform extremists on Twitter in the name of “free speech”, but what it really boils down to is that the more eyeballs content gets the more money Twitter makes. Hate gets a lot of eyeballs — a situation someone without ethics can no doubt capitalize on by co-opting talking points about “free speech” and pretending it applies to hate speech. You’d think Elon Musk would be cooler than torpedoing his company with Twitter antics, but the sad fact is that Tesla is rife with cultural problems that could only come from the top down.

Why do investors and VCs put up with this lack of ethical behavior? Money is the easy answer, but if you peel away the veneer of the startup world and VCs in particular, it’s all populated with the exact same lack of ethics you find in the top companies. These people all come from the same wealthy upbringing, and money is everything. Of course Mark Zuckerberg can get away with aiding and abetting Russian troll farms for the same reason Uber can get away with “disrupting” the taxi industry — it increases shareholder value.

The upshot among all this is that the ethical CEOs, the ones who care about their employees (such as Dan Price, who actually cut his own salary to give everyone at his company a living wage) get way less exposure because anything less than a billion dollars is Not Sexy to VCs.

I’ll tell you my personal solution for all of this — don’t work for them. Avoid any situation that seems like a “cult of personality” around a “visionary” leader. I highly recommend that you start your own company, because it’s worked for me. Barring that, find a company you believe in. I get that everyone has to eat, but in the end you’ll feel better if you pass up that job at Facebook and find a company that’s actually trying to change the world rather than sell it.