San Francisco.- The young king of Silicon Valley is getting off his unicorn.
He is writing passionate blog posts that speak of his legacy. They express their hope in the prospects of their companies. They are quitting their jobs by running a start-up they have set up.
in the last weeks, ben silbermanCo-Founder of Digital Board Service Pinterestresigned as CEO; Joe GebbiaCo-Founder of Housing Rental Company airbnbannounced his departure from the management of the company, and Apoorva MehtaGrocery Delivery App Founder instacartsaid he would end his term as chief executive when the company goes public this year.
sign of resignation The end of an era in these companies that are among the most valuable and well-known in Silicon Valley in the last decade, and the era they represent. In recent years, investors have poured more and more money into a group of highly valued start-ups, known as unicorns, which is worth $1 billion or more, and its founders have been treated like visionary heroes. Those founders fought for exclusive property rights that would keep them in control of their companies, a change from the past, when entrepreneurs were often replaced by more experienced executives or pressured to sell.
However, when the stock market fell sharply this year, tech companies that lost hard money in particular took a hit, this attitude began to change, venture capital investors back out of deals and Urges Silicon Valley’s prized young companies to cut costs and proceed with caution, The industry started talking about “wartime CEOs” who can do more with less, claiming lessons learned from past crises.
Patience with visionaries ran out. The companies run by their founders began to seem passive, not active.
“All of this has changed in the last 90 days and it’s not going to happen again anytime soon,” said Will Schröter, founder of Startups.com, a startup accelerator program. The “we’ll figure it out later” story is no longer attractive to investors, he said.
In addition to Silbermann, Gebia and Mehta, Founders at the helm of Twitter, Peloton, Medium and Microstrategy have all resigned this year.
They don’t leave with a good note. Shares of Pinterest are down 60% from a year ago. Elliott Management, an active shareholder known for putting pressure on companies to make major changes, recently picked up a stake in the company. Airbnb shares are down 25% from a year ago and Instacart lowered its internal valuation by nearly 40% in March as it prepares to go public in a hostile market.
“Certainly, it’s less fun to be a CEO when the market is down, the economy is turning negative, and regulation is ramping up,” said Kevin Werbach, a business professor at the University of Pennsylvania’s Wharton School. “If you’re already rich, famous, and successful like these people, there often comes a point where being in leadership is less attractive than retiring.”
In the tradition of start-ups, Mark Zuckerberg pioneered the modern Boss, “I’m the CEO, idiot,” and lifting Wall Street’s hair with his “outrageous” hoodie, he solicited investors to hold a majority stake in Facebook as it was growing, starting with the present. The era of “founder-friendly” deals. Equal protections and exemptions were given to ambitious youth like Zuckerberg because venture capital firms were quick to look as friendly as possible., engaging entrepreneurs with perks (dinner, jet, celebrities) and services (recruiting, PR, design). A company also publicly promised not to vote against any founder in the company’s affairs.
“He inspired an entire generation of us to believe they can’t start businesses,” said Trace Cohen, 34, a very young startup investor.
The founders used their advantage. They remained in top jobs, even when companies were far ahead of their skills as managers. And they kept their companies private for as long as possible, avoiding awkward business realities like making a profit. She was given the benefit of the doubt, something the founding women rarely got.
As the tech sector became a major force in our economy, the cult of startup founders found its way into popular culture through celebrities like Ashton Kutcher and TV shows like the HBO satire Silicon Valley.
Some of the founders of this era took their independence too far. Adam Newman’s spending and partying meant he was forced to leave WeWork in 2019, even though he held a majority stake in the company. And Travis Kalanick’s aggressive tactics at Uber led to him being fired in 2017 despite his supervising actions.
The rest, for the most part, held up to the companies’ initial public offerings. But it turns out that running a public company, with its fiduciary duties, analyst calls, and quarterly earnings work, is far from the hustle and bustle of startup life. Now, when troubles are brewing in the midst of a market downturn, they are relinquishing the power and control they once fought for.
In his announcement, Silberman said running Pinterest was a “gift of a lifetime.” Gabia, who would become an Airbnb consultant, traces the company’s early days as well as the nicknames of its co-founders (Brian “Jet Fuel” Chesky and “Indiana Nate” Blecharczyk), and the company’s early days with lessons on kindness. Posted a wonderful memory. Humanity. (Cheskey remains CEO.) Mehta tweeted that he “cared deeply” about Instacart, “the one thing I’ve thought about every waking minute for the past decade.”
By running into billionaires, they have projected the relentless positivity of Silicon Valley. Pinterest is “just getting started”, Airbnb is “in the best hands ever” and Instacart has a “huge opportunity ahead”, the founders wrote. Both Mehta and Gebia said they have plans for new projects.
investors say that Expect more founder resignations Those who feel they now have to work more for less (relatively speaking). “Now, they can let some executives move forward, handle it, and develop it with different incentives,” Cohen said.
Last week, Brad Hargreaves, the founder of Common, the startup that manages Common Living Spaces, announced that he was stepping down as CEO and becoming chief creative officer. The company’s Head of Properties, Carlin Holloman, a veteran of the hospitality industry, will take over as CEO.
The market downturn affected Hargreaves’ decision. In times of crisis, he said, it is good to have a founder at the helm of the company who can convince investors, employees and customers with a grand vision. “The operation doesn’t matter that much,” he said. “No closing balance pending.”
He said that today’s environment requires someone with extensive experience and operational skills of Holoman. “At a young age, where operations matter a lot and nobody believes in the bigoted approach, you need an operator in that seat,” he said.
“Too many founder-CEOs stay around for too long,” he said.
Founders who have been caught in the midst of a downturn so far — and there are many, such as Stripe, Coinbase and Discord — can wait. More demand and more pressure. Stock trading app Robinhood has laid off more than 1,000 employees this year as it lost active clients. Dan Dolev, an analyst at Mizuho Securities, said several investors had privately suggested that Robinhood bring in a more experienced executive to help co-founder Vlad Tenev. Tenev cannot be forcibly ousted, as he and his co-founder Baiju Bhatt have a controlling stake in the company.
“These are typical founders who are very good at ideas and creative things,” Dolev said, “but operations can benefit from help.”
A Robinhood spokesperson said the company recently underwent a restructuring, hiring executives from TD Ameritrade and the Securities and Exchange Commission.
To make matters worse, startup founders They have lost their aura of positive cultural cacheA trend that began during the tech backlash of 2017 and has grown with the publication of disastrous books and TV shows about WeWork, Uber and other tech darlings.
“When you’ve already earned a certain amount, you’re playing for the position and the position isn’t there,” Hargreaves explained.
However, there is always a comeback story. If the market takes a turn for the worse and companies start going in serious ways, we may be back to rescuing the founders’ reverse dynamic, suggested Akademik Werbach.
It will be the return of the original cult founder who admired and even inspired Zuckerberg’s arrogant business cards long before unicorns roamed Silicon Valley. Perhaps an example of this was the first great young boss: Steve Jobs.
by Erin Griffith