The history of the "coup" in Silicon Valley: when the founder was betrayed by the board of directors in cold blood!

Original source: Data Ape

Image source: Generated by Unbounded AI

Under the bright stars of Silicon Valley, a recent dramatic turn of events has occurred: OpenAI, the leader in the field of artificial intelligence, has shockingly swept its founder, Altman, out of the house. Of course, the story later reversed. The latest news shows that Altman has emerged victorious in the battle with OpenAI’s board of directors. He will return to OpenAI and will restructure the board of directors. This event seems to be a re-enactment of an old script, in this mecca of science and technology, which is known for its innovation and breakthroughs, the power game and palace fighting drama never stop.

Silicon Valley, as the heart of global technological innovation, has not only nurtured revolutionary technology and disruptive thinking, but also staged a fierce confrontation between founders and boards of directors. These stories go beyond mere business conflicts to show the complex interweaving of ideals, power, humanity and responsibility.

These “palace fighting dramas” are not only part of Silicon Valley, they have also become a profile of the history of science and technology. From Apple’s Steve Jobs to OpenAI’s Altman, every fight is not just a personal frustration or revenge, but has affected the trajectory of the entire industry and the world.

This article will delve into some of the most iconic palace fights in Silicon Valley history, and explore the blood and tears of these tech tycoons who were swept away by their own companies.

Apple - Steve Jobs (1985)

• In 1985, Silicon Valley staged a palace fight that shocked the world: Steve Jobs, the co-founder of Apple, was forced to leave the company he founded after losing a fierce power struggle with then-CEO John Scully and the board of directors. *

The conflict between Steve Jobs and Scully stems from a fundamental disagreement over Apple’s future direction. Steve Jobs, a visionary and creative pioneer, always adhered to his revolutionary ideas about technology and design. Scully, a traditional corporate executive from PepsiCo, is more focused on the company’s financial soundness and market strategy. Over time, these two distinct philosophies have formed a clear split within Apple.

In 1985, in Apple’s conference room, a dramatic showdown over the company’s future fate was unfolding. The spotlight is on Apple’s star product, the Macintosh. Steve Jobs, the founder with a passion for technology, insisted on making the Macintosh the pinnacle of technology and design, even if it meant soaring costs. However, this vision is at odds with CEO John Scully’s philosophy. Scully, a PepsiCo-hop executive, pays more attention to the market viability and cost control of the product. He firmly believes that only by reducing costs and selling prices can Macintosh gain a foothold in a competitive market.

In a tense and spark-filled board meeting, the disagreement between Jobs and Sculley reached its peak. Jobs passionately defended his vision, his eyes sparkling with a relentless pursuit of innovation, trying to convince everyone present. However, Scully’s calm and rational rebuttals, as well as his deep insight into market trends, gradually won over the board members. The atmosphere became tense, and the sound of Jobs’ idealistic bubble bursting could be heard in the conference room.

Ultimately, when the board voted in favor of Scully, it was not just a veto for Jobs alone, but a major choice for Apple’s future path. Jobs was forced to leave the company he had founded, and at that moment, his heart was filled with disappointment and anger, but his eyes still sparkled with unyielding light.

After Steve Jobs left Apple, he didn’t stop his entrepreneurial pace. He founded NeXT Computer Inc., which focused on developing advanced computer systems that would later become the core of Apple’s future products. At the same time, he also invested in Pixar Animation Studios, which later revolutionized the animation industry with popular animated films such as Toy Story. This experience not only shaped Jobs’s legendary image as an entrepreneur and innovator, but also set the stage for his future return to Apple and the rescue of a company on the verge of bankruptcy.

In 1997, when Apple was in financial trouble, Jobs was re-invited to return to Apple. He not only succeeded in rescuing Apple from bankruptcy, but also led the company into a new golden age. Jobs redefined the tech industry with a series of revolutionary products such as the iMac, iPod, iPhone, and iPad. His leadership has taken Apple from the periphery to the center, becoming one of the world’s most valuable companies.

Yahoo - Jerry Young (2008)

• In 2008, Yahoo Inc., the once-internet giant, faced a major turning point in its history. Co-founder Jerry Young has seen a growing conflict with the board of directors throughout the year, especially over the important event of blocking Microsoft’s attempt to acquire Yahoo. *

In 2008, Microsoft proposed to acquire Yahoo, which was not just a business deal, but a meeting point in the fortunes of two giants of the Internet era. Microsoft’s proposal is seen as a way to counter Google’s growing influence. However, Yang has strong opposition to this proposal. He believes that Microsoft’s acquisition will seriously threaten Yahoo’s identity and culture as an independent Internet company.

Yang’s opposition sparked a huge controversy in the board, with some members of the board leaning towards Microsoft’s offer as a way to bring stability to the company in a competitive market environment. However, Yang insisted that independence is one of Yahoo’s core values, and that being acquired by Microsoft would undermine the company’s ability to innovate and compete in the market. Over the course of months of debate and discussion, the disagreement between Yang and the board of directors grew, leaving the company in strategic confusion and uncertainty.

At the height of the struggle, Yang published a public letter expressing his firm stance on maintaining Yahoo’s independence. The letter was widely disseminated and became the focus of media and public discussion. In the letter, Yang emphasized that he believes that Yahoo can better realize value and innovation as an independent company, and the letter reflects Yang’s feelings as the company’s founder and deep affection for the company.

In the course of the struggle, disagreements and discontents within Yahoo began to leak out. Some executives and employees have expressed concerns about the board’s decision-making, concerned that the acquisition could have a negative impact on the company’s culture and future. This internal uncertainty and anxiety has affected the company’s day-to-day operations and employee morale to a certain extent.

As time went on, the relationship between Yang and the board became increasingly strained. Eventually, after Microsoft withdrew the acquisition proposal, Yang left the CEO position in 2009 and left the company altogether in 2012. This series of events not only ended Yang’s career at Yahoo, but also marked the end of an era for Yahoo as an Internet pioneer.

After Yang’s departure, Yahoo tried a variety of strategies and leadership changes, but never regained its former glory. The company was eventually acquired by Verizon Communications in 2017, symbolizing the eventual decline of a once-internet giant. In the eyes of many, if Yang had been able to emerge victorious in the battle with the board, perhaps Yahoo’s fate would have been different.

Jerry Young didn’t retire from tech after leaving Yahoo in 2012. Instead, he translates his years of experience in the internet industry into support and mentorship for emerging businesses. Yang has devoted himself to the field of venture capital and has become an active investor and entrepreneur mentor.

Yang co-founded AME Cloud Ventures, a venture capital firm focused on data-driven businesses. Through this platform, he has invested in several startups, especially those with potential in the fields of cloud computing, mobile technology, and artificial intelligence. For example, he invested in Zoom.

Of course, Jerry Young’s most classic investment case took place during the Yahoo era. In 2005, Yahoo invested $1 billion and transferred its China operations to Alibaba in exchange for a 40 percent stake in Alibaba. This investment went on to become one of the most successful deals in tech history, bringing huge returns to Yahoo.

Twitter - Jack Dorsey (2008)

• In 2008, Twitter co-founder Jack Dorsey faced a major challenge in his career: being forced to leave the CEO of the company he co-founded. This incident not only had a profound impact on Dorsey personally, but also had a significant impact on Twitter’s future trajectory. *

At the time, Twitter was in the early stages of rapid growth, but it also faced many challenges. As CEO, Dorsey had clear guidance on product innovation and vision, but struggled with company operations, team management, and a profit model. At that time, it was reported that Twitter was working in a chaotic environment, with unclear product development directions and poor communication within the company. In addition, Dorsey was also holding a key role at another company, Square, which made it difficult for him to devote himself fully to the management of Twitter.

According to insiders, the board is concerned about Dorsey’s management style. They believe that Dorsey is better at the start-up stage of creative stimulation than at the day-to-day management and decision-making of established companies. In a high-profile board meeting, Dorsey’s management capabilities were the focus of discussion. Some directors believe that a more experienced CEO is needed to take over for the sake of Twitter’s long-term growth and shareholder benefits.

In 2008, the board of directors ultimately decided to step down Dorsey from the CEO position. The decision has garnered a lot of attention in the tech world and is seen as yet another example of a power struggle between founders and boards in Silicon Valley. Dorsey’s departure has not been without controversy, with many employees disappointed with his departure, who believe Dorsey represents Twitter’s innovative spirit and company culture.

Dorsey didn’t leave the tech world after he left the CEO position. He shifted his focus to Square, which went on to become a significant player in the mobile payments space.

After Jack Dorsey left the position of CEO of Twitter, the social media giant entered a turbulent period.

Among Dorsey’s successors, Evan Williams and Dick Costello both briefly served as CEOs, trying to boost Twitter’s market performance by introducing new product features and improving the user experience. However, these efforts have encountered their own challenges in terms of boosting user growth and revenue, especially in the face of stiff competition from competitors such as Facebook and Instagram.

During these leadership changes and strategic changes, Twitter faced a series of challenges such as identity issues, online harassment, and the spread of disinformation. These issues not only affect the user experience, but also raise concerns from the public and regulators.

In 2015, Jack Dorsey returned to Twitter in a dramatic way to become CEO again, an event that caused a lot of attention in the tech world. At the time, Twitter was facing an important inflection point, with slowing user growth, revenue growth falling short of expectations, and a lack of clarity within the company. At this time, former CEO Dick Costello announced his resignation, and Twitter desperately needed a leader to stabilize the situation and revive the company.

The return marks a shift in Twitter’s strategic focus, and Dorsey has set out to address the company’s product innovation and user growth issues. Under Dorsey’s leadership, Twitter has intensified its focus on platform health and information quality, rolling out a series of feature updates designed to improve the user experience and increase user engagement.

Uber - Travis Kalanick (2017)

*In 2017, Uber founder Travis Kalanick was forced to resign as CEO amid a series of controversies that not only shook Silicon Valley, but also sparked widespread discussion about the culture and governance of tech companies. *

Under Kalanick’s leadership, Uber grew rapidly, but cultural, legal, and governance issues emerged. First, company culture issues are particularly prominent, including allegations of gender discrimination and harassment among employees, as well as a high-pressure and competitive work environment.

In 2017, Uber faced an unprecedented crisis. It all started when former engineer Susan Fowler published an explosive blog post exposing sexism and harassment within Uber. In this article, Fowler describes the sexism she experienced during her time at Uber and the neglect of the issue by management. Her story quickly gained widespread attention on social media and the news media, becoming the focus of public discussion.

Fowler’s article not only exposes the problems within Uber, but also sparks an in-depth discussion about the work culture of the tech industry as a whole. The gender inequality and workplace harassment issues mentioned in the article have severely damaged Uber’s corporate image, while also prompting other tech companies to review their own work environments and policies.

The incident forced Uber’s board of directors to take action, and under pressure from the public and the media, Uber launched an internal investigation into the company’s culture and pledged to take steps to improve the working environment for its employees. The incident became one of the key factors driving Kalanick’s eventual departure, and marked the beginning of Uber’s efforts to address long-standing organizational and cultural issues.

In addition, Uber’s operating model in multiple markets has also raised legal challenges, including conflicts with traditional taxi services and labor rights disputes among drivers.

Also in 2017, Travis Kalanick was embroiled in another major PR crisis. The incident was caused by the publication of a video showing Kalanick arguing with an Uber driver. In this video, the driver expresses his dissatisfaction with Uber’s price-lowering strategy to Kalanick, which he believes is severely impacting the driver’s earnings.

Kalanick’s reaction in the video appears defensive and aggressive, and he responds bitterly to the driver’s concerns and complaints. The video quickly went viral on the internet, raising widespread questions about Kalanick’s leadership and Uber’s company culture. The incident not only damaged Kalanick’s personal image, but also intensified criticism of Uber’s corporate culture and management methods.

The release of the video culminated in the discontent of Uber’s board of directors, who believed that Kalanick’s behavior, as the public face of the company, was not only unprofessional, but could have a long-term negative impact on the company’s brand and business. Eventually, this incident became one of the decisive factors driving Kalanick’s departure.

In 2017, in the face of mounting external pressure and internal discontent, the board finally asked Kalanick to resign. Although Kalanick initially tried to keep his position, he eventually agreed to resign as CEO under pressure from investors. This decision marks the end of an era for Uber.

After Travis Kalanick’s departure, the company hired a new CEO, Dara Kosrosasi, who previously served as CEO at Expedia and was known for his solid leadership style and extensive management experience. Kosrosasi’s top priority is to reinvent Uber’s corporate culture and public image, and he is committed to building a more inclusive, transparent, and accountable corporate environment.

Under Kosrosasi’s leadership, Uber strengthened its legal compliance and safety standards, improved relationships with drivers and passengers, and began to proactively address previously neglected workplace issues such as gender discrimination and harassment. In addition, Uber has increased its investment in autonomous driving technology and other emerging technologies to maintain its leadership position in the global mobility services market.

Uber also faced challenges during this period, including navigating a strict regulatory environment, strong competitors, and pressure to move to profitability. Nonetheless, under the leadership of Kosrosassi, the company has begun to present a more mature and sustainable development model, gradually moving away from the controversies and uncertainties of the Kalanick era and moving towards a more stable future.

After Travis Kalanick left Uber, he did not quit the business scene. On the contrary, he continues to show dynamism in the field of investment and entrepreneurship. Kalanick founded an investment fund called 10100, which focuses on real estate, e-commerce, and investments in emerging markets.

Through the 10100 Fund, Kalanick has invested in a number of start-ups in a variety of industries, from food delivery to software services. For example, his investment in CloudKitchens, a company focused on providing infrastructure and software support for food delivery services, exemplifies his continued interest in the sharing economy model.

WeWork - Adam Neumann (2019)

*In 2019, WeWork’s founder, Adam Neumann, was forced to resign as CEO under the dual pressure of the company’s failed IPO and questioned personal behavior. *

WeWork’s IPO plan is in the spotlight of the business community and is seen as an important milestone in the coworking space. However, as details of the IPO preparation process were revealed, serious questions arose among investors and the market about WeWork’s business model, financial condition and its continued profitability. WeWork’s valuation has dropped significantly in a short period of time, and the public is skeptical about the company’s future.

In the run-up to the IPO, Neumann’s personal behavior and management style became the focus of controversy.

Neumann, for example, is known for its extravagant lifestyle. There are reports that he spent $60 million on a private jet and owns expensive properties around the globe. This lavish lifestyle contrasts sharply with the image of a WeWork start-up, raising questions about his personal taste and judgment.

Neumann promotes an unconventional work culture that includes bars and parties in the office. While these practices are intended to create a free and innovative work atmosphere, they also raise questions about professionalism and efficiency in the workplace.

In addition, there are reports that Neumann has shown a certain amount of arbitrariness in the decision-making process. For example, he has changed key company strategies in a short period of time or made unusual declarations and commitments at meetings. This seemingly chaotic approach to decision-making has left employees and investors confused and uneasy.

As the problems continued to grow, WeWork’s board of directors and major investors began to cast doubt on Neumann’s leadership. The problems that arose during the IPO process and the negative news about Neumann’s personal actions made the board feel that WeWork’s future and reputation were at stake. Eventually, under strong external pressure and at the behest of the board of directors, Neumann was forced to resign as CEO.

Following Neumann’s departure, WeWork quickly appointed a new leadership team to stabilize the company. Sandil Masilani has been named the new CEO, having previously served as T-Mobile’s chief operating officer, and is known for his experience in corporate restructuring and operational efficiency. Immediately after taking office, Masilani began implementing a series of restructuring measures, including layoffs, sales of non-core businesses, and cutting expenses, to reduce losses and improve the company’s efficiency.

Under the new leadership, WeWork’s strategic focus has also shifted, shifting from rapid expansion in the past to a greater focus on financial stability and sustainable growth of its core business. The company began to take a closer look at its business model and look for more robust ways to make a profit, including attracting and retaining customers by improving the efficiency of office space and enhancing the quality of service.

Despite the significant challenges, WeWork is showing signs of recovery after an initial period of turmoil. The company is starting to regain momentum in a number of key markets, especially in the wake of the pandemic, where WeWork’s business model has gained new attention and opportunities as the demand for remote work and flexible office space increases.

On the other hand, Adam Neumann did not retire from the business scene after leaving WeWork. He used the huge compensation he received when he left WeWork to start investing in several startups. These investments span a wide range of industries, including technology, real estate, and biosciences.

He has been reported to have a particular interest in the real estate market, particularly in housing and community development. He leverages the experience he has gained during his time at WeWork to try to implement innovative business models in the real estate sector.

Under what circumstances might a founder be swept away by the board?

The above is a well-known case of “coup” d’état in Silicon Valley. Next, from the perspective of the board’s decision-making mechanism, we analyze the circumstances under which the founder may be swept away by the board.

First, we need to understand the structure and decision-making mechanism of the board of directors in Silicon Valley.

In Silicon Valley and global technology companies, the board of directors is typically composed of a diverse set of members, including company founders, CEOs, venture capital representatives, independent directors, and industry experts. This composition combines different perspectives and expertise to provide comprehensive strategic guidance and effective oversight to the company.

The board of directors of a Silicon Valley company is responsible not only for setting the company’s strategy, but also for overseeing management’s execution, ensuring the company’s compliance, and representing shareholder interests. The Board of Directors plays a decisive role in key decisions such as major investments, mergers and acquisitions, and restructuring of corporate governance structures.

The decision-making process of the board of directors is usually based on a voting system, and each director has a certain amount of voting weight according to his or her shareholding in the company or the provisions of the company’s articles of association.

In the standard case, the voting weight of a board member is usually linked to the proportion of his or her stake in the company. This means that directors with more shares have more influence in decision-making. This mechanism ensures that the interests of shareholders are reflected in the decisions of the board of directors.

However, in some tech companies, especially those start-ups led by founders, special shareholding structure designs may be employed, such as “super voting rights” mechanisms. Under this mechanism, the founders and certain early investors have a much larger voting weight than their shareholdings, which allows them to maintain control of the company even when their holdings are not high. For example, both Google and Facebook have adopted similar super-voting power structures to protect the founders’ strategic vision from external pressures.

In addition, some companies’ articles of association contain special protections for founders, which may require a vote ratio greater than an ordinary majority on certain key decisions, or give founders veto decisions in certain circumstances. This design is designed to balance the founder’s leadership vision with the interests of external shareholders.

Under this structure, the board’s decision-making mechanism must delicately balance the founders’ vision, management’s ability to execute, and investors’ expectations. For example, founders may focus on the company’s long-term growth and product innovation, while investors may be more focused on short-term financial returns and market performance. By reconciling these different interests, the board ensures that the company can find a balance between innovation and sound growth.

Next, let’s look at the situations in which founders and the board of directors may be at odds, and in what situations the founders will be swept away by the board.

In the development of a tech company, the conflict between the founder and the board of directors usually stems from several key aspects:

Divergence over the company’s strategic direction is a major reason. Founders may have a unique vision of the company’s future growth, such as pursuing innovation or expansion, while the board may be more focused on financial stability and risk management. Contradictions arise when there is a fundamental disagreement between the two sides on how to move forward with the company.

Differences in management styles and decision-making styles are also common causes of conflicts. Founders may prefer more direct and quick decision-making, while boards may prefer a more deliberate and collective decision-making process. Additionally, the board may be upset if the founder’s management approach leads to internal inefficiencies or employee dissatisfaction.

The founder’s personal behavior and work ethic can also be a point of conflict. If a founder is involved in legal issues, personal scandals, or misconduct, this not only damages the company’s reputation, but can also trigger a backlash from the board.

In extreme cases, these contradictions can lead to the founders being “swept away” by the board. For example, the company’s performance is severely underperformed, and the founder’s decision-making is cited as the main reason, there is an irreconcilable disagreement between the founder and the board of directors on the company’s key strategy, or the founder is involved in significant personal misconduct that seriously damages the company’s interests. In these cases, in order to protect the interests of the company and shareholder value, the board of directors may take action to remove the founder from management.