From artist Picasso to director Woody Allen, actor Kevin Spacey, athlete OJ Simpson, record producer Phil Spector and rapper Jay-Z, the idea of flawed genius is not new.
But its prominence in the startup sector has been front of mind in recent months, most notably with WiseTech’s billionaire founder Richard White.
Many have noted that when the CEO owns a large slice of the company – in White’s case around 30% – boards tend to let them survive in the role when things go awry for much longer than ordinary executives.
“Brilliant jerks” theory and its clash between culture and capital – the ratio of tolerance between substandard behaviours and return on investment – runs from Steve Jobs 1.0 at Apple through to more recent leaders such as WeWork’s Adam Neumann, Uber’s Travis Kalanick and Donald Trump’s new billionaire BFF, who now has a new job for the incoming US president alongside running Tesla, X and SpaceX.
Startup culture has been front of mind for many, especially after Grapevine released its Harvest Report last month, reporting that 72% of those who experienced discrimination, bullying, or harassment in startups left the company, while 96% of those who raised issues informally had negative experiences with senior leaders, HR, or managers.
Deeply flawed characters
And the issue popped up again at the Tech Council’s summit in Melbourne on Tuesday when a panel featuring Airtree partner Craig Blair was asked if there’s a tendency to protect those behaving badly because of their “genius”.
Blair, responded in what one eyewitness called a joking tone, saying “I think all founders are problematic” and “deeply flawed”.
The AFR picked up his comments, paraphrasing them as “visionary founders with problematic behaviours should be accommodated so they can generate rich returns, not pushed out”.
Blair was quoted as saying: “They’re very amazing at some things, but they’re deeply flawed characters, and I think that’s what makes them special. We shouldn’t be looking for some accountant or consulting [types], we need to be looking for these problem children who we can build incredible cultures around.”
The VC elder subsequently followed up on LinkedIn saying “I feel obliged to tackle this head-on” to clarify his views.
“When (sic) I meant by founders being ‘deeply flawed’ was that they typically have an obsession with the problem they’re solving in a way that not everyone understands. This often comes from complex lived experiences and over indexing on a few key super powers,” he wrote.
“‘Problem children’ was not the best way of putting it either. I mean those who break the mould in their own inimitable way to pull off the improbable and build a company from scratch.
“That doesn’t mean we accept or tolerate brilliant jerks.”
The Airtree cofounder went on to say “no one is protected or exempt” when it comes to harassment, bullying, sexism and toxic behaviours being unacceptable in the workplace or elsewhere.
“As an investor and board member, I have a legal and moral responsibility to root out these behaviours,” he wrote.
“For me personally, if the founders we back are arseholes who behave badly, we’ve failed miserably at building a fund with a positive impact that would outlast us all. This is core to our mission and values at Airtree.”
Blair concluded saying that trust, safety and respect at work are fundamental.
“This is a belief shared by Airtree’s partners, our team and many others in our community, including founders, who are building generational companies and positive workplace cultures,” he wrote.
“If this isn’t a given for a founder, they should be called out and held to account. And rightly so.”
Diversity paradox
The issue is also a particular flashpoint for the Tech Council at this point after White resigned from the board late last month. Critics saw the lobby group as slow to respond to the increasing scandal, having said on the morning before the billionaire handed in his notice that the TCA board “continues to assess and monitor the matter closely and is following its governance processes”.
On Monday the TCA launched “T-EDI standards” (equity, diversity and inclusion) after engaging Emma Jones, CEO and founder of Project F, to develop the framework. Project F helps startups address diversity in their workplaces, and is used by the likes of Canva, Google, UNSW and VC fund Blackbird.
The T-EDI framework will see tech companies self-assess their performance against 10 DEI standards and develop action plans for improvement.
There an additional layer of frisson in all of this because TCA chair Robyn Denholm, an operating partner at VC Blackbird, was telling those gathered at the summit about how important DEI is, that “the tech industry is a space for women”.
“We’ve heard your calls for more action,” she told the summit.
Denholm said there’s a “collective will” for change to improve things.
She said it the day after Capital Brief reported that tech unicorn Employment Hero canned plans for an International Women’s Day initiatives this year because the company was “apolitical” and “spotlighting talent of a certain gender” created “unnecessary division between our teams”.
It’s worth recalling that back in March, startup investor Hostplus, which backs several VC funds, wrote to fellow investor, Airtree, about Employment Hero’s CEO and founder Ben Thompson, and his behaviour after he made a series of allegations the super fund said were “inappropriate, false and defamatory”.
Hostplus asked Employment Hero’s board to consider whether his “position as CEO remains tenable in the light of his conduct” and threatened to report him to ASIC.
The conflict and accompanying media attention died down soon after and the outspoken CEO remains in his role, although Capital Brief noted Thompson made a “bad dad joke” about White on Twitter, leading Techstars MD Kirstin Hunter to say: “Women are working hard to call out and clean up bad behaviour in the tech ecosystem, while our male leaders stand back making schoolboy dick jokes.”
Enabling opposition
Amid lofty and noble goals for diversity, equity and inclusion, there’s fierce opposition in many quarters to the idea, and the question becomes not just the side you fall on, but how much you enable those undermining your professed beliefs.
Among Denholm’s many hats as a tech leader, she also chairs Tesla, the company that’s made Elon Musk the world’s richest man.
He detests DEI. As anyone still on X and force-fed his tweets, whether they want them or not, knows, the world’s most triggered man spends his time on the micro-blogging site railing against the “woke mind virus”.
In Musk’s mind, where there’s a will, there’s a woke.
His position places him in direct conflict with his company’s chair. One of the most powerful men in tech is not part of the collective will.
Musk’s just spent around $200 million of his personal wealth ensuring a man caught on tape saying: “when you’re a star, they let you do it. You can do anything. Grab ’em by the pussy,” will be the 47th President of the United States.
Let’s not forget two years ago when Musk took over Twitter, and accused the former head of trust and safety, Yoel Roth, of advocating for child sexualisation. Subsequent death threats forced Roth and his family to flee their home. Musk routinely slurs those he disagrees with, but that’s ok in his mind, because it’s free speech.
This week Musk posted Trump saying he will remove “all Marxist diversity, equity, and inclusion bureaucrats” from universities when he assumes power, as well as seizing endowments if they’re deemed discriminatory “under the guise of equity”.
Trump certainly believes he’s brilliant. A majority of US voters agree. Even some of his supporters think he’s a jerk, but that’s not an issue for them.
A problematic and deeply flawed 78-year-old entrepreneur is about to serve four more years in the White House. Many have noted how quickly global tech leaders rushed to congratulate Trump on his win.
There’s definitely broad goodwill in the startup sector, seeking to build a positive impact that would outlast us all, but the simple truth we dare not admit to ourselves is that we do indeed tolerate brilliant jerks.
When push comes to shoving a founder, do you think a VC’s Limited Partners would be demanding someone is fired for substandard behaviours over a 10x return on their investment?
Religions remind us that we are all flawed and offer a path to forgiveness.
Business reminds us those flaws are part of a cost benefit analysis and offer a path to profitability.
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