How Founder-CEOs Got Their Superpowers


The NewCo Daily: Today’s Top Stories

Julian Fong | Flickr

Embattled, scandal-ridden leaders don’t just go quietly. If they’re going to bow out, they need to be pushed, and whoever’s pushing them needs leverage.

This principle holds for business and politics alike. Only Congress can remove a president, so unless President Trump really pisses off his Republican Congress, he isn’t going anywhere, no matter how many Russian connections get uncovered. Similarly, don’t expect Uber CEO Travis Kalanick to throw in his hand without a massive fight, no matter how many stories of malfeasance emerge.

That’s because only a board can remove a CEO, and Kalanick controls his board, as Jessi Hempel explains in Backchannel. Like many of today’s most successful tech companies, Uber has a dual-class share structure. Some shares are (a lot) more equal than others, and the people who own those shares can maintain effective control of a company even while they’ve sold off much of it to outsiders.

This is how media-company families have kept control of institutions like the New York Times across the generations. It’s how Larry Page and Sergey Brin keep their hands on Alphabet/Google’s tiller, and how Mark Zuckerberg will run Facebook as long as he wants to. Kalanick has the same deal.

Silicon Valley embraced granting founders these super-voting powers because its culture venerates their vision and determination. Too often in the past, the suits have kicked out the geeks — and then run good companies into the ground.

On the other hand, sometimes CEOs need to get out for a while. After all, it was only after Steve Jobs’ return from exile that he was able to turn Apple into the extraordinary success it is today. If he’d had super-voting shares, he might never have left — and no one knows how that would have turned out.

In Uber’s case, everyone can see that the company’s problems are rooted in Kalanick’s psyche. Making him the company’s king for life locks it into what’s looking more and more like a royal tragedy.

Is Google Slipping Up on Search?

Even though Google is just another (enormous) company, we think of it as almost a public utility, and we take for granted that its search Just Works. Periodically, though, the quality of Google’s search results goes through rough patches, and now is one of those times, according to search expert Danny Sullivan (Search Engine Land).

“What’s happened to Google search is on par with the Apple Maps fiasco or Samsung’s exploding Galaxy Note 7 phones…Google has lost core faith with people and publications that have bought into the idea that you can Google anything and get the right answer,” Sullivan says.

Some problems are the result of the way mobile and Google Assistant results aim to provide “one true answer” — they’re just never going to achieve 100 percent accuracy. Other problems stem from today’s hyper-partisan political climate, which generates rafts of articles that are bound to offend one side or the other. Finally, anyone can find horrifying racism, sexism, and anti-Semitism pretty quickly just by looking at the suggested searches Google prompts you with as you type. The search engine is only telling you these searches are popular! But that’s not going to stem your nausea.

Google continues to provide extraordinary results, and much of the dissatisfaction with search today isn’t really borne out by the facts, Sullivan writes. But since there’s no independent yardstick for search quality, Google’s performance is in the eye of the beholder. If people perceive it to be in decline, it has a big problem.

Verizon Has a Plan to Win the Online Ad War

In the past week we’ve watched Congress remove restraints on internet service providers’ tracking of user behavior, and Verizon announce that it would combine the content operations of Yahoo and AOL under a new corporate umbrella named Oath.

In The Verge, Nilay Patel and Ben Popper tie together the threads of these stories and conclude that Verizon’s Oath is going to “churn out cheap content” and then court advertisers with a promise that it can target users more effectively than Google and Facebook. In other words, Verizon is cueing up a whole new phase of the digital advertising wars, in which ISPs try to outflank the incumbents by taking advantage of their close-to-the-user relationship.

One one level, this makes perfect business sense: the ISPs had the clout to get the law changed. They have the data on their users. Why shouldn’t they deliver a better experience (for their advertising clients, at least) and carve out some of Google’s and Facebook’s profits for themselves?

On a different level, of course, it’s a total sellout of everyday users, and a complete perversion of everything the internet once stood for. An ISP that’s also a content provider has every incentive to favor its own content and marginalize everyone else’s. Just watch how that plays out — and if you don’t like what you see, keep supporting ideas and projects that break the ISP monopolies.

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