There’s a new law of the land taking root in Silicon Valley: the more technology makes us laypeople replaceable, the more the technocrats building it are considered indispensable.
That’s been good for the tech titans, many of whom are among the richest in the world and have watched their wealth and power grow alongside the rise of new tools like artificial intelligence. But it’s been more complicated for the companies they rule, saddling them with what’s known as key-person risk — when a single individual’s very existence is tied to an organization’s performance and value.
And as if that wasn’t perilous enough, there’s something else going on with these so-called key people: they just can’t seem to stop taking risks.
I’m not talking about the potential liabilities that come with taking big business bets — say, opening a new market or launching a new product. Rather, this is unnecessary and dangerous personal behavior, more in keeping with tech’s reputation of frat boy culture than that befitting CEOs running companies with valuations reaching as high as the trillions.
Take Elon Musk, who is considered so critical to Tesla Inc. that his board granted him a record $56 billion pay package — albeit one that a judge voided. Meanwhile, the Wall Street Journal has reported that Musk is using a “concerning” volume of drugs, including cocaine, ecstasy, LSD, shrooms and ketamine. (“If drugs actually helped improve my net productivity over time, I would definitely take them!” Musk posted on X in response, saying he had not tested positive in three years of random drug testing.)
Over at Meta Platforms Inc., Mark Zuckerberg effectively cannot be ousted as CEO because dual-class shares give him super-voting rights. But his appetite for combat sports, which last year led to surgery for a torn ACL, is high-risk enough that his board decided it needed to disclose the hobby in the company’s 10-K. (In a case of key men colliding, over the summer Musk and Zuckerberg even toyed with the idea of settling a long-held feud via cage match.)
Then there’s Sam Altman, whose employees at OpenAI believe the organization will crumble without him, to the point that more than 700 threatened to quit after the board attempted to boot Altman last year. And yet he allegedly has a pattern of deceptive behavior, with WSJ reporting that at one of his previous startups he failed to tell the truth “sometimes about matters so insignificant one person described them as paper cuts.” At OpenAI, the company’s chief scientist is said to have presented directors with some 20 examples of when Altman had misled fellow executives, and Altman’s failure to be “consistently candid” in his communications with the board precipitated his attempted ousting and has reportedly led to an SEC investigation. ("It is clear that there were real misunderstandings between me and members of the board," Altman wrote on X at the time.)
One would think that if these founder-CEOs were truly indispensable, they and their boards would do whatever necessary to protect themselves and, in turn, the companies they run — that the more they have, the more they have to lose. But it seems instead that the more powerful they get, the riskier the behavior they take on.
While nonsensical, apparently such conduct isn’t unprecedented. In fact, power can actually lead to riskier behavior because it causes “more optimistic perceptions” of the outcome — a sense that you will reap the rewards rather than face the potential negative consequences of risk taking. Those are conclusion from a paper co-authored by Cameron Anderson, a professor at Haas School of Business at the University of California, Berkeley. Anderson told me the finding holds even if the odds of disaster are 50%, or if the outcome of the risk is completely outside of one’s control. His paper noted those with a higher sense of power were more likely to believe that they’d avoid events like running into turbulence on an airplane or encountering a dangerous snake while on vacation. And on the flip side, partaking in hazardous behavior may actually increase someone’s power “because of the message it implicitly conveys to others: that they can afford to take such risks by virtue of their power.”
Having an appetite for risk is of course an essential part of being an entrepreneur. The vast majority of startups fail, so founders must have an “optimistic perception” of the dangers — that they won’t hit that rough air or get bitten by the viper. That mindset has paid off massively for the likes of Altman, Zuckerberg and Musk in their professional lives, perhaps giving them an inflated sense of what they can get away with. As Altman once wrote on his personal blog: “A big secret is that you can bend the world to your will a surprising percentage of the time.”
But Silicon Valley seems to be letting its leaders bend the world a little too much, mistaking some of these risky behaviors for indicators of genius. An excellent recent example here is Adam Neumann, who somehow has convinced serious people with serious money to fund his attempt to buy back WeWork. This is a man who reportedly smoked marijuana on an international flight, stuffing the drugs in a cereal box for the return. His epic flameout was outrageous enough to inspire a miniseries.
Because risk and power do go hand in hand, it’s a board’s job to make sure CEOs stay on the side of the line where risk-taking is healthy and beneficial to an organization and doesn’t devolve into Neumann-style chaos. But among the most powerful in techland, the checks and balances that are supposed to come with corporate governance have either failed or were never put in place to begin with. Instead, we’ve ended up with some very powerful men who seem to believe that both they and their companies are invincible. In some sense, they may be right. As my Bloomberg Opinion colleague Matt Levine put it, “Musk is too big to fail a drug test.”
When reports surfaced that Meta had added Zuckerberg’s mixed martial arts training to its risk factors, Morning Brew posted a tongue-and-cheek response on Threads:
*checks stock price*
Let this man do anything he wants
Zuckerberg responded with a gif that read, “High risk = high reward.” He may have been talking about Meta’s business practices, or about his mixed martial arts training. In some ways it doesn’t matter; it seems investors will have to get comfortable with both.
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