Do you need to be a jerk to succeed in Silicon Valley? The frequency with which bad-boy behavior crops up in the epicenter of tech culture can certainly make it seem that way.
The latest dustup involves the ride-sharing service Uber, whose senior vice president for business, Emil Michael, said he planned to hire private investigators to dig up dirt on journalists who he felt criticized the company. It sounded like a contemporary take on Nixon’s enemies list.
Michael is still with Uber. Company founder and CEO Travis Kalanick didn’t demote or fire him, opting to merely disavow the idea. And Michael’s transgression was hardly an isolated case of jerk behavior at Uber. A writer for San Francisco magazine has charged that she was told by people inside Uber that the company might monitor her rides on the service. There have been allegations that Uber has played dirty tricks on its competitor Lyft, it was revealed that Kalanick has privately called the service Boober because its success has made it easier for him to pick up women, the company has come out with blatantly sexist promotions, and more.
If you think all of that sounds like a company that is imploding, I have to inform you that Uber is valued at $18 billion.
And Uber is not an isolated case, but merely the latest manifestation of well-documented jerk culture among tech startups. The game company Zynga, for example, has faced lawsuits for illegally copying games of its competitors, has been charged with working with scam advertisers, and at one point forced four senior employees to either give up some of their non-vested stock or be fired. Zynga founder and one-time CEO Mark Pincus admitted in a speech at Startup@Berkeley, “I funded the company myself, but I did every horrible thing in the book to, just to get revenues right away. I mean we gave our users poker chips if they downloaded this zwinky toolbar which was like, I don’t know, I downloaded it once and couldn’t get rid of it.”
Even established companies in Silicon Valley have exhibited jerk behavior. Apple founder Steve Jobs, thought by some to be almost saintlike, was not exactly a warm and fuzzy human being. Biographer Walter Isaacson said Jobs was both “Good Steve” and “Bad Steve,” and he included a variety of “Bad Steve” anecdotes in his biography of him: He denied paternity of his daughter for years (he ultimately accepted it), short-changed Apple co-founder Steve Wozniak on a bonus, and more.
Do we have to just accept this as the way things work? No. In fact, it’s not uncommon for bad behavior to come back and bite the founders and their companies.
Take Zynga. It was a high-flying startup, whose stock price in the early days was near $15. Today it’s trading at about $2. Pincus had to step down as CEO and chief product officer in April of this year.
Uber still seems to be riding high, but bad publicity may well take its toll, with numerous high-profile people abandoning the service and deleting the app, according to The New York Times. Kelly Hoey, a New York-based angel investor, deleted her Uber account because of privacy concerns, telling the Times, “I don’t want them to have my information, my credit card or my name.” Lisa Abeyta, founder and CEO of the tech startup APPCityLife, did the same, adding, “There is a difference between being competitive and being dirty. It is bad-boy, jerk culture. And I can’t celebrate that.” And Minnesota Senator Al Franken has written a scathing letter to Kalanick saying that Uber’s actions “suggest a troubling disregard for customers’ privacy, including the need to protect their sensitive geolocation data.”
One of Silicon Valley’s most prominent investors, Paul Graham, believes that investing in jerks (his term) is not just a kind of bad karma, but bad for business as well. Graham heads the prominent startup accelerator Y Combinator, which has helped launch countless successful startups, including Dropbox and Airbnb, and he won’t invest in companies run by people he considers jerks.
He told Business Insider, “The reason we tried not to invest in jerks initially was sheer self-indulgence. We were going to have to spend a lot of time with whoever we funded, and we didn't want to have to spend time with people we couldn't stand. Later we realized it had been a clever move to filter out jerks, because it made the alumni network really tight … based on what I've seen so far, the good people have the advantage over the jerks. Probably because to get really big, a company has to have a sense of mission, and the good people are more likely to have an authentic one, rather than just being motivated by money or power.”
So don’t think the bad buys always win. Sometimes they do get their comeuppance.