this post was submitted on 18 Nov 2023
242 points (96.9% liked)
Technology
59148 readers
2721 users here now
This is a most excellent place for technology news and articles.
Our Rules
- Follow the lemmy.world rules.
- Only tech related content.
- Be excellent to each another!
- Mod approved content bots can post up to 10 articles per day.
- Threads asking for personal tech support may be deleted.
- Politics threads may be removed.
- No memes allowed as posts, OK to post as comments.
- Only approved bots from the list below, to ask if your bot can be added please contact us.
- Check for duplicates before posting, duplicates may be removed
Approved Bots
founded 1 year ago
MODERATORS
you are viewing a single comment's thread
view the rest of the comments
view the rest of the comments
Once you structure your business so that you have a board of directors, who is the boss is not your decision anymore, as they "work" for the shareholders. In OpenAI's case, the CEO lied to the board so they fired him, and Greg left on his own.
That's why one of the first things Musk did as the majority shareholder was to dissolve the board of directors of Twitter.
I didn't ask "how", I asked "why?" does it happen so often. I understand how BOD works.
Why? Because the people who make money don't like dealing with the founders.
Purely made up example: board of directors decides they can make the mosy money by pivoting and rebranding as "the customer service company". They will throw away all the models built with copyright material, build simpler models based on customer service scripts and interactions from customer businesses, and save a ton on compute while making bank on licensing and professional services. No more free chat, etc.
A founder doesn't like this new direction that is antithetical to their vision for the business so they go around telling shareholders to get rid of the current board and for employees to quit or otherwise not help with this.
Board sees this messing with their genius money printing idea so they fire them.
Yes, that's correct, I wanted the answer that I asked for. Thanks for the helpful clarification.
Seems you've gotten quite a few answers for the "why this happens" and don't like it.
Risk taking is necessary for a startup to reach success but once success is reached that needs to be tempered. Founders that are good at the vision part often aren't that great at leading an already successful company but don't have the introspection necessary to recognize that and try to hold onto their position beyond what's healthy rather than pivot to a more suitable role in their company and letting someone who knows how to run a successful business take over.
There's also a greed aspect for many companies that go public and become beholden to increasing shareholder value above all else. Even a good founder who's also a good long term leader will be forced to do things that maximize quarter over quarter profit at the cost of long term goals, and if they refuse insisting on looking at the long term goals they'll be fired because the shareholders have rights and can force the company to change. For a good example of this, look at Dell: Michael Dell brought the company public, the shareholders forced the company to prioritize quarterly profit growth which hurt the quality of the product, which was detrimental to the long term goals, so Michael Dell bought out the shares to bring it private again and focus on the long term. Something he couldn't do as long as there are shareholders who aren't on board with that vision and just want their return on their investment.
So, your "why" is not really one single reason:
For some, it's the founder not having the skills to manage an established and successful business even though they're the ones who got them to that point, but their ego won't let them see that and they have to be forced out
For others it's shareholder greed
And I'm sure there are several more reasons why companies do this
If these reasons don't seem to make sense... Well, humans often don't make sense and frequently make decisions detrimental to themselves. Our decisions often don't make sense from the perspective of what's the most sensible or logical course. If you're asking why they do something, there's a decent chance the answer isn't going to make as much sense as you'd like, because humans frequently just don't make sense.
And companies are run by these humans.
In another example, the Zuck maneuvered so that he always kept a majority holding of Facebook which means nobody can kick him out.
OpenAI isn't public. They aren't answering to shareholders.
"Stakeholders" then, the same thing just not publicly traded. OpenAI is owned 49% by microsoft and the rest by other companies and people. The point is the founders or CEO etc aren't the owners or hold a majority so they don't actually have a say in how the company is run and can be booted off by the board.