In recent years, as sweet liquidity has flowed into and from private equity, startup founders, especially those who have got funding, have become the new masters of the universe, a term used by Tom Wolfe in his epic book, “The Bonfire of the Vanities,” to typify the ‘80s Wall Street banker whose hubris stretches longer than a stretch limo.
It’s not only megalomania that makes these masters of the universe behave the way they do, abuse co-workers and even personnel of other companies. While Ashneer Grover is becoming a poster boy for such action, there are several others and not just Indians like Vishal Garg of better.com. Impossible business problems do attract impossible people. Garg is back at his job after a leave of absence.
A megalomaniac lies dormant in every individual, given a chance. Private equity or pliable boards provide the chance for megalomania to flower and thrive in a professional environment. They not only allow, but also applaud, appreciate and encourage founders to wield the whip towards creating “performance” in a toxic pool.
Only chance reveals the true colours publicly. For every Grover exposed, there are nine others who are not known. And this full display is tolerated and even encouraged by those who have the mandate, authority, and duty to ensure good governance, and yet act only when a moral-ethical crisis blows up in their face!
Clearly, the obnoxious excel at something and their behaviour is condoned because they are good at their job. The ignorance or the tolerance of their behaviour by investors or the board is because they are getting things done, achieving a target or making a Unicorn.
Internally it is not easy to hide boorish behaviour for long, but it is possible to condone it forever. Even the media that covers startups rarely writes stories about founders’ behaviour.
The abused will tell you that they have to suffer their bosses because they do not have a choice of another job. The bosses will find ways to justify the abusive behaviour of their subordinates because they are performing well, meeting targets. And justifying abuse is always possible. Even successive Popes have justified predatory sexual behaviour of priests on young boys for decades. Boards of startup companies are even more complicit in hiding such behaviour, structurally. The board of startups is mostly a collective of friends of the founder. The boards of private companies or even non-profit companies represent only the founder. They have very little say in anything and they bend and scrape as the founder wishes.
Executive hubris is well represented in not just the startup world but most fields requiring high performance. It takes a certain kind of personality to be always domineering, dictatorial and produce results that will please the bean counters. Only such a personality can believe that impossible targets are achievable. And when such impossible targets are achieved – much of it as a result of the talent, skill and hours logged in by overworked employees – these personalities start to believe in their own infallibility. And then, the system starts treating them like God. This happens in many ways, including praising fund-raising as some kind of an achievement. The God-creating machinery is well-oiled and massaged with compensation and stock options.
The extremity of their behaviour is tolerated as is the case with Ashneer Grover of BharatPe. He claims that he built Bharat Pe into a Unicorn so he deserves a golden handshake of Rs 4000 crore as compensation to exit the firm that, in his self-perception, he and he only conceived and built. In this absurd narrative, the rest of the employees do not matter much as he was the single God that created, strategised, planned and implemented the tasks of everyone in the organisation.
The fault is not just his. The poster boys of excess are fed on a high cholesterol diet of funds from private equity funds. But this creates a distortion in the narrative for real wealth creators in society, which can be harmful in a politically charged atmosphere where the opposition has adopted an anti-wealth creator stance. The Leftist stance of the opposition gets further boost from bad behaviour of entrepreneurs. It has happened in the past.
This behaviour is not good neither for the society, nor the markets, the wealth creators and the job creators as such behaviour creates caricatures of stereotypes that can be easily manipulated into memes and jokes. The memes on social media are no longer about fun, they are bytes of information that sears a stereotype into people’s mind. Every entrepreneur will suffer because of the bad behaviour of few.
BharatPe’s board should immediately take action before Mr Grover becomes a template for the startup world, and before it goes the way of similar startups that were buried by the wrongdoings of their founders. But removing one person will not solve the systemic problem.
Nor when all the masters of the universe have been relegated to the void, because then who will create the new Unicorns? Can a doubtful leader make the millennials work harder than they have ever done in life? To manage the chaos of daily doubt and uncertainty of a startup, do we need masters of the universe? Yes and no. We need them but we don’t need the toxic environment along with it. And it is for the board of these startups to prevent this.
The systemic way to do it is by increasing the diversity of the board beyond friends and families of the founder. Diversity is not just about gender, getting the founder’s wife on the board for gender representation does not really strengthen the board. Neither is getting a banker or bureaucrat whom the founders want to oblige. Bankers and bureaucrats are trained Yes Men and will accept and agree to anything to perpetuate their board seat. There is a genuine need to get outsiders, people who have entrepreneurial experience in other industries, are aware of how social media plays a role in a startup’s life. And, are used to questioning and checking unbridled authority. Maybe somebody from the media or social media organisation would make a great outsider independent director.
Recruiting outsiders is a process and can be mastered by a head hunting firm or by building a pool of such directors by one of the many institutions. The idea should be to randomly allocate directors based on a search criterion from a pool of candidates. If the system does not rectify itself sooner or later, the heavy hand of the regulator will enter to curb the ecosystem. This is not good for the masters or the makers of masters. Wealth creators are job creators, their role in the society cannot be caricatured and perpetuated among the masses.
The author is a senior journalist and associated with a think tank based out of Gurgaon. The views expressed in this article are those of the author and do not represent the stand of this publication.