So farewell then, Jensen Huang. On Thursday morning, the CEO of the world’s largest company, Nvidia’s $NVDA ex-CEO bit the bullet and resigned. A drip-feed of revelations and scandals, including an intimate relationship with an alleged Chinese spy, massive chip sales to Chinese front companies, and finally a second tryst with a top deputy at Nvidia, ultimately forced the company’s acquiescent board to demand Huang’s departure.
He’ll be replaced, for now, by the company’s respected CFO, Colette Kress, but Nvidia’s stock has taken a tumble, and increased concern about the future of AI-linked tech stocks. After a brief selloff last week, tied more to worries over the industry’s chances of growth than the exploding Huang scandal, the major stock indexes were all up slightly at midday Thursday.
Huang was a founder and a visionary, but he may have ultimately become so convinced by his own success that he felt he could do no wrong. And he seemed to have made a habit of dismissing the leading concerns about AI: The first, that China might use U.S. technology to overtake the U.S. and dominate the world with its authoritarian vision of a surveillance society, and the second, that AI development needs guardrails, a proposition argued by OpenAI’s $OPEAZZX Sam Altman and Anthropic’s Dario Amodei, and even hinted at by SpaceX’s $SPCX Elon Musk.
Huang was instrumental in persuading President Donald Trump, who became a surprising friend and acolyte of Huang’s, to ditch any thought of limiting AI growth. That friendship may also have helped Huang avoid a reprimand from the FBI, which reportedly briefed Trump a year ago on Huang’s dalliance with the Chinese operative, Alice Huang (no relation) and her firm Megaspeed (Trump chose not to act at the time, and this week claimed he knew nothing about the honey trap allegations, despite the reporting suggesting otherwise).
“You’ve got to give him credit that he was quite the visionary — moving from a CPU to a GPU chip was his creation,” Jeffrey Sonnenfeld, a professor at the Yale School of Management and founder and president of the Chief Executive Leadership Institute, said in an interview with BBTW (See below for more from Sonnenfeld). ”And he created the software that leverages this hardware. And he was certainly invested in proselytizing the future of AI and the promise of it. But he made mockery of any of the fears of catastrophic possibilities of AI, which should have made us nervous.”
Kress is now interim CEO, and she could easily stay in the role, or be partnered with Ian Buck, the company’s chief tech wiz, in a co-leadership role. Huang’s own future is nebulous. His vision took Nvidia from nothing to the world’s largest company in less than a decade. But unlike a Musk or a Zuckerberg, or even Rupert Murdoch, he doesn’t have any super-voting shares that could let him control the company from o outside the C-suite. He owns a mere 3.6% of Nvidia.
The board’s overnight decision, announced just as markets opened in the U.S., has sent the stock price ricocheting. Shares plunged 14% overnight, only to rebound by nearly 10% in midday trading on Thursday. But the damage is more serious. Nvidia shares are down 27% in the past month, after reaching a peak of $243 in early October. The company’s market cap plunged to $3.99 trillion Thursday afternoon, from a one-time high above $5 trillion.
All that stock movement has class action lawyers filing briefs and emailing shareholders to line up suits against the board — and possibly Huang — for failing in their fiduciary duty to protect the firm and its shareholders from Huang’s reckless and undisclosed behavior. Those suits will live or die by how the share price pans out in the next few weeks, and Nvidia may survive. Its engineers keep designing chips and software that nobody else does, and its sales team keeps selling the chips at a speed that outpaces production capacity. And there are many more fields that could swiftly and profitably adopt AI. That includes, somewhat ironically, the healthcare and life sciences unit overseen by Huang’s American paramour, Kimberly Powell, Nvidia’s vice president and general manager of healthcare, who said in a recent video post that Nvidia sees a huge market in integrating AI into hospitals. “The hospital itself should be a robot,” Powell explained, describing a vision of an AI-led, highly automated patient experience.
Nvidia’s ricocheting stock price, and the uncertainty over whether a new CEO can keep the company’s relatively high valuation, a 20.12 price/earnings ratio, raises uncertainty over an even bigger picture than AI alone: The great big circular financing web that underpins the AI boom. Nvidia, with deep cash reserves, isn’t just the biggest chip seller; it’s the bank behind the buildout. It’s accumulated stakes in dozens of small startups, and invested in major AI players including OpenAI $OPEAZZX, Anthropic $ANTHZZX, xAI, and CoreWeave $CRWV. But now, instead of a savior for the industry, a loss of momentum at Nvidia would pull the rug out from under the entire AI boom.
How Hero Worship and a Hand-Picked Board Set Nvidia Up for a Fall
How did Jensen Huang, the godfather of AI and CEO of the world’s most valuable public company fall so hard and so fast? What went wrong at Nvidia that the company failed to question its CEO’s behavior? And that it failed to ask how so many of its prized chips could be going to a small company in tiny Singapore? And why is there no heir apparent in place? Big Business This Week’s Peter Green got on the phone with Yale School of Management professor Jeffrey Sonnenfeld, one of the world’s leading authorities on corporate governance and CEO leadership, and founder and president of the Chief Executive Leadership Institute.
Peter Green: You’d think a board of directors, major shareholders, even internal security at a company this sensitive would have made sure the CEO didn’t end up in a honey trap or canoodling with a senior executive. What went wrong at Nvidia?
Jeffrey Sonnenfeld: This happens with a lot of brilliant founders: a sense of idolatry sets in, hero worship. The board fears to question what they themselves couldn’t have accomplished. They feel unworthy to question the Almighty. [It’s like] the book of Job, when Job’s complaining about his lot in life, and the Almighty says, who are you, of dust and ashes to question me? [Jensen Huang] was a dishwasher at a Denny’s restaurant that sits down with a couple of guys with $600 between them. Thirty-three years later, he’s built the most valuable — at least until yesterday — business on the planet, at $5 trillion. And their view is, how can we even question that? So they tend to give him a lot of credit. Sociologists call it idiosyncrasy credits. You give him a chance just to be different, not held to the standards that the rest of us are held to. But if anybody else in the company — if they thought they were doing [what Huang did] there’d be no question that he would have been fired.
Huang doesn’t have, at least publicly, that Lex Luthor image that many tech CEOs cultivate.
Despite not having a brutal, thuggish aura like Mark Zuckerberg and Elon Musk, or some of the coldness of Jeff Bezos, he seemed like a warmer, friendlier guy, which is true. However, he has the same sense of grandiosity — that he could get away with things nobody else could, because he and Elon Musk and Mark Zuckerberg were able to create things that other people couldn’t create.
By contrast, there are people equally visionary, like Michael Dell $DELL, who are much more humble and philanthropic, more generous. They have respect for the people they work with. And they keep themselves to a human scale. Michael Dell has always put together a board of people who did things he didn’t do — to learn from CEOs who’ve run companies — and he had people in place who could hold him in check, who were not afraid of him.
Elon Musk and Jensen Huang have boards where they don’t have any CEOs in there — somebody who’s led a public company and been responsible to shareholders and financial communities. They’re functional experts who know different areas within companies, but there hasn’t been a CEO that could sit in judgment to challenge him. And the board also are not a threat to him. They could never parachute in, in an interim way or successor way. That’s how Jensen Huang set it up. He thought he’d be entrenched. He thought that he would be the one person who was truly indispensable.
If you’re a board member on a board like that, at what point do you get concerned that you have fiduciary responsibilities, or more personally, that may not be covered by your D&O insurance or that you might be torpedoing your stock options?
It’s a serious problem that you’re noting. You’re exactly right. They failed in a duty of care: There were warning signals. They should have paid attention. There should be a lot of concern that this board didn’t have anybody from the company on the board. There was no management committee. There were 60 people, his direct reports, and they fell for the anti-bureaucracy b.s. that this is a flatter organization.
So flatter organizations don’t work?
Flatter organization means there’s no accountability. The sociologist Max Weber, at the turn of the last century, championed bureaucracy — bureaucracy is supposed to be a good thing. It was supposed to get away from the capriciousness, the control of a boss. It was to create a system of justice for resource allocation, for decision-making, for accountability. The trouble with bureaucracies [is that] a lot of them got too rigid. But the original idea was that bureaucracy was supposed to be a reform.
If a CEO is seen as indispensable, isn’t that itself a governance failure?
Exactly. He set it up so he would be seen as indispensable. Some of them have founder stock — dual-class shares that allow them extra voting power beyond what they own. Huang didn’t need that, because he just felt secure that there’s nobody in the business that would be a threat to him, because nobody knows what he knows as a technology genius. His 60 reports all just had small fragmentary knowledge of the total enterprise. It’s too much to keep track of, but it kept them all in check. He thought that would insulate him from a management committee threat, and from a board. He put together a board where they didn’t know anything about technology — and they also didn’t know how to be a CEO, to speak to all the constituencies.
So then the board doesn’t question things that may seem a little off, like an outsize customer no one’s heard of?
It should have made us nervous that this board was so distant from the business. They didn’t realize that 20% of chip sales were going to the little island of Singapore. And meanwhile, who was this company? [It] was a $4 million company one year that the next year is buying $5 billion worth of chips. In the drug trafficking world, it’d be called a strawman — a front for the redirection of illicit goods. So it was sanctioned circumvention of trade-restricted goods that this company, run by Chinese, anchored in Singapore, was sending back to the Chinese government, military and companies like Alibaba.
At some point, won’t the Chinese simply copy the chip — and there goes Nvidia’s market. Isn’t that the big danger here that the board failed to notice?
Eventually. But they figured, in the meantime, before it gets engineered and copied, that they were still getting [paid] through this company that was redirecting the chips — which is pretty awful. It was hampering Western businesses, but also equipping [China’s] military for dangerous uses. All because of the abdication of the board, [which never] asked about this imbalance in customers and also did not have a succession plan.
So that’s oversight of the China connection, but what about the flat organization and the lack of a designated successor?
As it turns out, there are some leaders within that can rise to the occasion, such as the CFO, Colette Kress, who’s very good. She has a terrific reputation in financial institutions, Wall Street and financial markets, but also in the world of technology. She was a very senior, well-respected person at Cisco $CSCO and Microsoft $MSFT, and hits the ground running with a lot of momentum. She could be a very good CEO. And then there is a guy named Ian Buck, who knows all the bits and bytes and the ins and outs of the hyperscale community that they serve. So they could be a terrific CEO–president team that would be very reassuring to the markets. She doesn’t wear a tight-fitting leather jacket and doesn’t have a stylized brand, but her authenticity and knowledge is very impressive.
Long-term “key man” CEOs — Elon Musk, Mark Zuckerberg, Rupert Murdoch, Jamie Dimon to an extent — quash all competition for their job. But they all seem to face a reckoning eventually.
I wrote a book about this called The Hero’s Farewell. There’s a type in that book called the Monarch, that is driven by their heroic mission. They see that their immortality is defined by their business-building mission, and their personal identity [is defined] by the heroic stature of the seat they have in the corner office. These monarchs stay on until they either [die in] office or [face] a palace revolt, as we’re seeing right now at Nvidia. They think they are the one person who’s truly indispensable. And when they leave, there’s a power vacuum, because they didn’t groom a successor that would be seen as a threat to them. They might have what was called in Victorian literature a beard — a non-threatening male escort. Somebody who’s sort of a placeholder as a president or chief operating officer, if they have one at all. But it isn’t someone that anybody would take seriously as a threat to the throne.
Turn that same optic on the other big companies — Muskworld, Meta, OpenAI. Where else do you see this?
There are only a few of them. You do see them in technology, in entertainment, periodically in retail — Dov Charney, who was running American Apparel, and Chip Wilson, who created Lululemon $LULU. You see it in personality-infused businesses in fairly creative spaces like fashion, media, entertainment, technology, where innovation is at a premium. You want people that are big risk-takers, [where] the chances of them failing are like 99%. These are people who have an otherworldly sense of confidence in their vision. Most of them don’t make it. But those who do believe that they are invincible, because they’ve made it through odds that were so daunting. And when founders flounder, it’s a big problem, because they have a board that’s not equipped to challenge them or support them. The board that they build is filled with sycophants.
How big is the risk at, say, Tesla?
Take a look at SolarCity. That was a fiasco. So he folded it into Tesla $TSLA. X — Twitter’s a disaster. So he folded that into xAI [which was folded into SpaceX $SPCX]. They had to shut down his self-promoted, horrible-looking trash truck called the Cybertruck. The fleet of a million robo-taxis we were supposed to have seen, nationwide, five years ago — never happened. The big insurance company — he was going to create the world’s largest car insurance company. He didn’t sell a dollar. The Boring Company, they were supposed to connect 25 cities with high-speed tunnels. That just never happened. So he staples them all together, and he hides the failures in the dust of the extraordinary successes. SpaceX has been an amazing success — but it’s an amazing success with half its funding coming from the government.
Yet the tech bros keep the share price up.
There’s a meme stock quality to it. It’s the world’s largest meme stock. It’s an absurd ratio. [And they] absolutely face the same risk as Nvidia. You’re just wondering, any day, if the recklessness and flamboyance of Elon Musk is just going to go a little bit too far. And then we’ll see the pinprick of the balloon with the air racing out of Tesla as well.
What about Anthropic and OpenAI?
Anthropic — Dario Amodei is [actually] more like Michael Dell, [in] that he’s his own toughest critic. Michael Dell doesn’t make a religion out of his business. He’s grown with his business and he’s reinvented it 12 times over. There’s nothing which is ritualized. And they have a team that’s constantly questioning him and each other. The same with Amodei. He’s very good at that. It’s a really, really different leadership style. I don’t know Amodei, but I do know Michael Dell and Jensen. Amodei’s style is quite different from that of Musk.
What’s the lesson for everyone else?
It’s a cult-like enterprise where people don’t want to question what their own eyes tell them. You remember Jack Nicholson in A Few Good Men shouting back, “You can’t handle the truth”? They don’t want to ask because they’re afraid. They don’t want to know. They should have questioned the quality of the board. [They] should have been questioning the succession plans and the excessive breadth of this management team of 60 direct reports. They should have questioned the concentration [of] shipments into Singapore, into this unknown little teeny company. There’s things they didn’t question because they didn’t want to know.
(This interview has been edited and condensed for clarity and brevity)
—Peter S. Green
Big Businesses Mentioned This Week
$NVDA ( ▼ 5.51% ) $OPEAZZX ( ▼ 0.68% ) $SPCX ( ▲ 0.69% ) $DELL ( ▼ 0.31% ) $SKYD ( ▼ 2.6% ) $WEN ( ▼ 1.98% ) $BA ( ▼ 1.53% ) $TSLA ( ▲ 1.34% ) $STLA ( ▼ 5.23% ) $HMC ( ▲ 0.75% )
The Usual Suspects
So farewell then, Jensen Huang. On Thursday morning, the CEO of the world’s largest company, Nvidia’s $NVDA ex-CEO bit the bullet and resigned. A drip-feed of revelations and scandals, including an intimate relationship with an alleged Chinese spy, massive chip sales to Chinese front companies, and finally a second tryst with a top deputy at Nvidia, ultimately forced the company’s acquiescent board to demand Huang’s departure.
He’ll be replaced, for now, by the company’s respected CFO, Colette Kress, but Nvidia’s stock has taken a tumble, and increased concern about the future of AI-linked tech stocks. After a brief selloff last week, tied more to worries over the industry’s chances of growth than the exploding Huang scandal, the major stock indexes were all up slightly at midday Thursday.
Huang was a founder and a visionary, but he may have ultimately become so convinced by his own success that he felt he could do no wrong. And he seemed to have made a habit of dismissing the leading concerns about AI: The first, that China might use U.S. technology to overtake the U.S. and dominate the world with its authoritarian vision of a surveillance society, and the second, that AI development needs guardrails, a proposition argued by OpenAI’s $OPEAZZX Sam Altman and Anthropic’s Dario Amodei, and even hinted at by SpaceX’s $SPCX Elon Musk.
Huang was instrumental in persuading President Donald Trump, who became a surprising friend and acolyte of Huang’s, to ditch any thought of limiting AI growth. That friendship may also have helped Huang avoid a reprimand from the FBI, which reportedly briefed Trump a year ago on Huang’s dalliance with the Chinese operative, Alice Huang (no relation) and her firm Megaspeed (Trump chose not to act at the time, and this week claimed he knew nothing about the honey trap allegations, despite the reporting suggesting otherwise).
“You’ve got to give him credit that he was quite the visionary — moving from a CPU to a GPU chip was his creation,” Jeffrey Sonnenfeld, a professor at the Yale School of Management and founder and president of the Chief Executive Leadership Institute, said in an interview with BBTW (See below for more from Sonnenfeld). ”And he created the software that leverages this hardware. And he was certainly invested in proselytizing the future of AI and the promise of it. But he made mockery of any of the fears of catastrophic possibilities of AI, which should have made us nervous.”
Kress is now interim CEO, and she could easily stay in the role, or be partnered with Ian Buck, the company’s chief tech wiz, in a co-leadership role. Huang’s own future is nebulous. His vision took Nvidia from nothing to the world’s largest company in less than a decade. But unlike a Musk or a Zuckerberg, or even Rupert Murdoch, he doesn’t have any super-voting shares that could let him control the company from o outside the C-suite. He owns a mere 3.6% of Nvidia.
The board’s overnight decision, announced just as markets opened in the U.S., has sent the stock price ricocheting. Shares plunged 14% overnight, only to rebound by nearly 10% in midday trading on Thursday. But the damage is more serious. Nvidia shares are down 27% in the past month, after reaching a peak of $243 in early October. The company’s market cap plunged to $3.99 trillion Thursday afternoon, from a one-time high above $5 trillion.
All that stock movement has class action lawyers filing briefs and emailing shareholders to line up suits against the board — and possibly Huang — for failing in their fiduciary duty to protect the firm and its shareholders from Huang’s reckless and undisclosed behavior. Those suits will live or die by how the share price pans out in the next few weeks, and Nvidia may survive. Its engineers keep designing chips and software that nobody else does, and its sales team keeps selling the chips at a speed that outpaces production capacity. And there are many more fields that could swiftly and profitably adopt AI. That includes, somewhat ironically, the healthcare and life sciences unit overseen by Huang’s American paramour, Kimberly Powell, Nvidia’s vice president and general manager of healthcare, who said in a recent video post that Nvidia sees a huge market in integrating AI into hospitals. “The hospital itself should be a robot,” Powell explained, describing a vision of an AI-led, highly automated patient experience.
Nvidia’s ricocheting stock price, and the uncertainty over whether a new CEO can keep the company’s relatively high valuation, a 20.12 price/earnings ratio, raises uncertainty over an even bigger picture than AI alone: The great big circular financing web that underpins the AI boom. Nvidia, with deep cash reserves, isn’t just the biggest chip seller; it’s the bank behind the buildout. It’s accumulated stakes in dozens of small startups, and invested in major AI players including OpenAI $OPEAZZX, Anthropic $ANTHZZX, xAI, and CoreWeave $CRWV. But now, instead of a savior for the industry, a loss of momentum at Nvidia would pull the rug out from under the entire AI boom.
How Hero Worship and a Hand-Picked Board Set Nvidia Up for a Fall
How did Jensen Huang, the godfather of AI and CEO of the world’s most valuable public company fall so hard and so fast? What went wrong at Nvidia that the company failed to question its CEO’s behavior? And that it failed to ask how so many of its prized chips could be going to a small company in tiny Singapore? And why is there no heir apparent in place? Big Business This Week’s Peter Green got on the phone with Yale School of Management professor Jeffrey Sonnenfeld, one of the world’s leading authorities on corporate governance and CEO leadership, and founder and president of the Chief Executive Leadership Institute.
Peter Green: You’d think a board of directors, major shareholders, even internal security at a company this sensitive would have made sure the CEO didn’t end up in a honey trap or canoodling with a senior executive. What went wrong at Nvidia?
Jeffrey Sonnenfeld: This happens with a lot of brilliant founders: a sense of idolatry sets in, hero worship. The board fears to question what they themselves couldn’t have accomplished. They feel unworthy to question the Almighty. [It’s like] the book of Job, when Job’s complaining about his lot in life, and the Almighty says, who are you, of dust and ashes to question me? [Jensen Huang] was a dishwasher at a Denny’s restaurant that sits down with a couple of guys with $600 between them. Thirty-three years later, he’s built the most valuable — at least until yesterday — business on the planet, at $5 trillion. And their view is, how can we even question that? So they tend to give him a lot of credit. Sociologists call it idiosyncrasy credits. You give him a chance just to be different, not held to the standards that the rest of us are held to. But if anybody else in the company — if they thought they were doing [what Huang did] there’d be no question that he would have been fired.
Huang doesn’t have, at least publicly, that Lex Luthor image that many tech CEOs cultivate.
Despite not having a brutal, thuggish aura like Mark Zuckerberg and Elon Musk, or some of the coldness of Jeff Bezos, he seemed like a warmer, friendlier guy, which is true. However, he has the same sense of grandiosity — that he could get away with things nobody else could, because he and Elon Musk and Mark Zuckerberg were able to create things that other people couldn’t create.
By contrast, there are people equally visionary, like Michael Dell $DELL, who are much more humble and philanthropic, more generous. They have respect for the people they work with. And they keep themselves to a human scale. Michael Dell has always put together a board of people who did things he didn’t do — to learn from CEOs who’ve run companies — and he had people in place who could hold him in check, who were not afraid of him.
Elon Musk and Jensen Huang have boards where they don’t have any CEOs in there — somebody who’s led a public company and been responsible to shareholders and financial communities. They’re functional experts who know different areas within companies, but there hasn’t been a CEO that could sit in judgment to challenge him. And the board also are not a threat to him. They could never parachute in, in an interim way or successor way. That’s how Jensen Huang set it up. He thought he’d be entrenched. He thought that he would be the one person who was truly indispensable.
If you’re a board member on a board like that, at what point do you get concerned that you have fiduciary responsibilities, or more personally, that may not be covered by your D&O insurance or that you might be torpedoing your stock options?
It’s a serious problem that you’re noting. You’re exactly right. They failed in a duty of care: There were warning signals. They should have paid attention. There should be a lot of concern that this board didn’t have anybody from the company on the board. There was no management committee. There were 60 people, his direct reports, and they fell for the anti-bureaucracy b.s. that this is a flatter organization.
So flatter organizations don’t work?
Flatter organization means there’s no accountability. The sociologist Max Weber, at the turn of the last century, championed bureaucracy — bureaucracy is supposed to be a good thing. It was supposed to get away from the capriciousness, the control of a boss. It was to create a system of justice for resource allocation, for decision-making, for accountability. The trouble with bureaucracies [is that] a lot of them got too rigid. But the original idea was that bureaucracy was supposed to be a reform.
If a CEO is seen as indispensable, isn’t that itself a governance failure?
Exactly. He set it up so he would be seen as indispensable. Some of them have founder stock — dual-class shares that allow them extra voting power beyond what they own. Huang didn’t need that, because he just felt secure that there’s nobody in the business that would be a threat to him, because nobody knows what he knows as a technology genius. His 60 reports all just had small fragmentary knowledge of the total enterprise. It’s too much to keep track of, but it kept them all in check. He thought that would insulate him from a management committee threat, and from a board. He put together a board where they didn’t know anything about technology — and they also didn’t know how to be a CEO, to speak to all the constituencies.
So then the board doesn’t question things that may seem a little off, like an outsize customer no one’s heard of?
It should have made us nervous that this board was so distant from the business. They didn’t realize that 20% of chip sales were going to the little island of Singapore. And meanwhile, who was this company? [It] was a $4 million company one year that the next year is buying $5 billion worth of chips. In the drug trafficking world, it’d be called a strawman — a front for the redirection of illicit goods. So it was sanctioned circumvention of trade-restricted goods that this company, run by Chinese, anchored in Singapore, was sending back to the Chinese government, military and companies like Alibaba.
At some point, won’t the Chinese simply copy the chip — and there goes Nvidia’s market. Isn’t that the big danger here that the board failed to notice?
Eventually. But they figured, in the meantime, before it gets engineered and copied, that they were still getting [paid] through this company that was redirecting the chips — which is pretty awful. It was hampering Western businesses, but also equipping [China’s] military for dangerous uses. All because of the abdication of the board, [which never] asked about this imbalance in customers and also did not have a succession plan.
So that’s oversight of the China connection, but what about the flat organization and the lack of a designated successor?
As it turns out, there are some leaders within that can rise to the occasion, such as the CFO, Colette Kress, who’s very good. She has a terrific reputation in financial institutions, Wall Street and financial markets, but also in the world of technology. She was a very senior, well-respected person at Cisco $CSCO and Microsoft $MSFT, and hits the ground running with a lot of momentum. She could be a very good CEO. And then there is a guy named Ian Buck, who knows all the bits and bytes and the ins and outs of the hyperscale community that they serve. So they could be a terrific CEO–president team that would be very reassuring to the markets. She doesn’t wear a tight-fitting leather jacket and doesn’t have a stylized brand, but her authenticity and knowledge is very impressive.
Long-term “key man” CEOs — Elon Musk, Mark Zuckerberg, Rupert Murdoch, Jamie Dimon to an extent — quash all competition for their job. But they all seem to face a reckoning eventually.
I wrote a book about this called The Hero’s Farewell. There’s a type in that book called the Monarch, that is driven by their heroic mission. They see that their immortality is defined by their business-building mission, and their personal identity [is defined] by the heroic stature of the seat they have in the corner office. These monarchs stay on until they either [die in] office or [face] a palace revolt, as we’re seeing right now at Nvidia. They think they are the one person who’s truly indispensable. And when they leave, there’s a power vacuum, because they didn’t groom a successor that would be seen as a threat to them. They might have what was called in Victorian literature a beard — a non-threatening male escort. Somebody who’s sort of a placeholder as a president or chief operating officer, if they have one at all. But it isn’t someone that anybody would take seriously as a threat to the throne.
Turn that same optic on the other big companies — Muskworld, Meta, OpenAI. Where else do you see this?
There are only a few of them. You do see them in technology, in entertainment, periodically in retail — Dov Charney, who was running American Apparel, and Chip Wilson, who created Lululemon $LULU. You see it in personality-infused businesses in fairly creative spaces like fashion, media, entertainment, technology, where innovation is at a premium. You want people that are big risk-takers, [where] the chances of them failing are like 99%. These are people who have an otherworldly sense of confidence in their vision. Most of them don’t make it. But those who do believe that they are invincible, because they’ve made it through odds that were so daunting. And when founders flounder, it’s a big problem, because they have a board that’s not equipped to challenge them or support them. The board that they build is filled with sycophants.
How big is the risk at, say, Tesla?
Take a look at SolarCity. That was a fiasco. So he folded it into Tesla $TSLA. X — Twitter’s a disaster. So he folded that into xAI [which was folded into SpaceX $SPCX]. They had to shut down his self-promoted, horrible-looking trash truck called the Cybertruck. The fleet of a million robo-taxis we were supposed to have seen, nationwide, five years ago — never happened. The big insurance company — he was going to create the world’s largest car insurance company. He didn’t sell a dollar. The Boring Company, they were supposed to connect 25 cities with high-speed tunnels. That just never happened. So he staples them all together, and he hides the failures in the dust of the extraordinary successes. SpaceX has been an amazing success — but it’s an amazing success with half its funding coming from the government.
Yet the tech bros keep the share price up.
There’s a meme stock quality to it. It’s the world’s largest meme stock. It’s an absurd ratio. [And they] absolutely face the same risk as Nvidia. You’re just wondering, any day, if the recklessness and flamboyance of Elon Musk is just going to go a little bit too far. And then we’ll see the pinprick of the balloon with the air racing out of Tesla as well.
What about Anthropic and OpenAI?
Anthropic — Dario Amodei is [actually] more like Michael Dell, [in] that he’s his own toughest critic. Michael Dell doesn’t make a religion out of his business. He’s grown with his business and he’s reinvented it 12 times over. There’s nothing which is ritualized. And they have a team that’s constantly questioning him and each other. The same with Amodei. He’s very good at that. It’s a really, really different leadership style. I don’t know Amodei, but I do know Michael Dell and Jensen. Amodei’s style is quite different from that of Musk.
What’s the lesson for everyone else?
It’s a cult-like enterprise where people don’t want to question what their own eyes tell them. You remember Jack Nicholson in A Few Good Men shouting back, “You can’t handle the truth”? They don’t want to ask because they’re afraid. They don’t want to know. They should have questioned the quality of the board. [They] should have been questioning the succession plans and the excessive breadth of this management team of 60 direct reports. They should have questioned the concentration [of] shipments into Singapore, into this unknown little teeny company. There’s things they didn’t question because they didn’t want to know.
(This interview has been edited and condensed for clarity and brevity)
—Peter S. Green
Big Businesses mentioned this week:
$NVDA $OPEAZZX $SPCX $DELL $SKYD $WEN $BA $TSLA $STLA $HMC
The Usual Suspects
- Skydance starts cutting: You can’t spell synergies without j-o-b-c-u-t-s, as David Ellison, the new nepomogul chief of Warner Bros., Paramount, HBO, CNN, and CBS News (among others) reminded shareholders in his newly enlarged company, Skydance (The one with the epic stock ticker, $SKYD). On Monday, Ellison outlined a plan for $6 billion in annual savings within three years, as the company struggles under $87 billion in debt, most of that from this year’s acquisition of Warner Bros. Discovery. Voluntary buyouts, merging lackluster streaming service Paramount+ with the legendary HBO Max, and using AI to cut the cost of movie making are all in the works. Also out: DC Studios’ chiefs James Gunn and Peter Safran, who’ve been replaced by former Marvel Studios exec Jeremy Latcham. (The DC duo will continue to make films) The reasoning seems pretty straightforward: Marvel’s Spider-Man: Brand New Day is the top-grossing film this year with a $2.5 billion worldwide box office, while DC’s “Supergirl” only took in $126 million. Shares in Skydance plunged 10% on Tuesday, amid investor concerns over the cost of servicing the giant debt and integrating the three entertainment companies, Skydance, Paramount and Warner. Shares are down 50% in the past year.
- Hey Nelson, Where’s the beef? Wendy’s $WEN board stiff-armed investor Nelson Peltz and his Trian Group this week, rejecting his plan to buy the burger chain for about $1.4 billion. The company said Peltz’s offer was too low and doesn’t include the value of the ongoing turnaround led by CEO Bob Wright. Peltz and his Trian Investment Fund have been arguing that Wendy’s has swapped ingredient quality for cost savings, that service has become uneven, and that Wendy’s depended too much on barely profitable deals to boost revenue. That led Wendy’s to lose its spot as America’s second favorite burger joint to Burger King.
- Boeing’s bad days: CEO Kelly Ortberg’s long-awaited turnaround for Boeing $BA has yet to take wing. Actually, wings. Turns out that ramping up production of the cash-cow 737 Max is being hampered by difficulties producing enough wings fast enough to meet a hoped-for production schedule of 47 planes a month, following a months-long shutdown in 2024 after machinists strike, and FAA production limits following the blowout in mid-air of a poorly installed doorpanel on a 737 Max. The wing issues mean Boeing can’t meet its order book, and the company says it’s laying off 2,500 people whose jobs depended on having enough wings to install. Boeing’s also reckoning with a couple of billion dollars in liabilities it hadn’t accounted for last year, when it bought back Spirit AeroSystems, the longtime fuselage supplier that it spun off in 2005. That includes a $370 million increase in liability for “off-market customer contracts,” the Wall Street Journal’s Jonathan Weil reported. Boeing’s commercial airline unit posted a $697 million operating loss in the third quarter, and its shares are down. Boeing shares are down 23% this year.
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Car Talk
- Cybertruck canceled: That’s it for the Cybertruck, Tesla’s $TSLA widely ridiculed and impractical metallic pickup. In a post on X, Elon Musk said he’ll stop production next June of the underselling truck to focus Tesla’s Austin, Texas factory on its driverless cybercabs. Estimated U.S. sales fell to 20,237 in 2025, from 38,965 in 2024, according to Kelley Blue Book, far below Musk’s promise of 250,000 trucks a year, and failed to upset America’s pickup truck market. Last year, Ford $F sold 828,832 F-Series pickups (F-150 and the SuperDuty), including 27,307 of its now-discontinued F-150 Lightning electric pickups in 2025. Tesla shares jumped 5% on the news. They’re down 10.8% this year. On Thursday morning, Musk said he’d honor existing orders on the Cybertruck until 2027 for “sentimental” reasons.
- Northern fights: Stellantis $STLA, the forgettably named international carmaker that owns Chrysler, is facing more trouble in Canada after it agreed to finally shut production at its 3-million-square-foot factory in Brampton, Ontario, and sell the place to armored vehicle maker Roshel, a 10-year-old Canadian defense contractor. But Stellantis’ unions are mad, and the Ontario government is furious that Stellantis is walking away with $155 million of government money it got for retooling the plant and another in Windsor. Stellantis says it will pay Canada back. The conflict is likely to worsen U.S.-Canada trade relations, especially as Stellantis is moving production of the Jeeps it planned to make in Brampton to a site in Illinois. Prime Minister Mark Carney called Stellantis’ sale of the plant “unacceptable.” Roshel says it expects to hire thousands of workers. “There is a massive plant that has been idle, and this is what we’re fixing,” Roshel CEO Roman Shimonov told CTV News. Stellantis says it has no choice, as it’s got far too much factory space for the number of cars it can sell in the U.S. Stellantis shares are down 64% this year and 80% in the past five years.
- Hybrids are good: With gasoline still hovering around $4 a gallon and electric cars still hard to charge in large swathes of the U.S., Americans are turning to hybrids, and that’s good news for both Honda $HMC and Toyota. U.S. sales of hybrids jumped 28% from a year earlier in the third quarter, while EV sales dropped 40%. Honda is also cashing in on the hybrid boom, announcing a $3 billion plant in Ohio to make 240,000 hybrids a year. Toyota shares are up 17% in the past six months. Honda shares are up 38% in the past six months.
Peter S. Green is a veteran reporter and editor who has spent more than two decades covering business and finance from Eastern Europe to New York City, and has worked for Bloomberg News, The New York Post, The New York Times and The Messenger. He lives in New York City and is always looking for the next big story.
