After a turbulent week, Paddy Cosgrave resigned as CEO of Web Summit. But he’s far from the first leader to suffer at the hands of his own words.
Following comments regarding the ongoing Israel-Hamas conflict in Israel and Palestine, Web Summit co-founder Paddy Cosgrave may not have predicted that they would lead to his resignation as CEO of the company.
But as the week went on, the Israeli government, along with several Israeli start-ups, investors and VC firms spoke out against Cosgrave, pulling their support and demanding a boycott from others.
Then, like a line of dominos falling one after the other, the big players – both prominent speakers and major tech sponsors – began to pull their support for the event. By Saturday (21 October), Cosgrave resigned as CEO with immediate effect, adding that his personal comments had become a distraction from the event.
The story is far from original. CEOs and corporate leaders have for years had to tread the murky waters of not airing personal opinions for fear of repercussions from investors, shareholders, sponsors or powerful industry partners.
In a capitalist world, these repercussions almost always lead back to how financially damaging an action or a statement could be, rather than a moral one.
And as tech industry giants are quickly becoming their own economic superpower around the world, the moves they make matter more than before.
As the story unfolded last week, it became clear the power major tech players hold, when that power is used and why.
Another leader who knows all too well how easily words can land you in hot water is Elon Musk. He has repeatedly gotten into trouble over the years with the US Securities and Exchange Commission for tweets he posted on the platform he now owns.
While Musk is no stranger to regulatory trouble, he was also starting to create issues for his Tesla shareholders earlier this year. In April, a group of shareholders said Musk was not spending enough time focused on issues facing the company. “Due to the board’s failure to restrict the CEO’s outside commitments and ensure he is focused on solving the many challenges the company faces, we have lost confidence in its members,” the letter said.
However, while mounting pressure on Cosgrave has led to his resignation, it seems Musk is able to stay just enough inside the line to keep his investors and the majority of his shareholders happy.
Minding the purse strings
Another CEO that has recently faced financial issues due to his actions is Vishal Garg. The Better.com leader best known for firing 900 people on a Zoom call in 2021. Garg was placed on leave a week after he did this but returned to the helm in January 2022.
The story was covered widely, and Garg’s actions were condemned. And yet, his punishment seemed to be little more than a slap on the wrist. However, fast forward to August 2023 and Better.com suffers badly on its Nasdaq debut.
Following a SPAC combination with Aurora Acquisition Corp, its stock plummeted 93pc in its first day of trading. In an interview with Forbes, an investor with Better.com who requested anonymity said Garg’s arrogance caught up with him. However, without powerful industry players and investors calling for his resignation, he may be able to weather the storm better than Cosgrave.
Only time will tell whether Garg’s position will remain tenable in the future if the company suffered further reputational damage. Only time will tell if Musk continues to tweet his way into trouble with regulatory bodies – whether or not that really matters to his investors is another story.
And only time will tell if Cosgrave’s resignation will be enough to stem the outward flow of Web Summit sponsors. But one thing is for sure: company leaders need to remember the fallout that can happen when actions and words affect the purse strings particularly in the increasingly powerful tech industry.
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Image of Paddy Cosgrave: Web Summit/Flickr (CC BY 2.0)
