General Question

Hypocrisy_Central's avatar

David Neeleman (Jet Blue), Steve Jobs (Apple), George Zimmer (Men’s Wearhouse), Andrew Mason (Groupon), and Dov Charney (American Apparel) were founders and CEOs forced out of the companies they founded, how could they have made themselves ”bullet proof”?

Asked by Hypocrisy_Central (26821points) June 9th, 2015

How can you make yourself ”bullet proof”, or ”un-removable” with so much business Teflon you can’t be ousted? There is the old adage of owning at least 51% of the company’s stock, but is that the only way and how or what effect does that have on the business’ profitability?

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13 Answers

talljasperman's avatar

Don’t sell stock in your company and don’t borrow money.

Hypocrisy_Central's avatar

^ What happens if you need a bridge to cover a tough patch, and how do you raise capital to expand if you don’t go public?

talljasperman's avatar

You don’t and chalk it up for experience.

elbanditoroso's avatar

As soon as you go public (and don’t own 50.1% of the stock), you are vulnerable. Nothing you can do. One you have lost the confidence of the board, you’re out. Their responsibility is to the investors, not to the CEO.

bossob's avatar

They sold their souls to the devil: more is better; bigger is better; expansion is better, etc….which they made happen by going public to use other people’s money, and at the same time giving those people more control over company finances.

It’s a game for gamblers, and I doubt any of them were naive about the potential consequences.

There was a time when slower growth for long term benefits were the indicators of a well-managed company. Greed and avarice at the highest levels of an organization have made that business model obsolete in the modern era.

marinelife's avatar

They did not keep performing for the shareholders, therefore, they were ousted. No one can be made bulletproof unless they totally fund they company themselves.

stanleybmanly's avatar

If you must take the company public, you should maintain a hold on better than 50% of the stock. All of the examples given are of men who garnished enormous wealth from the loss of control. I would love to be so “unfortunate”.

gorillapaws's avatar

I know in Steve Jobs case, he came to believe that being kicked out of Apple was one of the best things that ever happened to him. He went on to found NeXT which eventually was acquired by Apple. The software running on every Mac and iOS device is still based on the work done by NeXT.

cookieman's avatar

^^ Not to mention a little company called Pixar which he bought at a fire sale from George Lucas — which he later sold to Disney for (I believe) a gajillion dollars of stock.

Buttonstc's avatar

Also, in the case of Steve Jobs who refused to compromise his unique vision for the Apple products, time has proven him correct.

After his exit, Apple went on an unabated downward slide producing the same beige boxes as other companies. And licensing others to produce them didn’t reverse that trend.

Trying to sell computers as if they’re soda just didn’t work either (one of the interim CEOs used to be in charge of Pepsi).

Finally, they were begging Jobs to come back. The fruit flavored iMacs were just the beginnning of Apples upward climb under Jobs followed by the iTunes store and the iPhone (concepts now routinely copied by multiple companies)

Prior to this we had to buy an entire album. There was no such thing as buying per song. And there were small portable cellphones (flip-phones) but nothing resembling the computer-in-your-pocket smartphones which we are all so used to and mostly take for granted.

So, Jobs got ousted because he refused to compromise the principles upon which he created Apple just for the sake of more profit and history has proven him correct.

But, he should have retained a majority of at least 51% as others have mentioned. But, then we might not have Pixar in addition to Next.

@cookieman

I was busy typing when you posted. I see we are in agreement about Pixar.

I saw an interview with John Lassiter )the head creative guy) and it’s clear that without Job’s money to save the day, there would not be a Pixar because some of the best creative ideas and methods which Lassiter proposed were not particularly regarded favorably by Disney.

cookieman's avatar

@Buttonstc: And to think, all because George Lucas was getting divorced and needed to liquidate certain assets. Pixar, under Lucas, was basically computer graphics r&d. They would make short animated films as proof of concept for some new technology. When Jobs bought them he basically said, “Let’s just make those” and turned the creative guys (Lassiter) loose. Which led to Toy Story and so on.

Hypocrisy_Central's avatar

@stanleybmanly If you must take the company public, you should maintain a hold on better than 50% of the stock.
There must be some very favorable stock options or one would go broke trying to buy enough shares to stay above the cuff, or have a broker on speed dial.

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