It is easy to attribute Jensen Huang’s abrupt fall to his lapses in judgment — including his growing list of extramarital dalliances — but Nvidia’s woes are a symptom of a much bigger problem.
Silicon Valley finds itself increasingly under the control of a handful of dominant chieftains and investors. And as these extraordinarily powerful executives grow closer to President Trump, the dark consequences of the wheeling and dealing are coming to the fore.
These problems are serious, but they are hardly new. Through much of this country’s history, particularly in the early 1900s, many American companies operated under similar conditions, dominated by powerful chief executives and controlling shareholders who faced few checks on their behavior. Over time, scandals, crisis and economic strain compelled regulators and public shareholders to demand more rigorous safeguards to protect the economic interests of everyday investors. This pressure led to many of the rules we take for granted today. Publicly traded companies must have an independent board of directors to hold executives accountable; they must disclose their operations clearly and in full; shareholders have rights. Such rules didn’t end all crises, but they made corporations well equipped to deal with them.
In the past decade and a half, the rules began to weaken, as several presidential administrations relaxed corporate regulations. Some of the changes occurred for good reasons: to reduce the cost for a company to take itself public, to encourage innovation, and to ease costly compliance and reporting requirements. Other changes derived from less defensible motives, such as an increased tolerance among investors, boards and regulators for concentrated founder control.
Few industries have taken this shift further than Silicon Valley. You can see the seeds of the problem in the many origin stories of its most successful companies: a brilliant founder, toiling perhaps in his garage, possessed with a singular vision and focus. Over time, even investors came to regard successful founders as something akin to mystical geniuses who could not be replaced. If a company loses its founder, it is lost forever. In such a mind-set, board members and shareholders give leaders pretty much whatever they want. The gushers of money flooding the biggest companies keep investors satiated, further entrenching this practice.
That explains why some of Silicon Valley’s largest companies are basically authoritarian realms. Mark Zuckerberg, the chief executive of Meta, is one of many successful founders who were granted a special class of stock that gives them effective control over their companies’ futures; the founders of Anthropic have proposed a similar arrangement ahead of their initial public offering, giving them collectively a majority of voting power, though they would own a much smaller share of the company. Elon Musk, the chief executive of Tesla and SpaceX, has a similar arrangement.
