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.
Mr. Huang lacked the special shares that would have made him impossible to fire. Instead, he entrenched himself in the company by overseeing seemingly every aspect of its operations. Nvidia dominates the manufacture of cutting-edge chips needed for artificial intelligence development, making the company critical to the success of the American A.I. industry (and also a highly desired target of foreign powers, China in particular). Yet Mr. Huang ran the $4 trillion company almost like a family business, rather than as a public company accountable to millions of shareholders. Ignoring traditional management structures, he had about 60 executives report directly to him. He never identified a successor. Both of Mr. Huang’s children, who are in their 30s, were swiftly rising through the ranks, with reports that they were being groomed as his heirs apparent.
Then Mr. Trump returned to power. Silicon Valley’s elite almost immediately began making nice with the president, a logical move given his lengthy history of favoring his friends (and persecuting his perceived enemies). Mr. Huang seemed to develop a particularly close relationship with Mr. Trump — a useful connection given that the Commerce Department had restricted sales of Nvidia’s most cutting-edge chips to China in 2022. Mr. Huang repeatedly pressed Mr. Trump to ease the restrictions, and, over time, his wishes seemed to come true. A Commerce Department inquiry investigating whether the Singaporean company Megaspeed was diverting Nvidia chips to China was abruptly halted by the administration and transferred to the Justice Department.
Many have pointed to Mr. Huang’s dalliances as the catalyst for the crisis. But look carefully, and you can see that the administration must shoulder some of the blame. Had it enforced the export restrictions, concerns at Megaspeed could have been addressed sooner, and China would not have been so incentivized to ensnare Nvidia’s charismatic chief executive. (China has rejected the espionage claims.)
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