Biden resigns – fear and loathing on the campaign trail

It was Hunter S Thompson that said ‘A man who procrastinates in his choosing will inevitably have his choice made for him’. 

Thompson was born only 5 years before Joe Biden, but he died nearly 20 years ago. Biden is still with us, kinda, having (one hopes) taken things at a somewhat gentler pace.

He certainly doesn’t seem in the first flush of youth though, as evidenced by the latest flurry of breathtaking gaffes. Following his sub-optimal debate performance Reed Hastings, Netflix co-founder, a past board member of Microsoft and Facebook, and a significant donor to the Democrats, called for Biden to step aside, in order that a ‘vigorous, youthful’ new Democratic leader could beat Trump, and keep us safe’. A number of other respected business leaders have followed suit.

That’s what they call a pivot in today’s febrile start-up world. It’s a word I dread to hear – especially if I’m an early investor in a business, and I suspect this is also true for lots of family offices

Of course it’s always tempting to stick with the incumbent, especially if they’re a past winner, like Biden. And it is especially difficult to change direction when you’re a long way down the road with something. Hastings knows this only too well. He’s a comparative baby now, at a mere 63, but he was only 50 when he scuttled Qwikster.

Can’t remember Qwikster? Check it out. Mark Randolph and Reed Hastings started Netflix as a DVD rental service when DVDs were in their infancy in 1997 – you might have used it then to deliver the discs that you viewed and then posted back, in their cute little prepaid red envelopes.

Super-popular (and triumphant against Blockbuster and others) it navigated naturally towards the streaming content service we all use now.

In 2010 they decided to separate off the DVD rental business (which remained useful for rural customers with slow internet service) to keep the Netflix brand as clean as possible, which meant that they could strip out the additional operating costs and ‘noise’ of the older proposition as they developed their online offering. Completely understandable, and a popular idea internally, where Hastings had created a famously flat organisation, with a very ‘open’ corporate culture. 

Externally, however, Qwikster bombed – and not just a little bit. The Netflix team had created differential pricing (read: more expensive) for those wanting DVDs and streaming) which meant that they lost millions of subscribers, and in turn, around 75% of the share price. Ouch.

After a couple of fumbles, Hastings admitted that this was the wrong move, and shuttered the service. The perception of the company improved, as did subscriber numbers, and we all know the rest. Sometimes, it seems, it’s best to admit defeat, and change direction. 

That’s what they call a pivot in today’s febrile start-up world. It’s a word I dread to hear – especially if I’m an early investor in a business, and I suspect this is also true for lots of family offices, who take a position in a start-up, having bought into their original compelling, disruptive proposition.

It’s extremely difficult territory, the pivot, I find. One obviously looks at the fundamental financials when writing the initial cheque, but I am drawn more to two other things: the value of the core proposition, and the strength of the founder – their intelligence, vision, energy and tenacity. In fact a colleague of mine says he never invests unless the founder is ‘a complete Ninja’. Consider that in the context of the presidential debates for a minute. How many ‘strong leaders’ are actually strong enough to admit to an error – to go back on what they told/sold you a short while ago? Some of them love to be mavericks, but aren’t great at admitting mistakes, which they perceive as a sign of weakness.

I used to say of my mother, a particularly strong character, that she was often wrong but never uncertain, and you’ll likely have come across lots of similar characters, especially some young founders. They can be exhausting to deal with, and sometimes impossible to prise a clear, honest answer from. So what do you do – what should you do – if your office invested for one thing, an idea you believed in, and now they tell you they’re going to be doing something else?

Should we trust the strong leader who we backed at the start, or push them to stick with the proposition that we loved? It seems that lots of ‘vigorous, youthful leaders’ would rather trust their gut than listen to advice – especially younger men.

Looking back at the world of 2024 politics, there appear to be quite a few examples of leaders caught out by this kind of hubris – Macron, Sunak, Yousaf (these three are around half Biden’s age). Refusing to quit is not always a heroic act – it is quite often stupid and stubborn behaviour, plain and simple.

Walking away from a losing battle can be a triumph of wisdom, not a failure of tenacity. It is heartening that, eventually, Biden, with all the wisdom would expect, seems to have learned from this. Great leaders need to know how, and when, to step aside – not just how to ‘step up’. It took Biden a few weeks to come to this decision, so is prevarication a disease of the old? 

Maybe not. Sir James Dyson, who had apparently committed around £500M to the project, shut down their nascent car division a couple of years ago. Easier to decide to do, I guess, within a private company, as Dyson is, but a massive decision nonetheless. Although not strictly at the helm, Dyson, in his late 70s, still works in the business day-to-day, which remains family owned.

Warren Buffett has run his company for more than 50 years, and he’s famous for his consistent approach, yet takes bold decisive action when needed. Nobody is calling for these guys to go because they’re too old.

So what lessons can family offices take from the behaviour of leaders in general, and company management in particular? Should investors concern themselves with the age of the boss? It seems to me that their age is nearly irrelevant, so long as they have the respect of their team, and they’re delivering against their plan.

Once you lose control, and lose sight of the overall strategy, you’re lost. Confidence and clarity seem key – in that order. Rapid decision making is critical – especially if you’re changing course, and then being able to communicate the reasoning and the anticipated outcome in a concise and compelling manner, in order to carry the invested audience with you, is crucial. 

Biden, who unbelievably (and heartbreakingly) continued to stutter from gaffe to Malapropism and back again, may not have entirely managed that. We’ll only find out over the coming days. 

I think we can agree that the best leaders know that the future of the organisation is more important than their own egos – a quiet and thoughtful manager of a successful corporation will always emerge better in historical terms than an obdurate, single-minded leader who guides their business to failure, however strong they feel they were.

And what of the other side? Hunter Thompson also said that ‘in a closed society, where everybody’s guilty, the only crime is getting caught.’ God knows what Thompson would have made of Trump (who makes even Nixon, Thompson’s arch-enemy, look loveable), but he certainly seems to have got away with getting caught.

In fact he seems to have learned that a more measured approach pays off, which means he has managed to carry his audience with him. Well – most of them. A little while before I wrote this a young registered Republican had taken a few shots at him. Four years ago this would have precipitated the sort of Twitter-Tourette’s that took his team weeks to repair. This time, around a week later, he says he ‘took a bullet for democracy.’

He’s allowed Biden to do the hard work for him, and even some of the ‘liberal, west coast, tech community’ are coming around. Musk and, latterly billionaire venture capitalists Marc Andreessen and Ben Horowitz, have been getting in line to endorse Trump. Maybe that has more to do with Biden’s proposed tax on unrealized capital gains (which, by the way, would have only kicked in for households worth more than $100 million).

The greatest challenge for a statesman, according to Harold MacMillan was ‘events, dear boy, events’. I’d build on that to say that it seems to be how you react to them. Maybe a good pre-investment question for family offices to ask company founders is: “How will you act if things don’t go to plan?”. If they sound decisive and collaborative, and their answers prioritise the company (and thus your investment) you’ve got a conversation.