Why Did Salsa Labs Fire Its CEO and Co-Founder?

October 19, 2012; Source: Campaigns & Elections

In a move that has relevance for nonprofits engaged in issue campaigns, Salsa Labs fired CEO and co-founder Chris Lundberg. The Salsa Labs organizing platform (and before it, Democracy in Action) was the creation of Lundberg and April Pederson. Salsa Labs went from a nonprofit at which Lundberg and Pederson sacrificed their salaries to a privately-held for-profit with thousands of clients using it as an integrated platform for “nonprofits [to] build, organize & engage a base of support with tools to communicate, fundraise, advocate & build community,” as stated on Salsa’s Twitter account.

The entire story of what happened here is worth a detailed examination, but a number of issues jump out from the limited news coverage and the almost unlimited social media commentary so far. There has been some debate about Salsa operating as a company with a board of directors as opposed to simply being owned and run by its private owners. Is the problem, as some have suggested, a board that might disagree with the owners/founders on some points, or is the problem one of venture capital sources inserting themselves into the fiduciary and organizational management structure of the organization as a consequence of their capital? Lundberg and Pederson accepted a $5 million venture capital investment from Edison Ventures in 2011. According to Pederson’s account of what happened, the venture capital interests on the Salsa board forced Pederson out. Pederson calls the venture capital money a mistake and suggests that Salsa didn’t even need the money. Should venture capital money for social ventures come with a warning sign about the potential for loss of control and mission drift?

Pederson and others are concerned that the changes in Salsa might mean a shift away from Salsa’s roots, which include a commitment to progressive politics. If Pederson is right that the leadership change portends Salsa’s accepting less than politically progressive partners, is that necessarily a bad thing? Or was Salsa only meant as a mission-proprietary tool to serve the political left—and only the political left? Despite the concerns of Pederson and a number of Salsa partners, Salsa’s remaining leadership has issued a public statement declaring that it will stay true to the progressive political mission and principles of the founders. Lundberg is still on the board, and both Lundberg and Pederson maintain a majority ownership stake in the firm. Are there clear benchmarks for Salsa’s partners and clients to use to gauge whether the company is drifting from the founders’ progressive principles?

Nick Judd at Tech President notes the indicator of Salsa’s purported expunging of the word "progressive" from its website (Salsa staff say that isn’t true) and cites, as a parallel, the nonpartisan NationBuilder platform, whose founders are progressive leaders, which ended up signing a deal with the Republican State Leadership Committee. The Lundberg termination has inspired other progressive digital groups to take to the ramparts.

“I think it’s clear that this is basically a hostile takeover from the investors that they took on and that clearly they’re going in the direction of NationBuilder and Change.org, where they’re sort of removing the progressive underpinnings of the organization and going to a pure profit model that doesn’t hinge on a mission-oriented customer base,” Aaron Welch, founder of Advomatic, told Tech President. “And I know there’s a feeling out there that these tools have been built with progressive dollars, and indirectly through the clients that pay to use these tools, on the backs of progressive donor dollars. To turn around and say, ‘Oh well, it’s just technology, it’s just a set of tools and everyone should be able to use them and that’s good for everyone in democracy,’ is pretty transparent and cynical when there’s a profit motive involved.”

Pederson’s e-mail to the Salsa staff squarely takes issue with the board’s stated reasons for Lundberg’s termination as CEO, which were a mélange of issues related to his “management style.” Setting aside Pederson’s claims to consider the potential merits of the board’s stated reason for dismissal, might this be a moment where the skills and aptitudes of the founder/managers have run their course in the organization and need to be replaced despite the founders’ discomfort with giving up control? As Pederson put it, “Today, your CEO is sitting on the sidelines of a company that he built working 12-hour days, countless nights and weekends for over 9 years with a passion and dedicated unmatched by anyone, for innocuous reasons cited by a Board in place for about 1 year and with no warning or discussion.” It isn’t unknown in the nonprofit sector to encounter this kind of founder tension.

It’s also worth noting that Pederson says that her vision was to eventually make Salsa free, but it was (and still is) privately owned, with Pederson and Lundberg as the majority owners. Are for-profit, socially minded businesses really going to generate business models that are “business-y” enough for owners (and investors) while evolving toward providing a free service to its nonprofit or movement constituency?

As modeled by Salsa Labs, turning the technology of political activism into a profitable business raises several intriguing issues. The Salsa Labs story is still emerging. We hope Salsa’s nonprofit partners and clients weigh in with NPQ to tell us how they are experiencing the Salsa leadership change.—Rick Cohen

CORRECTION: An earlier version of this article referred to the nonpartisan NationBuilder platform as a "progressive" platform.

About

Rick Cohen

Rick joined NPQ in 2006, after almost eight years as the executive director of the National Committee for Responsive Philanthropy (NCRP). Before that he played various roles as a community worker and advisor to others doing community work. He has also worked in government. Cohen pursues investigative and analytical articles, advocates for increased philanthropic giving and access for disenfranchised constituencies, and promotes increased philanthropic and nonprofit accountability.

  • Nancy P.

    CorporateActionNetwork.org is taking the non-profit route to help groups fight corporate abuse — in the Beta stage with online organizing tools for activists. Check out corporateactionnetwork.org/about

  • Rick

    I was shocked to see Salsa acting as the platform for the “No on 37″ campaign here in California (the ballot measure to label genetically modified food). That, combined with the lousy customer service I have received from them in the past few months, is making me re-think my organization’s use of Salsa.

  • Glen Hellman

    Here’s what I don’t get. If Salsa Labs made the best tool to win your political battle, would you use a less effective tool if Salsa took on clients from all sides of the issue? In other words, would you bring a knife to a gun fight?

  • Chris Hanson

    We’ve seen time and again what happens to software companies when they go down the venture capital rabbit hole. One can say all they want about staying true to their values and mission. The reality is venture capital companies are in business to generate a high return on investor’s money. If this doesn’t happen fast enough, changes will and do happen.

    The nonprofit software market is no different. Just think of: Kintera, CTSG, GetActive, Convio, eTapestry. The remnants of all of these companies are now somewhere in the bowels of Blackbaud. When Salsa took $5M in venture money there was an expectation that the $5M would turn into $25M-$50M in 3-5 years. How does that happen? The most likely way is for Salsa to be acquired by someone. Who would acquire Salsa? Blackbaud? Not many other companies out there with enough cash to do something like this.

    It’s ultimately the consumer’s responsibility to be thoughtful about their technology purchases. This isn’t just about who has the coolest, greatest thing, even though we all know that small companies are where this innovation happens. It’s also about making an investment in technology that is going to be there tomorrow and the day after that and working with a company that provides great service and support.

    There are plenty of nonprofit software companies out there that are not looking to be the next Kintera, Blackbaud, or even Salsa. Heck, I even run one, thedatabank.

  • Kevin

    Thanks for the comment pointing out The Action Network! : o ) We’ll definitely look into it as a replacement for Salsa Labs…which this year wants to raise rates 10x over previous! : o \

  • Bill

    The customer service is lacking about as much as the Salsa platform itself, which is bulky and not user-oriented.