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.