The CEO of a medical-advice startup has been ousted by his board of directors amid allegations that he intimidated and threatened employees.
Ron Gutman, the founder of HealthTap, was removed from the company and from the board after an outside law firm hired by the board, Crowell and Moring, was “receiving concerning reports by employees about Ron’s conduct as CEO,” according to a memo sent Tuesday to employees and seen by Recode.
The board did not specify the nature of his conduct in the note to employees, but a separate termination letter to Gutman obtained by Recode alleged he “committed acts of intimidation, abuse, and mistrust, and that [he] repeatedly mistreated, threatened, harassed and verbally abused employees.”
“This leaves us with no choice but to fire you,” the letter reads. “The toxicity you introduced into the workplace ends now.”
Gutman said those allegations are “not true.”
“The actions of the VCs are harmful to the Company and in violation of their duties. I will not stand for their effort to take control of the Company unfairly and to the detriment of the Company,” Gutman said in a statement. “I will continue to fight for HealthTap and for all of our employees, our customers and our users all over the world. My team and I remain committed to saving lives and help people live healthier happier longer lives.”
Backed by prominent venture capital firms like Khosla Ventures, Mayfield Fund and Eric Schmidt’s Innovation Endeavors, HealthTap connects patients to doctors online who can answer messages and even get prescriptions and lab testing. It’s one of many telemedicine companies that have attracted top investors over the last few years.
One person familiar with the process said the company had seen about 40 percent of its employees turn over in the last year, a level of turnover that triggered the board to take a closer look at the CEO’s leadership.
One employee who worked at HealthTap for about a year before leaving tweeted that the allegations were true.
FINALLY. Those allegations are true. I quit in 2016 and never looked back. 80+ hour workweeks, $40k salary, a toxic culture of CEO first ("I went to the best business school in the world"), even burying 1-star employee reviews on Glassdoor with fake 5-star reviews. Never again. https://t.co/ONcsgeiz8y— Gaby Gulo (@GabyNextDoor) May 1, 2018
Gutman will be replaced as CEO and on the board by Bill Gossman, the company said in the memo, a serial CEO who has led several companies that were later acquired. Gossman was appointed to the board late Monday as part of a complicated strategy by the company’s investors to oust Gutman.
“What we learned left us with no choice but to make this change, and we did so after taking the necessary steps from a corporate governance perspective,” the board wrote in its memo to employees.
That corporate governance change involved the three board members, who held three votes between them, converting most of their preferred shares in the company to common shares in order to break a deadlock with Gutman, who as the founder also held three votes, according to one person familiar with the process. Gutman for months was able to resist the firing.
That tactic allowed the venture capitalists — now as common shareholders — to appoint Gossman to the board and break the tie. They successfully and quietly surprised Gutman with a clandestine firing on Monday evening, though he wouldn’t be informed until Tuesday morning, people familiar with the process said.
Gutman says that the tactic was not authorized and violates the company’s voting agreement.
All in all, it’s another flashpoint in the tension between Silicon Valley CEOs and the boards trying to reel them in.
Here’s the memo from the board to employees:
Dear HealthTap Team,
The Board of Directors has decided to make a change in company leadership. As of this morning, Ron Gutman is no longer the President and CEO of HealthTap, nor is he employed by the Company in any capacity. He is also no longer a member of the Board of Directors.
After receiving concerning reports by employees about Ron’s conduct as CEO, the Board of Directors hired an outside law firm to conduct an investigation into these allegations. What we learned left us with no choice but to make this change, and we did so after taking the necessary steps from a corporate governance perspective.
Last evening the Board voted to appoint Bill Gossman as CEO and also elected him to the Board of Directors. He begins his position immediately. Bill is a tenured executive with a wealth of experience in enterprise software, consumer internet and mobile applications. Those of us who have worked with Bill in the past have witnessed his transparent, empowering leadership style, and we firmly believe he is the right leader for the company at this time.
There will be an all-hands meeting this morning at 9:30AM in Palo Alto, where you will get to meet Bill and hear about his near-term plans for the Company. You will also hear from the Board. We ask that employees in the San Francisco office join by video conference if they are unable to attend the meeting in person.
We are confident this change is the right thing to do and in the best interests of the Company. We want HealthTap to offer an atmosphere where employees are treated professionally and respectfully – and where they are rewarded for their contributions. We believe that by working together under Bill’s leadership, we can achieve HealthTap’s full potential.
Thank you for your continued hard work and dedication to HealthTap.
This article originally appeared on Recode.net.