👉 Background: WiseTech Global is a logistics software company founded in 1994 that sells software to global supply chain and logistics companies. WiseTech has been a bit of an ASX-darling since it went public in 2016, with it’s share price jumping more than 25x since IPO.

👉 What happened: Since last Thursday, WiseTech's share price has dropped more than 17% or $6 billion after its CEO and founder Richard White was embroiled in a number of scandals - where his personal life troubles were bleeding into his corporate responsibilities.

👉 What else: The Australian Council of Superannuation Investors said that the allegations were a “major concern for investors" especially because Richard White, as founder and CEO, is so central to the business. Now, the WiseTech board need to make some big decisions.

What's the key learning?

💡Key person risk is when a business becomes heavily reliant on a key individual — it's like having all your eggs in one basket...and then dropping that basket down the stairs.

💡Key person risk is quite common in smaller businesses but it can happen in larger companies too - especially when the CEO or founder is so tightly woven into the brand and the company’s identity. WiseTech's CEO has seen his personal issues blended with his professional world, and now WiseTech is feeling the ripple effects.

💡WiseTech isn’t the first public company to have key person risk. In 2017, Uber’s founder and then-CEO Travis Kalanick was forced to step down after a number of scandals. But despite that, Uber managed to go public in 2019 and its share price has increased by more than 100% since listing to nearly $170 billion USD.