Is Mark Zuckerberg in over his hoodie as Facebook CEO?(latimes.com)
latimes.com
Is Mark Zuckerberg in over his hoodie as Facebook CEO?
http://www.latimes.com/business/la-fi-zuckerberg-future-20120817,0,2667542.story
22 comments
It is true a new CEO could potentially improve things, but it shouldn't be taken for granted. Disclosure, I'm generally a Facebook skeptic, but I don't think it can be denied that bringing in another CEO who focuses on money, money, money could end up crashing Facebook ten times faster than Zuckerburg could. There are a whole lot of very appealing money-making answers that boil down to eating the seed corn, at wildly varying levels of subtlety. (In fact the source of my skepticism is whether there is any way to make money that doesn't fit this description, but who knows?)
I agree 100% but there is, sadly, the issue of credibility on Wall Street. The Google boys let Eric Schmidt have the CEO title for a while. Maybe Facebook should hand Sheryl Sandberg the top title for a while.
I think the fact that FB was over-priced and criminally IPO'd at ridiculous valuations that aren't living up to the hype (in the near run) are more to blame than anything MZ is doing in particular. As has been said, FB is a fantastic 5 billion dollar company. The sooner they painfully get there, the sooner they can start building...
I've submitted a Forbes article a couple of days before the IPO - http://news.ycombinator.com/item?id=4396500
Basically, if you bought a company with a P/E of 90 and decreasing revenue (it had dropped 6% in the quarter) then you shouldn't be playing with other people's money. Everyone knew it was a massive risk.
Basically, if you bought a company with a P/E of 90 and decreasing revenue (it had dropped 6% in the quarter) then you shouldn't be playing with other people's money. Everyone knew it was a massive risk.
According to Google Finance, 14% of FB's outstanding shares are institutionally owned. I think the vast majority of the pension funds got the message.
You are right, if they had not over excitedly hyped themselves as a £100 billion company, this expectations won't be there. I believe they will do well to downgrade those expectations to that of a $5 - 20 billion company in the short term. In the near future (10 years), we never can tell as they could end up a $100 billion company. For now they won't be able to live keep up with the earning expectations of a $100 billion company.
The people complaining here are often the same people who BOUGHT the shares at the ridiculous IPO valuation. For a few hours, the market average seemed to think the IPO prices was too low. MZ didn't force anyone to buy shares at this price.
"His behavior is what I would expect of someone his age — the hoodies and everything else," said Chris Whalen, senior managing director at Tangent Capital Partners in New York.
Those crazy 28-year olds with their hoodies are wrecking society! Has he heard of Google?
Whatever Facebook does, they certainly shouldn't go pandering to ignorant bankers like this guy NYT quoted. Being obsessed with quarterly financials is the reason we had to wait for Apple to make a decent phone. Every other company had to keep rolling out their incrementally polished turds in time for Christmas sales.
Those crazy 28-year olds with their hoodies are wrecking society! Has he heard of Google?
Whatever Facebook does, they certainly shouldn't go pandering to ignorant bankers like this guy NYT quoted. Being obsessed with quarterly financials is the reason we had to wait for Apple to make a decent phone. Every other company had to keep rolling out their incrementally polished turds in time for Christmas sales.
I don't know... I think Mr. Whalen knows a thing or two about websites: http://www.rcwhalen.com/
To be less flippant: I can't help but consider that although there are significant clouds over Facebook's future ("How to make money on mobile?" being the biggest question) some of the negativity surrounding Facebook is due to Mark being a young CEO and being product-focused. Like many others I don't know what the best path to revenue for Facebook but there is a very intelligent team in place and I think they are well suited to figure out mobile.
To be less flippant: I can't help but consider that although there are significant clouds over Facebook's future ("How to make money on mobile?" being the biggest question) some of the negativity surrounding Facebook is due to Mark being a young CEO and being product-focused. Like many others I don't know what the best path to revenue for Facebook but there is a very intelligent team in place and I think they are well suited to figure out mobile.
It's going to be a great day when our society can finally move past imaginary class systems based on the nonsensical belief that a cut of cloth can be a sign of disrespect or weakness or, frankly, holds any relevance at all. That's the same kind of backward, old world thinking that turns a NASA systems engineer's mohawk into major national news; because apparently it's shocking to find out that a person with uncommonly styled hair can be intelligent and successful.
I think we're already there for anyone who has at least one eye open. I mean people talk about a Silicon Valley eco-chamber, but it sounds like some people have been stuck in a Wall Street echo chamber if they haven't noticed the enormous value that has been created in recent decades by people who are comfortably dressed.
[deleted](2)
I have no interest in judging a public company by its stock price over such a short period of time.
Markets are fickle - on the short term they tend to react to emotion. Give it a few years, though, and we'll have a much more reliable measure of whether Zuck is creating real value.
Markets are fickle - on the short term they tend to react to emotion. Give it a few years, though, and we'll have a much more reliable measure of whether Zuck is creating real value.
Zuck should totally step down and hand over the reins to one of the many seasoned executives from Myspace.
Honestly, and sadly, I think this shows just how ready he is. He recognized Facebook was at its peak and sold. That's good business. He's got a ton of money to drive Facebook forward. What's the mismanagement I'm missing?
Stock options were a key tool in hiring practices at Facebook. The morale of those employees will be taking a nosedive along with the stock price. At the very least this makes it harder for Facebook to hire new employees based on stock option grants because new hires will discount the value of the stock options until the price stabilizes.
From the article:
"The danger, Ritholtz said, is that the drooping stock price could tag the company itself with a "stink of failure" that could make advertisers less willing to use Facebook."
"The danger, Ritholtz said, is that the drooping stock price could tag the company itself with a "stink of failure" that could make advertisers less willing to use Facebook."
This is such crap.
I don't decide where to spend my advertising dollars based on the company's stock price. I do a trial run and see if the CTR and conversions come under my customer lifetime value. If it does, then I pump more money into the ads. No where does stock value come into the equation.
I couldn't care less if the company is dieing - as long as I'm gaining more money (in terms of LTV of new customers) for less money than I'm spending on ads, it's a win to my business.
If the company goes belly up...well I just move my advertising budget somewhere else.
I don't decide where to spend my advertising dollars based on the company's stock price. I do a trial run and see if the CTR and conversions come under my customer lifetime value. If it does, then I pump more money into the ads. No where does stock value come into the equation.
I couldn't care less if the company is dieing - as long as I'm gaining more money (in terms of LTV of new customers) for less money than I'm spending on ads, it's a win to my business.
If the company goes belly up...well I just move my advertising budget somewhere else.
He didn't completely sell out. He still has the controlling stake in the company.
The CEO supposed to be making money for the shareholders, not for himself. Maybe someone forgot to tell him, but the level of success of a public company is reflected in the share price.
There is no requirement to maximize short-term stock prices, though. He may genuinely believe that his strategy is long-term the correct one, in which case he'd be correct to pursue it. After all, the stock price has widely swung in its evaluation of Facebook's value in a space of mere months, first pricing FB very high and then pricing it much lower, with little intervening change of fundamentals, so its credibility as an indicator of company performance is not strong.
Indeed. Bezos is famous for destroying short term profits because he likes to reinvest in Amazon (growing logistics, distribution, etc) which has so far profited investors handsomely in the long term.
But the major difference between Bezos' strategy with Amazon and Zuckerberg's apparent strategy with Facebook is that Amazon was absolutely up front that they're willing to sacrifice short term profits for long term stability.
Amazon's initial shareholder letters were basically "Yes, we know we're not turning a profit right now, but that's because we believe in our long term plan". They also detailed what they were doing to make sure that their short-term spending was going to result in long-term returns. Amazon's letters and SEC filings were focused almost completely on this message: That we're spending money now to make a LOT more money in the future.
Facebook, perhaps due to the competitive space that they're in, really haven't done anything like that. Their filings have more of a "Deer in the Headlights" feeling than anything else, with mobile revenue being basically 0, and not adequately explaining the massive expense increases for Q2 2012. Those are red flags for investors. It's a completely different message from Amazon's.
Amazon's initial shareholder letters were basically "Yes, we know we're not turning a profit right now, but that's because we believe in our long term plan". They also detailed what they were doing to make sure that their short-term spending was going to result in long-term returns. Amazon's letters and SEC filings were focused almost completely on this message: That we're spending money now to make a LOT more money in the future.
Facebook, perhaps due to the competitive space that they're in, really haven't done anything like that. Their filings have more of a "Deer in the Headlights" feeling than anything else, with mobile revenue being basically 0, and not adequately explaining the massive expense increases for Q2 2012. Those are red flags for investors. It's a completely different message from Amazon's.
Is this true for an IPO as well? How can the CEO work for the shareholders before they buy the shares? Isn't the point of IPOs to get the most money for the company?
No. It was quite clear in the IPO that Zack is in control and can do what he likes. Dual share classes and full control. He has no obligation to do what is in the interest of other shareholders.
Dumb article. The underlying assumption here is that a management shift is a panacea but that's far from the case. People forgot to ask how Facebook could effectively monetize, and I think MZ has a much better shot at figuring it out compared to external management.
The markets are fickle... And the suits complaining over sneakers are just plain ridiculous. Think what you may of Zuckerberg, he's ensured continued control of the company, and whoever's complaining should have done their research ahead instead of jumping in and then acting surprised. Research could have started with notorious early business cards reading "I'm the CEO, bitch".
It seems what they mean when they say "improvement" is merely the stock price increasing. As that data-point is set by investors, I don't see why Zuckerberg could be at fault for this. I also don't see how a CEO who goes around projecting his self confidence to worried investors but without a good technical background would be an "improvement" over Zuckerberg, who despite all malaise towards him is a better programmer than most. Just my thoughts.
edit: I was reading the comments of the article and one of them notes that by selling the IPO at 4x of what it should have been priced, Zuck showed that he is a brilliant CEO.
edit: I was reading the comments of the article and one of them notes that by selling the IPO at 4x of what it should have been priced, Zuck showed that he is a brilliant CEO.
> by selling the IPO at 4x of what it should have been priced, Zuck showed that he is a brilliant CEO
Keep telling yourself that.
Keep telling yourself that.
Remember that Zuck is the guy that didn't sell Facebook at a number of junctures, when all his advisors/investors were telling him to sell. He wants to build great tech -- which is at odds with what today's shareholders want -- quick returns.
On second thought, he could pull a Jobs and get pushed out, only to save the company from death and then take it to stratospheric heights decades later.
On second thought, he could pull a Jobs and get pushed out, only to save the company from death and then take it to stratospheric heights decades later.
He's got a controlling share; he'd have to push himself out.
I do not really care about Facebook. But I love how he actually did not step down in front of these people who believe to rule the world. The way the get angry at his hoodies makes me always laugh.
I can't possibly understand why people thought a $38 IPO wasn't going to implode. It's practically tongue-in-cheek. You're not really buying a piece of the new silicon valley when you do it on the old New York stock market. Suckers.
[deleted](1)
It's no secret that Mark Zuckerberg has always intended to keep control of the company and that his vision is a long-term one. So, investors got into facebook thinking something else would happen, and overvalued it in the process. But Zuckerberg doesn't really owe them anything other than to continue running the company with his vision (which would certainly pass good faith legal tests if it ever came to that).
What I'm getting at is that Zuckerberg has the ability stay, and he probably wants to stay. We can mock him all we want for what I consider wall street's mistakes, but what's his motivation to care?
What I'm getting at is that Zuckerberg has the ability stay, and he probably wants to stay. We can mock him all we want for what I consider wall street's mistakes, but what's his motivation to care?
This article is why I sometimes prefer blogs to newspapers. Articles whose titles are questions with lead-ins saying "some people say" make them sound like planted snipe pieces and desperate linkbait.
The language probably reflects that the writers in question are representing the newspaper instead of their own opinion, but the wishy-washy nature of the way it is phrased makes the entire argument diffuse to me.
The language probably reflects that the writers in question are representing the newspaper instead of their own opinion, but the wishy-washy nature of the way it is phrased makes the entire argument diffuse to me.
Every banker on Wall Street was in over their suits and ties when the mortgage debacle hit but many still have their jobs. So, quite frankly, who cares what Wall Street thinks. It's largely been taken over by investors looking for quick profits, which is in contrast sometimes to growing a company that's sustainable.
If you’re not paying for it, you’re not the customer. You’re the product being sold.
This saying applies to management teams/financial markets as well.
This saying applies to management teams/financial markets as well.
I thought this was a really good point, especially in all of the other Facebook / Google threads where people parroted it.
His legitimate goal is to improve the fundamentals (which have not declined 50%). To ask him to put on a suit and glad-hand the Street is to expect him to groom greater fools for the speculators who want to fold after just one quarter. Not only should he not waste his time on this type of investor relations (surely there are minions for that), neither should investors pay attention to it.
Facebook's problem is that it hit the market way over valued. It's possible that it could be worth $100bn someday but it isn't right now or within the next 12 months.
Betteridge's, anyone?
Is there any possible situation where Zuck gets pushed out? Or have his controlling shares insulated him from any kind of ouster?
Will people stop referring to share price when talking about company value? Share price isn't comparable over time due to stock splits and buy outs and other shenanigans. Please refer to market capitalization instead.
Quick, cut out the tech guy who made this possible, get the suits in here post-haste we've got to MARKET.
Indeed. One really has to question how this sort of thinking affects humanity in the long term. Modern business has become too meta to the point where it hurts the actual product and market.
Zuck is the marketer/Bizdev guy. He didn't do any of the interesting technical things beyond the CRUD implementation that is any small social network.