You may or may not like his products, but Zuck has proven over and over that he learnt from the mistakes of previous techpreneurs. Jobs failed to grasp how public companies work, and was ousted; Zuck made sure this could never, ever happen to him.
Shareholders have nothing to complain about, the structure was known when they bought in. If they are not happy, they can sell to people who trust the man more.
> You may or may not like his products, but Zuck has proven over and over that he learnt from the mistakes of previous techpreneurs.
Maybe, but this is a horrible example, since the weighted voting rights things was a well-publicized practice in tech startups for just the purpose FB adopted it well before FB did it, not some clever Zuckerberg innovation based on observation of others’ failures. See, e.g., Google.
This got me curious about how Job's ousting actually happened.
In 1985, Jobs apparently owned 15% of the total Apple stock. Wozniak presumably started out with the same share as Jobs, and the early 'garage' team was cut in from his holdings. Markkula became a 1/3 owner as the first investor and third employee, and was likely brought down to 15% as well during the 1980 IPO. The board apparently voted against Jobs unanimously - not to fire him, but to strip him of his management role.
So I definitely don't think it makes sense to claim Zuckerberg 'learned' from this. First, Jobs was never a majority shareholder, simply because there were three founders. Markkula voted against him and Wozniak had already sold many of his shares; this is like Page and Schmidt voting to oust Brin. And beyond that, you're exactly right; Apple went public fast as a consumer-electronics business looking to raise money, while the retained-control 'tech company' model was well-established before Zuckerberg could plausibly have IPOd.
Zuckerberg learnt to avoid ever getting in that position, which he did by cutting out everyone else as soon as possible, ruthlessly. And when it came to IPO, he made sure that power structure carried through. This was widely reported before and after (books, movies etc). This is why I’m saying there is little to complain about from a shareholder perspective: everybody knew what the game was and how good he was at playing it. If you step in a cave sporting a big sign that says LIONS’ DEN, how can you then complain that it contains lions?
I’m not saying this is particularly innovative, of course. What is remarkable is his ruthlessness to apply it shamelessly and at huge scale.
On the other hand, I think that Zuck is demonstrating that he doesn't understand what the near future holds, based on the geopolitical upheavals we are seeing today. Facebook is going to need to change in order to grow, and Zuck has a specific mindset about privacy, and a nonchalance towards regulation, that probably won't jive much longer if he finds himself in a regulatory environment that actually intends to be effective at its job.
The mistake is compounded by the fact that he thinks that he knows better than those who vote overwhelmingly against him. Facebook needs a new tack, and he is stubbornly maintaining course.
Facebook can't really grow; that race is effectively over, there are no significant new slices of humanity for it to penetrate into easily. Something like one third of all the people on Earth have a Facebook account, and when you factor in Instagram and Whatsapp, they have just about all the users that there are to have.
Apple were a computing company until they weren’t.
Amazon was a bookstore until it expanded into web services of all things. I remember what an eye opener the success of AWS was too everyone on the outside.
Google was a search/ad company and yet that hasn’t precluded them from trying any sector to see if something sticks. With the move to walled garden apps which exclude Google from indexing them Google’s share price would’ve tanked if not for Android.
Netflix went from shipping DVDs to building a video distribution service and then a studio production arm. Big moves.
My point is these companies aren’t afraid to think outside the box. Facebook can do that. But they don’t. They seem comfortable buying other companies instead. What a Facebook pivot would look like I have no idea. Buying Instagram and WhatsApp were strong moves but Facebook itself isn’t making a lot of bet the farm type moves itself - at least not the way in which the other big tech companies are doing.
That would have been Facebook buying LinkedIn or GitHub.
The fact that they ceded both to Microsoft boggles the mind.
Facebook looks a lot like Microsoft of the 90s, obsessing over stagnant or slow growing business lines to the exclusion of new opportunities.
Whereas Amazon, Google, and Apple (to some degree) seem to realize it's expand or become irrelevant.
You can build a world-scale business on one great idea, but every idea isn't great. And a lot of successful companies forget they got a lucky roll on their first idea (by definition). Shotgunning and pruning >> all-in.
I think Microsoft of 2019 looks a lot more like Amazon of 2006?
Specifically, recognizing that for large, mature businesses, growth has to be driven by new product types that customers are demanding.
And that at that scale nothing starts off "big", but by observing metrics, demand, and properly incubating and then funding launches of internal projects, small popular services can indeed become huge revenue drivers.
Just spitballing, but as Facebook use declines I'd imagine their huge data center resources will become increasingly less utilised. They clearly have some incredible data center engineers (see https://www.opencompute.org/). FB could have made for an interesting AWS competitor. It would've certainly hedged their bets because right now unless Instagram/WhatsApp are utilizing capacity which FB's stalled growth is ceding I see them outsourcing data center operations to another vendor eventually.
There's so much potential in FB or was till very recently (Open Compute and React to name two very impressive projects) - I imagine employee retention can only have become harder as the privacy scandals have hit and the share price gains have slowed.
Facebook, as mentioned in parent comments, has essentially tapped out casual social networking as a growth driver.
But casual (e.g. your mom and uncle) is the key there. There are many other kinds of social networking: not as large, but large enough to be worth even Facebook's time.
Developer networking is absolutely a large and valuable demographic. Facebook has demonstrated competency is compiling and making social graphs useful.
Ergo, buying GitHub would allow Facebook to move into a new market while offering new features that GitHub couldn't build on their own.
(Note: I'm charting out an "If Facebook decided not to be stupid and just slap ads on GitHub" business case here)
The main asset that facebook has is data. I've been reading "21 Lessons for the 21st Century", and I agree with Dr. Harari's argument that we need a regulatory environment for data, and the way that the cultural/political swing is going, all it takes is one election to completely upend the value that facebook holds. I would go one step further and argue that actions that the US has taken in regards to China and Europe endanger facebook in areas where they will most want to be in the coming years.
What will Zuck need to do to survive and thrive in that? I don't know and I have a strong feeling that he doesn't either, but I'm guessing that he has some investors that do.
I'm not aware of any global trackers that avoid dual class shares like this, and I can't very well sell the Facebook bit (I guess I own some somewhere).
I'm from the UK where elections are generally First past the post. In theory I can vote for whoever I want, in practice there are 2 parties who have a chance of winning so half the time I end up voting to keep the other one out. Its a democratic election, but I didn't really have a choice.
That's 2 counter examples to your reasoning.
It's like unfair contract terms. Ideally there would be no such thing, a contract is entered into freely by 2 parties, nothing should be unfair. In practise you need that protection.
Yes my financial exposure would be zero, but I would still be an owner.
I'm also (probably) an owner of facebook, despite having absolutely no say how it is run, as would be traditional as an owner.
Philosophical discussion aside, it isn't just Facebook that does this, so there would quite a few different stocks to track, which kind of undermines the 'stick it in a tracker' idea.
If you own facebook shares in a tracker and short Facebook, you are neutral, from a share price exposure point of view. I am still the beneficial owner of the shares within the tracker though, it is still hypothetically possible for me to go to a shareholder meeting and vote with that stock. So although I don't have any financial stake in Facebook, I do have some benefits of ownership.
Shareholders have nothing to complain about, the structure was known when they bought in. If they are not happy, they can sell to people who trust the man more.