Now that all of the hype and hysteria of Facebook going public have died down (somewhat!), it is time to move on to what was the inevitable next phase: daily gossip about the removal of Mark Zuckerberg as CEO and head honcho. It sounds a bit ridiculous, or even just ridiculously early, to be already discussing this particular topic, but guess what? They are no longer a private company! They went public, they now have various shareholders, and the board now answers to those shareholders, who collectively are far from happy today.
Why? For the same reason that any investor, institutional or private, invests: money! Now that the hype and hysteria have faded, so has the share price, dropping down below even the $19 mark as of this morning. This represents a full 50% loss since the company went public back in May, when it was (over)priced at a heady $38, which in and of itself caused a massive amount of debate about what the real price should have been. But the value has been cut in half, and like it or not, for any public company's CEO, that always tightens the noose around their neck. Even if that neck is rarely if ever restrained inside a crisply starched shirt collar and a necktie!
Let's make one salient point right from the get-go: we all know that the value of the stock was overrated at the time of the IPO, for a company with no tangible "product" or clarified plan on how to monetize their massive membership moving forward. Yes, they have Facebook advertising, but it seems that many now understand that in general one is paying for "likes", not for sales; this was underlined recently by car manufacturing giant General Motors yanking their ads, stating that they did not positively impact their bottom line. That sentiment has been further echoed in the comments of other users of the Facebook ads system. So overall, the drop in share price was totally expected, and one can not completely dump the responsibility for that onto Zuckerberg's young shoulders, even if, as the boss, he has to accept responsibility.
Making things even more interesting, we now hear of the high profile exit today of a very early but very prominent investor in Facebook (Peter Thiel), who sold off more than three quarters of his stock for an exit of around $400M. Thiel remains a board member of Facebook, all the while giving the impression of wanting to jump off the sinking ship, on a personal level. This cannot help but increase nervousness among other high level investors, and solidify the growing storm clouds full of whispers that a change in leadership is needed, sooner rather than later.
Zuckerberg did a fantastic job of taking Facebook to where it is today. Notwithstanding the fact that his own insistence on showing up to high level pre-IPO investor showcases in trademark hoodie and sneakers did undermine his status somewhat, and raised questions about his seriousness, maturity and professionalism. While I personally can understand the desire to go to work looking like a 22-year-old college dropout, I also can understand the need to not apparently offend or insult a very different breed whom you depend upon for a successful public offering of your company, or more importantly, for your own continued involvement as CEO following that offering. Does he need to be taught that being the "boss" of a funky collegial social media techie outfit is an extremely different thing from being the CEO of a publicly-traded company initially valued at over $100B? I hope not!
While he may well be capable of metamorphosing into a more typically professional executive with time, that could be an irrelevance. It is already felt that there is a lack of corporate guidance and leadership at Facebook, and the pressure to articulate anything remotely looking like a valid plan to monetize the huge membership is mounting daily. He is going to have to look long and hard in the mirror as to whether even he truly thinks that he is the man to carry the company forward into its financial expansion and growth. I am certain that various investors already have their eyes on Facebook COO, Sheryl Sandberg, who has stellar educational achievements in finance and business, and is one seriously smart woman.
It's ironic that because Facebook is so universal and so much a part of our recreational lives that we would see it as more tragic than usual that Zuckerberg should step down, because his story is so great and what he achieved is greater still. But as I said at the beginning, if you step out of the frying pan (boss of your own private company) and into the fire (CEO of a public entity), then you might just have to pay a price. Please note that I did not say "get burnt", because in this case, even if he goes, he will leave as a twenty-something multibillionaire! Now that's my kind of "getting burnt"! - Kevin Mc
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