Again and again in the last 3 years I scoffed at the idea Mark Zuckerberg would go public with Facebook. I saw it as a masochist move which would only result in the slow decline of Facebook’s innovation and a forcing out for the passionate entrepreneur, as with Sean Parker, as with Steve Jobs. Well, someone had to pay for Instagram at $1.27 billion.
Another year in digital, another milestone in the Information Age, and a shocking twist for me in my pedantic blogging on the internet’s Czar. As Facebook moves from marketing to the public, to producing equity for the public, I have moved from marketing to serving a new kind of customer: Board directors. The usual disclaimer may apply: These thoughts are my own and mine alone. However, I do feel my new career choice is has given me interesting perspective on the Geiger counters which run and ruin fortunes.
First of all, a board of directors is a group of individuals chosen to represent the shareholders. Their main duty is to increase shareholder value, although they are also supposed to watching the company per the SEC’s guidelines, to ensure there are no violations taking place which might over or under value the company. The SEC was established after the crash in 1929. Today, they make sure we don’t have another 1999 or 2007. (Top 10 DotCom crashes.)
Now the controversy:
Issue 1: No Girls Allowed?
Women’s rights group, Ultraviolet, began accusing Facebook of sexism starting before the IPO.
As UV pointed out, Facebook’s activity is overwhelmingly done by female users. The user ratio skews towards women as well. (The total U.S. population is 51% female.) UV argues a board without women can’t possibly understand Facebook’s user base. This begs the question: What makes a good director?
Issue 2: The Fall in Price
Facebook’s stock price has been falling since opening. $31 as of this posting, after opening and closing at about $38 on the IPO day. Was this all hype? Is Facebook already overvalued?
Issue 3: Banks Investigated
Morgan Stanley, JP Morgan and Goldman Sachs are under investigation for releasing negative information to shareholders right before opening. Supposedly, they dropped their revenue forecasts for the year at the last moment.
Issue 4: Delay on Stock Sales
Those technical difficulties which led to sell orders not being confirmed until the afternoon that day. What was a huge embarrassment for NASDAQ looking to attract more lucrative Silicon valley IPOs has turned into an SEC investigation for the newly public Facebook.
Issue 5: Antitrust laws = Facebook breakup
Could antitrust laws apply to the internet mogul? Back in the 90s Microsoft went to it’s knees for creating a superior processing system and attempting to be our only portal to the web. The FTC is now investigating the Instagram deal because of the mobile app. Facebook has sworn they won’t go mobile, but Instagram could be an entre.
Issue 6 : Mark Zuckerberg is Chairman and CEO
This is a conflict of interest because as CEO Mark is supposed to be managing the board, but he is also supposed to be overseeing management. He supposedly didn’t even warn the board he was buying Instagram. On the flip side, he has majority share ownership at 24%, which means he is invested in the company’s share value…and interestingly, he is open to some 80s style acquisition: It is possible to acquire more Facebook stock than Mark Zuckerberg. If you’re interested, Facebook’s majority shareowners.
So who else is on Facebook’s Board of Directors?
Happily, once a company is public, so are the people who “oversee” them.
Marc L. Andreessen has served as a member of our board of directors since June 2008. (Meaning while Facebook was still private.) He is also on the HP (which acquired his company Opsware) and eBay boards.
Erskine B. Bowles has served as a member of our board of directors since September 2011. His background is mostly finance and he has previous experience on other major boards. He also currently serves on Morgan Stanley, Belk, Inc., and Norfolk Southern Corporation.
James W. Breyer has served as a member of our board of directors since April 2005. He’s one of the partners at Accel Partners, a venture capital firm which is Facebook’s second largest shareholder. He also currently is on the boards of directors at Brightcove Inc., Dell, Inc., News Corporation, Prosper Marketplace, Inc., and Wal-Mart Stores, Inc.
Donald E. Graham has served as a member of our board of directors since March 2009. He’s the CEO of The Washington Post, which gives an interesting addition of a news expert to a social network.
Peter A. Thiel has served as a member of our board of directors since April 2005. He is a partner at Founders Fund, another venture capital firm. He also co-founded PayPal, which was acquired by eBay in 2002.
Still sound like a bunch of white men? Yes. However Facebook’s board is surprisingly diverse group with degrees in computer science, business, finance and mathematics. They have experience founding successful internet, entertainment and technology companies, as well as investing in them to create successful funds for investors. Many of them have been with Facebook from the beginning, but it is open to where they will take it in the future.
Should Facebook expand it’s board, here are some females I think would rock:
Founded: 23andme, the genetic database which houses entire individual genomes and compares them to search for new diseases.
Fun fact: Married to Sergey Brin, Google cofounder, and a big Silicon Valley belle.
On AOL: Some say AOL bought the Huffington Post just to acquire Arianna.
Who? Former President of Conde Nast digital, the new media arm for the holdings company of Vogue. Vogue‘s and GQ‘s interactive apps and new way to display media are waltzing it into the digital era.
Who? Facebook’s Global Marketing VP. While it’s a conflict as she is still working there, should she move on she would be a great female and marketing influence for the board.
Founded: Her own hedgefund, after working in Asia straight out of school as a investment manager. She recently founded a cosmetic line, vBeaute.
Fun fact: New York socialite