Right about now the communications team at Facebook is just praying for someone else in technology to be bought, go public or generally screw up. Anybody. We’re in week two of the post-mortem over Facebook’s IPO. The narrative has shifted (somewhat) from “WHAT A TRAINWRECK!” to “Wait, Facebook made a pile of money without inflating a bubble…is that really so bad?”
My view, as I wrote last week, is somewhere down the middle. There was clearly some bizarre amateur hour stuff going on, and there’s enough blame to go around for all parties involved. That’s astounding, considering how much was riding on this IPO for the industry and how meticulously planned it was.
On the other hand, the lack of a pop is most definitely not cause for alarm. It not only means the IPO was priced correctly. It means that the secondary markets actually worked. They managed to price Facebook shares pretty well, despite limited information and limited supply and demand in trading. The recent surge in early stage VCs funding later and later stage companies was due to them looking at Google and seeing that most of the value was created after the company went public. The Valley’s deep-pocketed money wanted to correct that. It seems — just a week into Facebook’s life as a public company — they may have succeeded. (Not to say I told you so, but I told you it wouldn’t be a Netscape moment for these reasons.)
But one part of Facebook’s IPO playbook is very much still TBD: Whether Wall Street will accept a young, inexperienced Wunderkind of a CEO. Much more hangs on this for the future of this company and companies in the future than how the shares immediately priced.
Even though Facebook waited until Zuckerberg was in his late 20s to file, you still saw the absurd balking that he wore a hoodie to court bankers. When the issue didn’t go as well as expected, haters were only too happy to pile on. We’re decades into the Internet revolution, which Wall Street has benefited from handsomely. And yet, the two cultures are still leagues apart.
When it comes to the inexperienced founder/CEO, Zuckerberg is in mostly unchartered territory. Steve Jobs wasn’t the CEO in the early days of Apple, and more recent consumer Internet giants like eBay, Yahoo, Google, and Netscape all had “adult” CEOs.
Facebook has been with us long enough and Zuckerberg has aged enough that the novelty has worn off in tech circles. But just as groundbreaking as Facebook’s use of the secondary markets and its delay to go public was an insistence that Zuckerberg not be replaced as CEO — experience and age be damned.
The cult of the product founder as CEO is one of the most defining characteristics of the post-bust, Web 2.0 wave. So we take it for granted as an established trend. But that trend has only just made its way into public market reality.
Let’s look at the companies that have gone out recently:
- Pandora’s founder Tim Westergren is no longer CEO.
- LinkedIn’s founder Reid Hoffman is no longer CEO. (Also not young and inexperienced.)
- Zynga’s founder Marc Pincus is still CEO, but while a maverick who can ruffle feathers, he is over forty and has several companies under his belt. He’s hardly in the same camp as Zuckerberg.
- Groupon’s youthful founder Andrew Mason is still CEO…and he’s not exactly inspiring confidence.
- Yelp’s founder Jeremy Stoppleman is still CEO, but with PayPal experience and a few years of a Harvard MBA under his belt, he’s a bit more palatable. Also Yelp isn’t close to the size of Facebook, which means far less scrutiny.
Zuckerberg didn’t expect hosannas, and had already anticipated the worst. He held off going public until Facebook — and he — was more mature, and has surrounded himself with an excellent management team and board (as we discuss at length in our ebook on Facebook.) More tellingly: He has cemented his control of the company. Put another way: He wasn’t counting on the markets loving him. And didn’t spend much time and effort catering to them during the roadshow.
It would have been nice if the world had thrown bouquets at him upon the company’s public debut. But that’s not the case. Google’s IPO was in many ways the inspiration for Facebook’s strategy, but to be successful Zuckerberg the public company CEO will have to be less like the Google duo Larry Page and Sergey Brin, and more like Amazon’s Jeff Bezos.
Bezos has long disdained the public markets and far, far worse things have been written about him than have been written about Zuckerberg in the past few weeks. Wall Street hated his core business, and each time he added a new one (Amazon Web Services, Kindle, publishing) they thought he was insane, too. Bezos embraced it. He owned it. He cackled like a wild man on calls and refused to give the answers to the questions they craved. Bite me, Wall Street.
Which brings us to the Facebook phone rumors that are circulating….again. Who knows if they are legit this time? The only people who really know the answers on that have gone radio silent right now, so I won’t pretend to have the answer. But in continuing to jump on the Facebook dog pile, nearly everyone has come out as saying it’s a bad move. Even Friendster’s founder Jonathan Abrams is taking pot shots at Zuckerberg — which he must relish as the founder of the original hyped-up social network that didn’t become a big company.
It makes no sense to me, either. And yet, as an observer, I almost hope Facebook is doing a phone and that it makes sense on some weird planet in some way the rest of us don’t see. Zuckerberg hasn’t become a Wall Street darling. But he’s not going anywhere. And if he takes a page out of the Bezos playbook, in some ways that frees him up to do whatever the hell he wants.
And that will ultimately be good for Facebook’s investors and fun for the Valley to watch.
[Photo by Andrew Feinberg]