18 ms·

Powerless investors vote overwhelmingly to oust Mark Zuckerberg as chairman

333 points by SirLJ 7y ago

PaulHoule 7y ago
And you know, a good board is worth it's weight in gold...
- castis 7y ago
  I wish I was worth my weight in gold. With the current price at about $42,500/kg, and assuming the 8 people on FBs board are an average of 75 kg... 75842500 = 25 M. Sounds good to me.
  - SketchySeaBeast 7y ago
    I would guess that the people on Facebook's board are worth more than their weight in gold.
toyg 7y ago
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.
- dragonwriter 7y ago
  > 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.
  - Bartweiss 7y ago
    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.
    - toyg 7y ago
      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.
- benj111 7y ago
  "Shareholders have nothing to complain about" 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.
  - kaffeemitsahne 7y ago
    >global trackers Not Facebook's problem at all. >elections Not applicable, the choice to not buy a stock is much easier to make than the choice to leave a country because of the voting procedures.
    - benj111 7y ago
      "Not Facebook's problem at all" I didn't say it was. What's the easyness threshold where it becomes applicable? I'm sure theres a fair few pension holders that would find it very difficult to avoid Facebook.
  - i_am_proteus 7y ago
    > I can't very well sell the Facebook bit If you don't know any, you can short it.
    - benj111 7y ago
      I'm still an owner though? 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.
- moosey 7y ago
  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.
  - thrower123 7y ago
    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.
    - leonroy 7y ago
      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.
      - ethbro 7y ago
        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.
- deleted 7y ago
  [deleted]
- bitxbit 7y ago
  Jobs was a visionary. Mark Zuckerberg, on the other hand, has failed to inspire anything in the industry.
  - Aeolun 7y ago
    I think he’s inspired a lot of things, not all of them good, but it’s really hard to say he hasn’t had any influence.
- burtonator 7y ago
  This is a pretty common understanding in the valley. 99% of people understand this issue. The problem is that they often have to take additional VC to keep growing and HAVE to give up control or the company dies. If you need cash to reach escape velocity there's not much you can do
htkibar 7y ago
Whole system was designed so that Facebook did not need to prioritise short term goals such as stock prices over long term ambitions, no matter how good or bad those ambitions might be. System works, apparently.
salawat 7y ago
So, at what point does Zuckerberg become drive the company into such levels of toxicity that every investor does what they should have done in the first place, and pulls out? If "the Market" truly solves everything, after all, it should be possible to leave Facebook high and dry with no public funding left because Zuckerberg has made his business and himself a veritable pariah. It probably won't happen though. He's basically set himself up as the subject of a permanent condition of Stockholm Syndrome with regard to any investors. With a majority vote built in for him, any concession to the public is essentially a "let them eat cake" sort of deal.
- georgyo 7y ago
  Ironically, investors pulling out might be good for Zuckerberg. If a business is highly profitable but the investors don't see it that way, then it may make sense for him to take the company private again. This happened with Dell about 6 years ago. Michael Dell believed Dell was worth much more, but the market disagreed. He was able to buy back all the shares and take it private again.
  - vonmoltke 7y ago
    The big impediment to Facebook doing the same thing is that it uses huge RSU grants as a carrot to attract talent. Go private, and suddenly they need to make up for the 40%+ drop from somewhere.
- jfengel 7y ago
  It doesn't really affect FB one way or the other. They made their profit at the IPO. That's all the cash they get out of it. Zuckerberg himself (and other executives) would lose a lot of money if every investor pulled out, but Facebook would continue happily along. Ultimately, you can't get every investor to pull out because the stocks still entitle them to a piece of corporate profits, even without control. Facebook has a P/E of 24, corresponding to earning about 3% interest. There will always be a market for that cash. (Investors seem to think it will ultimately be more profitable than that, so the price is higher than the last 12 months of profit indicate.)
SuperGent 7y ago
The man owns the company, or at least 60% of the vote, and can do what he likes with it. If you don't like it get out or stay out of investing in Facebook, especially if you think that he will bring down the share price.
- strathmeyer 7y ago
  "Sure, but we'd also like to know what the adults think."
vikramkr 7y ago
It's his company and his vote, and investors knew what they were buying and that they were investing in zuck more than they were investing in the company. Zuck voting this down is entirely within his rights and justified. There is no obligation to give up power just because others demand it
- fredgrott 7y ago
  sure there is..if future potential investors decide to ditch investing in FB for example.. its called fiduciary responsibility
  - challenger22 7y ago
    Do you think the other shareholders would have voted to dump Zuck if they knew he did not have a majority position? This act could have been a protest vote knowing it would only reform his behavior, not remove him. Similar to how people speculate that Brexit was only voted in because nobody thought the vote would pass- it was a protest vote.
    - cal97g 7y ago
      The latter speculation is pure bullshit.
    - marvin-83 7y ago
      Such speculation of voting intentions is disingenuous. To take your example, only people that oppose the result of the Brexit vote suggest that voters didn't really mean what they voted; it's just a way to apply favourable spin to an unfavourable outcome.
      - atoav 7y ago
        Does everybody mean what they vote? Probably not, many people vote strategically or symbolically. But that doesn’t matter after the vote. The fascinating thing about Brexit was that the “people’s will” that was interpreted into the vote shifted its shape gradually over the months and years into whatever seemed to it the agenda that moment. Democracy is fundamentally about consensus, and the longer a decision affects the future, the more consensus there should be. In the Brexit process the most consens everybody could get was what 54%? And that 54% was gained on fraud and turned out to be split into fundamentally opposed directions. There was never consensus in Brexit.
FailMore 7y ago
I think MZ does think long term, is taking privacy seriously moving forward and is good for the company. (I was, but am currently not, an investor in FB)
strikelaserclaw 7y ago
FB need Zuck now more than ever, otherwise it will become a middling company run by an unimaginative middling corporate "CEO". FB is a potential goldmine, they have not even made a fraction of the money they are capable of making. Monetizing instagram, monetizing watsapp, making watsapp the default way to send money, effectively becoming involved in banking, they could literally copy wechat and become print money because of the strong network effects fb has.
- finnthehuman 7y ago
  >otherwise it will become a middling company run by an unimaginative middling corporate "CEO" And this is distinguishable from the last 5 (+?) years of Zuck how?
  - anonymousab 7y ago
    Facebook has not gone anywhere near as far as they could in the pursuit of profits. The past few years have been comparatively benign, based on public knowledge at least.
- save_ferris 7y ago
  Profits over privacy, over people, over the security of elections. He’s repeatedly failed to address scandal after scandal of his company. Scariest of all is that people like you don’t even seem to care. It’s totally OK to violate privacy, permit foreign actors to undermine elections, as long you make a ton of money.
  - joering2 7y ago
    Apparantely how its done in “corporate america” since our government allows it and approves it. Btw: friends don’t let friends do Facebook.
  - thrower123 7y ago
    I'd be more concerned that it is apparently fine for Facebook employees to dox random anonymous users to gossip rags like the Daily Beast.
Nasrudith 7y ago
I think this highlights one of the oddities of the current shareholding investment system and how oddly "broken" it is on several levels. Wall Street has become infamous for being a horde of locusts seeking short term growth for one. Most smaller investors wish for long term growth while being spooked by bad short term and charmed by short term growth. Most don't engage in voting and may not even have control of their vote but their broker. Perhaps some of it is from fundamentally wrong assumptions about division of management and incentives. Especially given multiple ownership is possible the assumption shareholders care about the long term health doesn't actually hold. Voting system may be influenced by older school thinking that it was more like a country or smaller scale venture. It is entirely possible for a large vote holder to push for short term policies and get out on top - and it wouldn't even be misconduct let alone something enforceable. I wonder what a better system could look like - and how better would be defineable for that matter. With another layer in "how could it be introduced?". Since if it is just a matter of starting your own and proving it works better that hard task is ironically easy compared to say changing FTC rules.
- granshaw 7y ago
  Check out the Long Term Stock Exchange
  - chumali 7y ago
    The LTSE wants to give startups all the benefits of being public whilst encouraging long-termism through tenured voting and other gimmicks. It seems that Zuckerberg has already achieved this however by retaining voting rights. That hasn't stopped investors from pouring money in to FB. Why would any founder then decide to list on LTSE rather then just implement a dual class structure? Perhaps if market conditions were to change, but right now there appears to be no shortage of investor cash looking for a home.
travisoneill1 7y ago
People who bought non-voting shares would like their assets converted to something that has more value? I am shocked!
takanori 7y ago
Who would they replace him with?
JackFr 7y ago
It always annoys me when people liken the stock market to gambling. I understand how buying a stock, in one sense, may feel like placing a bet. But in reality it's ownership of an ongoing commercial enterprise and as an owner, the right to choose and guide management is one of the things that makes it more than simply a bet. But Facebook stock? Literally a bet on Zuck.
Glyptodon 7y ago
I don't understand why a company where one shareholder controls the company and has over 50% ownership can be considered anything other than privately owned.
nknealk 7y ago
There are a ton of comments suggesting the non-binding vote will not change behavior. I want to throw some light on the opposite side: Zuk has a strong incentive to listen to his shareholders even if he doesn't have to. If he ignores them, shareholders are likely to sell their shares driving the price down. This (1) reduces Zuk's overall wealth since much of it is locked up in Facebook equity, (2) reduces the total compensation of many Facebook employees who receive options or RSUs thereby making retention harder, (3) makes recruiting engineering talent harder because few people want to join a sinking ship, and (4) reduces the ability of the company to raise capital in public markets (unlikely a significant consequence for Facebook as they throw off a lot of operating cashflow) So yes, Zuk voted to not fire himself. That doesn't mean he can ignore his shareholders without consequence.
DenisM 7y ago
If you think that majority voting rights give Zuck absolute power, think back to Travis Kalanick - he had all the voting rights in the world, and yet he had to leave. There's more than one way to put pressure on the CEO, it's just a question of which people want to throw their weight behind the cause.
tschellenbach 7y ago
Pretty sure the stock will spike in the short term and then go on an endless decline to 0 if they actually manage to kick him out. Most social companies stumble and fall, Zuck has proven to be insanely talented at seeing the future trends. Think about their push to be mobile first, the acquisition of instagram, whatsapp, social login, shift of engagement to groups and chat etc. They clearly missed the changes in people's perception about privacy over the last few years, but if the past is any guidance they will probably overcome that hurdle as well.
apo 7y ago
Yet they fail to put their money where their votes are by simply selling Facebook shares. Regardless of what happens with Zuckerberg, Facebook's best days are behind it. The notion that a change in leadership can right this sinking ship makes no sense.
- michaelt 7y ago
  Yet they fail to put their money where their votes are by simply selling Facebook shares. Wouldn't that imply that no shareholder resolution should ever pass? And boards shouldn't be accountable to anyone?
  - buckminster 7y ago
    It would just mean that nobody would invest in the small number of companies designed to have an unaccountable board.
- Bakary 7y ago
  They own the next generation of social networks, I don't see why they would stop doing well. Unless you mean just the Facebook service itself.
ddingus 7y ago
They can always sell.
- OJFord 7y ago
  Some clearly have been, or have wanted to; hence the downward pressure on the stock price. Not owning stock isn't the same as wanting different governance though - an investor might like the fundamentals, and think it could go further, but not under its current x.
geggam 7y ago
What is interesting to me is how shareholders seem to kill corporations when they are allowed to vote the direction of the company. Direct Democracy ?
- burtonator 7y ago
  One dollar ? one vote?
heymijo 7y ago
Flip this perspective. Zuckerberg has iron-clad control of FB. He could unilaterally decide that quarterly profits, hell, any profits, do not matter and there is nothing anyone could do. Keep that in mind when it's discussed that FB can't really do anything about the problems it has spawned because it is part of the financial system and governed by Wall Street. No, it is governed by Mark Zuckerberg and he can do whatever he wants. Every last dark pattern and shady thing they are pushing for with engagement, ultimately, he and he alone is is responsible for and condones. Every other CEO on the planet has the "but the quarterly earnings" boogeyman to fall back on as a scapegoat for their malfeasance. Zuckerberg, due to his shrewd engineering of stock classes, does not and we should do well to remember that.
- neya 7y ago
  In the same token, I think we should also hold Twitter accountable. Have you seen their "In case you missed X's tweets" notification spam? That's the "Some random nobody hosted a watch party" equivalent on Facebook. And it can't even be turned off. All this for what? To present to some investor on a powerpoint "Hey, we increased our conversion rates by 2% by faking notifications. I wonder if this is even legal to trick people to use a service by lying to them there's something they need to attend to.
- VectorLock 7y ago
  >Every other CEO on the planet has the "but the quarterly earnings" boogeyman If you rephrase it as "I want to make as much money as possible" it sounds worse but at its base, thats both what every other CEO and Zuckerberg's real motivations are.
- malloreon 7y ago
  >Every last dark pattern and shady thing they are pushing for with engagement, ultimately, he and he alone is is responsible for and condones. This is absolutely 100% FALSE. Every single person who works on those dark and shady patterns are responsible for their actions. They choose to work for evil every single day because the money is more important to them. Why do we give tech employees a moral and ethical pass for the terrible things they do just because they work for a company? These engineers don't work with blinders on, they know that every line they commit is ultimately in service of getting more people addicted, and more clicks on facebook ads. Someone above them may tell them to write that code, but they choose to write each line when they could be working somewhere else. Last I heard, facebook hires supposedly intelligent people, I daresay they'd be able to to get a job elsewhere. They choose not to.
Aeolun 7y ago
I can just imagine him going, “Lol. No”.
malloreon 7y ago
Is it too much to ask that this vote of no confidence inspires any facebook employees to re-evaluate their life choices and decide to work somewhere else? Maybe somewhere that does good? I think it's too much to ask, but I hope that it isn't.
tasubotadas 7y ago
I dunno. They are on this boat by their own will. If only there would be a way to ditch a company like this their problems could be solved. A place where you could sell your stake in the company (preferably on a global scale) and buy a stake in a company which doesn't suffer from such issues. Something like a marketplace but for stocks. ¯\_(ツ)_/¯
- TAForObvReasons 7y ago
  Their presence in the S&P 500 ensures that countless people are unaware they are even on the boat, by din of their retirement exposure
  - coryfklein 7y ago
    People that own FB stock by way of a general retirement fund probably aren't exercising their right to vote on the chairman.
  - titanomachy 7y ago
    s/din/dint
crazygringo 7y ago
I'm curious why it's even legal to sell shares that don't have equal voting power. I mean, equal ownership via shares is pretty much the concept of a public corporation. Since public corporations are entirely a legal entity (nothing "natural" about them), and so heavily regulated in so many ways to protect investors... ...what is the rationale the US has for even allowing the concept of shares that have less/more votes? It changes the ideas of shares as ownership to more of a kind of financial gambling. And creates problems like this one, where a majority of ownership thinks a CEO is performly badly but can't do anything about. I know investors bought shares voluntarily and knew this in advance... but I still don't understand why it's even a choice investors are allowed to be given. How are unequal voting shares good for society in any way at all? It just seems to allow corporations to get the benefits of raising cash publicly without the public accountability that should come with it.
SteveJS 7y ago
68% of ‘independent investors’. Would the vote have been less than 50% under an ordinary structure as well? I can’t tell if Zuckerburg would still have been fine under ‘normal’ circumstances.
lowdose 7y ago
People achieving enormous success on the top level can become detached from our reality. The chief executive of Goldman Sachs Lloyd C. Blankfein said in an interview (2009) with The Times of London: “We're very important, doing God's work.” What is the chance Zuck is living in a simular bubble?
- Bakary 7y ago
  He seems to compare himself to Augustus [0] and to be honest, who could blame him? [0] https://www.newyorker.com/magazine/2018/09/17/can-mark-zuckerberg-fix-facebook-before-it-breaks-democracy https://www.newyorker.com/magazine/2018/09/17/can-mark-zucke...
anigbrowl 7y ago
Strange to see the writers describe the revolt as being bloody given that the only bleeding is by the investors banging their heads against a brick wall. Everyone knew about this share structure when they bought into FB, essentially choosing to be passengers on Zuckerberg's yacht. Well, they can always sell their shares if they want off. I'm no fan of Zuckerberg, but investors put greed ahead of good sense.
rdlecler1 7y ago
If people want to vote they can sell their shares. I never understood this.
tasssko 7y ago
They could sell their shares. Money talks.
Triverklorezam 7y ago
Facebook is definitely being mismanaged and has very poor leadership. It shows all over Facebook's business decisions and that it emanates from the top down.

333 points by SirLJ 7y ago

PaulHoule 7y ago

And you know, a good board is worth it's weight in gold...

castis 7y ago
I wish I was worth my weight in gold. With the current price at about $42,500/kg, and assuming the 8 people on FBs board are an average of 75 kg... 75842500 = 25 M. Sounds good to me.
- SketchySeaBeast 7y ago
  I would guess that the people on Facebook's board are worth more than their weight in gold.

toyg 7y ago

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.

dragonwriter 7y ago
> 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.
- Bartweiss 7y ago
  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.
  - toyg 7y ago
    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.
benj111 7y ago
"Shareholders have nothing to complain about" 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.
- kaffeemitsahne 7y ago
  >global trackers Not Facebook's problem at all. >elections Not applicable, the choice to not buy a stock is much easier to make than the choice to leave a country because of the voting procedures.
  - benj111 7y ago
    "Not Facebook's problem at all" I didn't say it was. What's the easyness threshold where it becomes applicable? I'm sure theres a fair few pension holders that would find it very difficult to avoid Facebook.
- i_am_proteus 7y ago
  > I can't very well sell the Facebook bit If you don't know any, you can short it.
  - benj111 7y ago
    I'm still an owner though? 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.
moosey 7y ago
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.
- thrower123 7y ago
  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.
  - leonroy 7y ago
    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.
    - ethbro 7y ago
      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.
deleted 7y ago
[deleted]
bitxbit 7y ago
Jobs was a visionary. Mark Zuckerberg, on the other hand, has failed to inspire anything in the industry.
- Aeolun 7y ago
  I think he’s inspired a lot of things, not all of them good, but it’s really hard to say he hasn’t had any influence.
burtonator 7y ago
This is a pretty common understanding in the valley. 99% of people understand this issue. The problem is that they often have to take additional VC to keep growing and HAVE to give up control or the company dies. If you need cash to reach escape velocity there's not much you can do

htkibar 7y ago

Whole system was designed so that Facebook did not need to prioritise short term goals such as stock prices over long term ambitions, no matter how good or bad those ambitions might be. System works, apparently.

salawat 7y ago

So, at what point does Zuckerberg become drive the company into such levels of toxicity that every investor does what they should have done in the first place, and pulls out? If "the Market" truly solves everything, after all, it should be possible to leave Facebook high and dry with no public funding left because Zuckerberg has made his business and himself a veritable pariah. It probably won't happen though. He's basically set himself up as the subject of a permanent condition of Stockholm Syndrome with regard to any investors. With a majority vote built in for him, any concession to the public is essentially a "let them eat cake" sort of deal.

georgyo 7y ago
Ironically, investors pulling out might be good for Zuckerberg. If a business is highly profitable but the investors don't see it that way, then it may make sense for him to take the company private again. This happened with Dell about 6 years ago. Michael Dell believed Dell was worth much more, but the market disagreed. He was able to buy back all the shares and take it private again.
- vonmoltke 7y ago
  The big impediment to Facebook doing the same thing is that it uses huge RSU grants as a carrot to attract talent. Go private, and suddenly they need to make up for the 40%+ drop from somewhere.
jfengel 7y ago
It doesn't really affect FB one way or the other. They made their profit at the IPO. That's all the cash they get out of it. Zuckerberg himself (and other executives) would lose a lot of money if every investor pulled out, but Facebook would continue happily along. Ultimately, you can't get every investor to pull out because the stocks still entitle them to a piece of corporate profits, even without control. Facebook has a P/E of 24, corresponding to earning about 3% interest. There will always be a market for that cash. (Investors seem to think it will ultimately be more profitable than that, so the price is higher than the last 12 months of profit indicate.)

SuperGent 7y ago

The man owns the company, or at least 60% of the vote, and can do what he likes with it. If you don't like it get out or stay out of investing in Facebook, especially if you think that he will bring down the share price.

strathmeyer 7y ago
"Sure, but we'd also like to know what the adults think."

vikramkr 7y ago

It's his company and his vote, and investors knew what they were buying and that they were investing in zuck more than they were investing in the company. Zuck voting this down is entirely within his rights and justified. There is no obligation to give up power just because others demand it

fredgrott 7y ago
sure there is..if future potential investors decide to ditch investing in FB for example.. its called fiduciary responsibility
- challenger22 7y ago
  Do you think the other shareholders would have voted to dump Zuck if they knew he did not have a majority position? This act could have been a protest vote knowing it would only reform his behavior, not remove him. Similar to how people speculate that Brexit was only voted in because nobody thought the vote would pass- it was a protest vote.
  - cal97g 7y ago
    The latter speculation is pure bullshit.
  - marvin-83 7y ago
    Such speculation of voting intentions is disingenuous. To take your example, only people that oppose the result of the Brexit vote suggest that voters didn't really mean what they voted; it's just a way to apply favourable spin to an unfavourable outcome.
    - atoav 7y ago
      Does everybody mean what they vote? Probably not, many people vote strategically or symbolically. But that doesn’t matter after the vote. The fascinating thing about Brexit was that the “people’s will” that was interpreted into the vote shifted its shape gradually over the months and years into whatever seemed to it the agenda that moment. Democracy is fundamentally about consensus, and the longer a decision affects the future, the more consensus there should be. In the Brexit process the most consens everybody could get was what 54%? And that 54% was gained on fraud and turned out to be split into fundamentally opposed directions. There was never consensus in Brexit.

FailMore 7y ago

I think MZ does think long term, is taking privacy seriously moving forward and is good for the company. (I was, but am currently not, an investor in FB)

strikelaserclaw 7y ago

FB need Zuck now more than ever, otherwise it will become a middling company run by an unimaginative middling corporate "CEO". FB is a potential goldmine, they have not even made a fraction of the money they are capable of making. Monetizing instagram, monetizing watsapp, making watsapp the default way to send money, effectively becoming involved in banking, they could literally copy wechat and become print money because of the strong network effects fb has.

finnthehuman 7y ago
>otherwise it will become a middling company run by an unimaginative middling corporate "CEO" And this is distinguishable from the last 5 (+?) years of Zuck how?
- anonymousab 7y ago
  Facebook has not gone anywhere near as far as they could in the pursuit of profits. The past few years have been comparatively benign, based on public knowledge at least.
save_ferris 7y ago
Profits over privacy, over people, over the security of elections. He’s repeatedly failed to address scandal after scandal of his company. Scariest of all is that people like you don’t even seem to care. It’s totally OK to violate privacy, permit foreign actors to undermine elections, as long you make a ton of money.
- joering2 7y ago
  Apparantely how its done in “corporate america” since our government allows it and approves it. Btw: friends don’t let friends do Facebook.
- thrower123 7y ago
  I'd be more concerned that it is apparently fine for Facebook employees to dox random anonymous users to gossip rags like the Daily Beast.

Nasrudith 7y ago

I think this highlights one of the oddities of the current shareholding investment system and how oddly "broken" it is on several levels. Wall Street has become infamous for being a horde of locusts seeking short term growth for one. Most smaller investors wish for long term growth while being spooked by bad short term and charmed by short term growth. Most don't engage in voting and may not even have control of their vote but their broker. Perhaps some of it is from fundamentally wrong assumptions about division of management and incentives. Especially given multiple ownership is possible the assumption shareholders care about the long term health doesn't actually hold. Voting system may be influenced by older school thinking that it was more like a country or smaller scale venture. It is entirely possible for a large vote holder to push for short term policies and get out on top - and it wouldn't even be misconduct let alone something enforceable. I wonder what a better system could look like - and how better would be defineable for that matter. With another layer in "how could it be introduced?". Since if it is just a matter of starting your own and proving it works better that hard task is ironically easy compared to say changing FTC rules.

granshaw 7y ago
Check out the Long Term Stock Exchange
- chumali 7y ago
  The LTSE wants to give startups all the benefits of being public whilst encouraging long-termism through tenured voting and other gimmicks. It seems that Zuckerberg has already achieved this however by retaining voting rights. That hasn't stopped investors from pouring money in to FB. Why would any founder then decide to list on LTSE rather then just implement a dual class structure? Perhaps if market conditions were to change, but right now there appears to be no shortage of investor cash looking for a home.

travisoneill1 7y ago

People who bought non-voting shares would like their assets converted to something that has more value? I am shocked!

takanori 7y ago

Who would they replace him with?

JackFr 7y ago

It always annoys me when people liken the stock market to gambling. I understand how buying a stock, in one sense, may feel like placing a bet. But in reality it's ownership of an ongoing commercial enterprise and as an owner, the right to choose and guide management is one of the things that makes it more than simply a bet. But Facebook stock? Literally a bet on Zuck.

Glyptodon 7y ago

I don't understand why a company where one shareholder controls the company and has over 50% ownership can be considered anything other than privately owned.

nknealk 7y ago

There are a ton of comments suggesting the non-binding vote will not change behavior. I want to throw some light on the opposite side: Zuk has a strong incentive to listen to his shareholders even if he doesn't have to. If he ignores them, shareholders are likely to sell their shares driving the price down. This (1) reduces Zuk's overall wealth since much of it is locked up in Facebook equity, (2) reduces the total compensation of many Facebook employees who receive options or RSUs thereby making retention harder, (3) makes recruiting engineering talent harder because few people want to join a sinking ship, and (4) reduces the ability of the company to raise capital in public markets (unlikely a significant consequence for Facebook as they throw off a lot of operating cashflow) So yes, Zuk voted to not fire himself. That doesn't mean he can ignore his shareholders without consequence.

DenisM 7y ago

If you think that majority voting rights give Zuck absolute power, think back to Travis Kalanick - he had all the voting rights in the world, and yet he had to leave. There's more than one way to put pressure on the CEO, it's just a question of which people want to throw their weight behind the cause.

tschellenbach 7y ago

Pretty sure the stock will spike in the short term and then go on an endless decline to 0 if they actually manage to kick him out. Most social companies stumble and fall, Zuck has proven to be insanely talented at seeing the future trends. Think about their push to be mobile first, the acquisition of instagram, whatsapp, social login, shift of engagement to groups and chat etc. They clearly missed the changes in people's perception about privacy over the last few years, but if the past is any guidance they will probably overcome that hurdle as well.

apo 7y ago

Yet they fail to put their money where their votes are by simply selling Facebook shares. Regardless of what happens with Zuckerberg, Facebook's best days are behind it. The notion that a change in leadership can right this sinking ship makes no sense.

michaelt 7y ago
Yet they fail to put their money where their votes are by simply selling Facebook shares. Wouldn't that imply that no shareholder resolution should ever pass? And boards shouldn't be accountable to anyone?
- buckminster 7y ago
  It would just mean that nobody would invest in the small number of companies designed to have an unaccountable board.
Bakary 7y ago
They own the next generation of social networks, I don't see why they would stop doing well. Unless you mean just the Facebook service itself.

ddingus 7y ago

They can always sell.

OJFord 7y ago
Some clearly have been, or have wanted to; hence the downward pressure on the stock price. Not owning stock isn't the same as wanting different governance though - an investor might like the fundamentals, and think it could go further, but not under its current x.

geggam 7y ago

What is interesting to me is how shareholders seem to kill corporations when they are allowed to vote the direction of the company. Direct Democracy ?

burtonator 7y ago
One dollar ? one vote?

heymijo 7y ago

Flip this perspective. Zuckerberg has iron-clad control of FB. He could unilaterally decide that quarterly profits, hell, any profits, do not matter and there is nothing anyone could do. Keep that in mind when it's discussed that FB can't really do anything about the problems it has spawned because it is part of the financial system and governed by Wall Street. No, it is governed by Mark Zuckerberg and he can do whatever he wants. Every last dark pattern and shady thing they are pushing for with engagement, ultimately, he and he alone is is responsible for and condones. Every other CEO on the planet has the "but the quarterly earnings" boogeyman to fall back on as a scapegoat for their malfeasance. Zuckerberg, due to his shrewd engineering of stock classes, does not and we should do well to remember that.

neya 7y ago
In the same token, I think we should also hold Twitter accountable. Have you seen their "In case you missed X's tweets" notification spam? That's the "Some random nobody hosted a watch party" equivalent on Facebook. And it can't even be turned off. All this for what? To present to some investor on a powerpoint "Hey, we increased our conversion rates by 2% by faking notifications. I wonder if this is even legal to trick people to use a service by lying to them there's something they need to attend to.
VectorLock 7y ago
>Every other CEO on the planet has the "but the quarterly earnings" boogeyman If you rephrase it as "I want to make as much money as possible" it sounds worse but at its base, thats both what every other CEO and Zuckerberg's real motivations are.
malloreon 7y ago
>Every last dark pattern and shady thing they are pushing for with engagement, ultimately, he and he alone is is responsible for and condones. This is absolutely 100% FALSE. Every single person who works on those dark and shady patterns are responsible for their actions. They choose to work for evil every single day because the money is more important to them. Why do we give tech employees a moral and ethical pass for the terrible things they do just because they work for a company? These engineers don't work with blinders on, they know that every line they commit is ultimately in service of getting more people addicted, and more clicks on facebook ads. Someone above them may tell them to write that code, but they choose to write each line when they could be working somewhere else. Last I heard, facebook hires supposedly intelligent people, I daresay they'd be able to to get a job elsewhere. They choose not to.

Aeolun 7y ago

I can just imagine him going, “Lol. No”.

malloreon 7y ago

Is it too much to ask that this vote of no confidence inspires any facebook employees to re-evaluate their life choices and decide to work somewhere else? Maybe somewhere that does good? I think it's too much to ask, but I hope that it isn't.

tasubotadas 7y ago

I dunno. They are on this boat by their own will. If only there would be a way to ditch a company like this their problems could be solved. A place where you could sell your stake in the company (preferably on a global scale) and buy a stake in a company which doesn't suffer from such issues. Something like a marketplace but for stocks. ¯\_(ツ)_/¯

TAForObvReasons 7y ago
Their presence in the S&P 500 ensures that countless people are unaware they are even on the boat, by din of their retirement exposure
- coryfklein 7y ago
  People that own FB stock by way of a general retirement fund probably aren't exercising their right to vote on the chairman.
- titanomachy 7y ago
  s/din/dint

crazygringo 7y ago

I'm curious why it's even legal to sell shares that don't have equal voting power. I mean, equal ownership via shares is pretty much the concept of a public corporation. Since public corporations are entirely a legal entity (nothing "natural" about them), and so heavily regulated in so many ways to protect investors... ...what is the rationale the US has for even allowing the concept of shares that have less/more votes? It changes the ideas of shares as ownership to more of a kind of financial gambling. And creates problems like this one, where a majority of ownership thinks a CEO is performly badly but can't do anything about. I know investors bought shares voluntarily and knew this in advance... but I still don't understand why it's even a choice investors are allowed to be given. How are unequal voting shares good for society in any way at all? It just seems to allow corporations to get the benefits of raising cash publicly without the public accountability that should come with it.

SteveJS 7y ago

68% of ‘independent investors’. Would the vote have been less than 50% under an ordinary structure as well? I can’t tell if Zuckerburg would still have been fine under ‘normal’ circumstances.

lowdose 7y ago

People achieving enormous success on the top level can become detached from our reality. The chief executive of Goldman Sachs Lloyd C. Blankfein said in an interview (2009) with The Times of London: “We're very important, doing God's work.” What is the chance Zuck is living in a simular bubble?

Bakary 7y ago
He seems to compare himself to Augustus [0] and to be honest, who could blame him? [0] https://www.newyorker.com/magazine/2018/09/17/can-mark-zuckerberg-fix-facebook-before-it-breaks-democracy https://www.newyorker.com/magazine/2018/09/17/can-mark-zucke...

anigbrowl 7y ago

Strange to see the writers describe the revolt as being bloody given that the only bleeding is by the investors banging their heads against a brick wall. Everyone knew about this share structure when they bought into FB, essentially choosing to be passengers on Zuckerberg's yacht. Well, they can always sell their shares if they want off. I'm no fan of Zuckerberg, but investors put greed ahead of good sense.

rdlecler1 7y ago

If people want to vote they can sell their shares. I never understood this.

tasssko 7y ago

They could sell their shares. Money talks.

Triverklorezam 7y ago

Facebook is definitely being mismanaged and has very poor leadership. It shows all over Facebook's business decisions and that it emanates from the top down.