Zuckerberg Grip Should Be Choke Hold
May 8, 2012
In 2012, Facebook seems to be shaping up as the “new” Google. I know that apps for Facebook are not behaving the way some would like. The privacy thing is an issue. Facebook pretty much does what it wants, or, perhaps I should say, “Mr. Zuckerberg does what he wants.”
I spotted an important “real” journalistic position in “Zuckerberg Grip Becomes New Normal in Silicon Valley.” The “old” normal was Google. Hewlett Packard, Oracle, and Yahoo seem oddly out of step in the social analytics, big data, and big upside environment created by Facebook. The concept of the “new normal” is an important one, and I think that other Bloomberg and “real” journalists will hop on the bandwagon and cling until the next big thing rolls along.
Here’s the passage I noted:
Companies that have three or fewer outside board members include Pinterest, an online bulletin board; Dropbox, a provider of Web-based storage; question-and-answer site Quora Inc.; Flipboard Inc., the maker of a magazine-like application for the iPad; and Nest Labs, the creator of a technology-powered thermostat. Zuckerberg adopted a dual-class structure in 2009. He has 10 votes for every other shareholder’s single ballot. Facebook plans to raise as much as $11.8 billion in the IPO, the biggest offering on record for an Internet company. The Menlo Park, California-based company would be valued at as much as $96 billion in the deal. “People look at Facebook and see what they have done,” said Stephen Venuto, a partner at Orrick, Herrington & Sutcliffe LLP in Menlo Park, who helped Facebook set up its initial corporate-governance structure. “It’s become a much more common thing to implement dual-class capital structures in Silicon Valley companies.”
Several observations:
First, Zuckerberg is likely to keep control going forward. As a one-man band, the new normal is more power to the technologist executive. Good for the executive, perhaps no so good for some other constituencies.
Second, the lousy financial climate has shifted the financial firmament. The beneficiaries of the “new normal” may not be financial institutions which, despite protestations to the contrary, prefer to have control. The “new normal” is that power is divided differently.
Third, the implosion of the social media shock wave is likely to take out people, partners, and users. Facebook is a different type of outfit; that is, it is member based and chock full of content with a significant specific gravity. Explode high mass content out of Facebook. Interesting repercussions are likely.
The “new normal” may be fresh and innovative, particularly from a financial vantage point. Stable? I am no so sure.
Stephen E Arnold, May 8, 2012
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