If you believe the buzz, there’s some pressure growing on Facebook’s board to replace Mark Zuckerberg, the company’s founder, and shunt him sideways to a specially created job with the title of “chief innovation guru,” or some such. What seems notable, however, is that those in the know – Facebook insiders – aren’t talking publicly, and those willing to have their opinions quoted for the record (a securities lawyer, a small business advisor, and so on) seem to be opining at least in part because weighing in on any part of the Facebook story will win them a higher profile.
Zuckerberg will leave the top job at Facebook sooner or later, in all likelihood. But that doesn’t mean his departure (whether to a job where he can devote his attention to big new ideas rather than spending all his time running what is now a very large public company, or to head up some new startup) will come this year or even next. None of what has happened in recent months should have come as a surprise to any Facebook investor; the writing was on the wall – or rather, in the S-1 IPO filing – for all to read in the months leading up to the company’s initial public offering.
At that point, some of the same folks who now are eager to criticize both Facebook’s business plan and Zuckerberg’s ability to discharge the office of CEO were clamoring for stock in the company and overlooking clues that growth was slowing down. Some may point to the fact that Peter Thiel, one of Facebook’s early backers, now has sold off some 90 percent of his original stake in the company and attributes it to a loss of faith in Zuckerberg. Thiel may be nervous, but – once again – that is hardly a recent phenomenon. As recently reported by Forbes, Thiel told David Kirkpatrick (author of The Facebook Effect) as far back as 2009 that Facebook could be a massive hit or “weirdly spiral out”; that’s the year he slashed his holdings in the company in a private transaction.
Does Thiel have a particular concern about Zuckerberg’s leadership? It’s possible – but if that’s the case, he hasn’t seen fit to make it public, and again, his reluctance to hang on to Facebook stock is hardly a new phenomenon that the rest of us should greet with shock. What is clear, however, is that any such concern – if it exists at all – isn’t shared by Thiel’s fellow board members at Facebook.
It’s not uncommon for a Silicon Valley entrepreneur to launch a company and oversee its growth during its first and most perilous days, only to step aside – or be pushed aside by venture capitalists – just ahead of the next stage, whether that is an IPO or a sale to a bigger industry player. In fact, it’s so common that those individuals who do oversee the day-to-day running of a successful company that they created from scratch are memorable: Bill Gates, Jerry Yang at Yahoo! (well, for a while, anyway), the “Google guys” (Larry Page and Sergey Brin, who stayed active at the company even after Eric Schmidt was brought on as adult supervision), Steve Jobs (after his comeback) to name a few.
Facebook’s venture capital backers could have chosen to urge Zuckerberg to step sideways within the corporate hierarchy a year or more before the IPO took place, once it had become apparent that going public was inevitable. They had all the time in the world to plan for such a transition and execute it, had they believed it was in the best interests of the company and its shareholders. Zuckerberg would have remained Facebook’s single largest shareholder; he could have devoted his time to being a genius innovator without having to worry about the day-to-day tasks that confront every CEO of a public company, regardless of his or her ability to delegate.
The fact that the board chose to go through the IPO process with Zuckerberg as CEO speaks volumes. Having him take on a different kind of role wouldn’t have diminished his importance to the company, just as Bill Gates continued to play a large role at Microsoft even after turning over the CEO job to Steve Ballmer.
The Facebook directors made their choice. The odds that they’ll reconsider it only a few months later are slim to nonexistent. What has changed at Facebook? True, the IPO process was a debacle – but that has as much or more to do with questions of market structure, the preparedness of Nasdaq, and the ability of the company’s investment bankers to cope with the chaos. Admittedly, the company’s first earnings release as a public venture was a deep disappointment. But the trend was already apparent to anyone who had read the IPO prospectus carefully. Trouble getting smartphone users to click on tiny Facebook ads on their devices? Sure, but once again, hardly dramatic news.
Yes, it’s up to Zuckerberg, as CEO, to devise a strategy that will be effective in addressing the latter two issues. He has COO Sheryl Sandberg to help with that task. And if a path to continued profit growth doesn’t emerge, it will be up to the board to politely suggest that it’s time for the founder to exit stage left, and take up a post as Resident Genius, or Chief Innovation Officer. But to do so after a mere three months as a public company is premature.
Facebook under Zuckerberg’s leadership may not have taken the kind of dramatic action that some shareholders would like to see, but neither has it made any massive missteps. Nothing has fundamentally altered. Perhaps directors were wrong to believe that Zuckerberg would be the most effective CEO possible. But this isn’t the point in time at which they’ll be ready to admit it – that would be to suggest that either their judgment was flawed when they didn’t push for a change in leadership prior to the IPO, or that it’s flawed today.
Of course, if Zuckerberg does take a wrong step, be prepared for all the disapproving cluck-clucking to take on new intensity. At the young age of 28, overseeing a company that is a household name and that already possesses many disappointed investors, he doesn’t have the latitude for trial and error that more seasoned, less high profile CEOs possess.
Eventually, Zuckerberg will leave. I, for one, would be surprised if he is still in the CEO’s seat at the age of 35. A bigger question, in my eyes, is what he might choose to do next. Become a serial entrepreneur, devising the next “new new thing”? Kick back and become a stay-at-home dad? Follow in Bill Gates’ shoes and become a world-class philanthropist?
With all those options open to him, at some point dealing with the bureaucracy associated with running a maturing public company is likely to pall. Sure, there are folks whose fate has been entwined with that of their company from its birth until their death, most recently Steve Jobs and Apple. It’s just not clear that Zuckerberg is one of them. What is clear is that for now, like it or lump it, he is likely to remain CEO of Facebook.