As Facebook has gone public this year there has been debate surrounding Mark Zuckerberg’s leadership abilities and what his role should be going forward. There has even been commentary on whether he should remain CEO as illustrated below. However, Zuckerberg’s decision to hire Sheryl Sandberg away from Google in 2008 as Facebook’s COO was likely the best business leadership decision the young entrepreneur could have made. By hiring Sandberg he acknowledged that certain aspects of the company like day-to-day operations would be best served by someone with the appropriate experience, yet maintained that he would remain the company’s chief and lead visionary.
Just before Facebook went public Geoffrey James wrote a rather disparaging review in Inc of Mark Zuckerberg’s leadership ability and maturity.
Facebook’s growth notwithstanding, I’ll bet that most big investors would be less enthusiastic about the company if Sandberg weren’t there to ameliorate Zuckerberg’s obvious immaturity. Furthermore, once the company goes public, one wonders how long investors will tolerate Zuckerberg’s hijinks when there’s a clear alternative available–one who has already shepherded Facebook (and possibly Zuckerberg as well) into the current market position.
Instead of considering if Zuckerberg stepped aside we instead consider the potential results had Steve Job’s hired a COO like Sandberg instead of a CEO like John Scully? Would he have been ousted? Would Apple have suffered the terrible decade of losing market share and innovation? I argue in Corporate Empathy that technology companies that came after Apple (starting with Google in 2004) have been evolving their corporate structures to insulate themselves from the short-term pressures and short-sighted views of Wall Street, by “creating a corporate structure that is designed for stability over long time horizons” as described by Larry Page in Google’s 2004 IPO founder’s letter.
Wall Street’s misreading of signals like, Zuckerberg’s Hoodie [as] a ‘Mark of Immaturity,’ and Michael Pachter stating that Zuckerberg “is well-suited to be the chief product officer…” yet be unsure if he is fit to run the corporation show how little Wall Street and it’s analysts in general understand the seismic shift that the technology sector is bringing to business.
So many of the innovative entrepreneurs who have taken huge risks, created jobs, invented industries, and generally improved our lives over the past century have witnessed Wall Street analysts and economics professors, who for the most part are not entrepreneurs and are risk averse, destroy the very innovative nature of the businesses that have made America great.
Milton Friedman was economist and author who taught at the University of Chicago and received the Nobel Memorial Prize in Economic Sciences. Friedman’s theories on free markets being the best system and strong statements like, “if you put the federal government in charge of the Sahara Desert, in 5 years there’d be a shortage of sand” are spot on with my own views of capitalism and limiting government regulation. I believe his academic background makes him well suited to make those arguments.
However Friedman also wrote in 1970 that The Social Responsibility of Business is to Increase its Profits which I believe he did not have the proper experience to claim or foresight to see how negatively that mindset would affect the American economy. Friedman was not an entrepreneur and did not invent anything like Jobs, Zuckerberg, and so many other American innovators. Zuckerberg in his letter to investors filed with the SEC wrote the following on why Facebook exists.
Simply put: we don’t build services to make money; we make money to build better services.
In his critique of socialism Friedman believed that “when everybody owns something, nobody owns it, and nobody has a direct interest in maintaining or improving its condition,” which I agree with strongly and believe has happened in corporate America. The shift of control to founders and management that technology companies are imposing on Wall Street is a direct result of witnessing the disinterest caused by public ownership on a stock exchange. Until recently, no one group of shareholders has maintained a large enough stake to feel responsible for the direction of large corporations.
Starting in Silicon Valley American entrepreneurs are taking a stand to keep their businesses on mission after they have gone public and Wall Street will eventually learn how to adapt and be part of the process or become increasingly less relevant.