Matthew Yglesias explains how Facebook’s ownership structure insures that if he so chooses, Mark Zuckerberg will have complete control over Facebook for the rest of his life. I find that fascinating:
To purchase a share in Facebook is to bet that at some future point some future person will want to take it off your hands for more money. You’re not getting even a notional slice of control in the company. There are no limits on the CEO’s ability to channel Facebook’s profits directly into his own pocket rather than yours. There’s not even a cheap-talk promise that he’s going to try to maximize the value of your investment. He created the company, he controls the company, he will always control the company, and he’s graciously allowing you to turn some of your working capital over to him.
February 4, 2012 at 8:00 pm
I’m amazed they can even go public with a structure like that. They won’t even have an independent board! Even at the expected IPO price Facebook is an overpriced stock of an overvalued company.
February 6, 2012 at 12:57 am
Observe how evil Google has gotten since its IPO (killing Labs, the pseudonym ban, etc). The Zuckerberg-as-dictator approach means that Facebook will not have to follow Google down the rabbit hole.
Unfortunately, FB is already evil, but it’s evil in a qualitatively different way from the maximizing revenue-per-share ratio foolishness.