Since Facebook’s IPO in May 2012, news stories discussing the fluctuating share price, issues with privacy, and controversial monetization changes have been rife. Facebook’s critics have jumped on each story as a sign that Facebook is losing its relevance and popularity, or that it was over-valued; or else that Mark Zuckerberg is taking over the Internet and leading his company down an overly-commercial route.
Will Zuckerberg be pressured by Wall Street into selling out his vision for Facebook for short-term gains, or will Facebook remain at the forefront of social media innovation and continue its unparalleled growth? This is one of the questions I tried to answer in my book “Think Like Zuck: The Five Business Secrets of Facebook’s Improbably Brilliant CEO Mark Zuckerberg.”
A quick scan of Mark Zuckerberg’s business history reveals his single-minded passion for using technology to bring people together. From his first social coding experiments as a boy, when he built an instant messaging program called Zucknet to help his family communicate, to the trouble he got into at Harvard over his site Facemash, which rated college members against each other without their permission, Zuckerberg has always been fascinated by social networking.
When Yahoo offered him $1 billion in 2006 for Facebook, Zuckerberg turned it down. Not because it wasn’t enough money, but because he felt that Facebook hadn’t yet fulfilled its potential to make the world a more connected place. “I never wanted to run a company,” Zuckerberg said. “To me a business is a good vehicle for getting stuff done.”
In fact, Zuckerberg has often been criticized by his investors for putting users’ needs above revenue generation. The letter that accompanied Facebook’s IPO prospectus begins, “Facebook was not originally created to be a company. It was built to accomplish a social mission – to make the world more open and connected.”
No one at Facebook would deny that there is tremendous pressure from Wall Street to justify the share price now that Facebook has gone public. But does this mean that Facebook will suddenly stray from its mission in search of profits? It’s unlikely.
When Amazon went public in 1997, many people expected it to fail. CEO Jeff Bezos ignored criticism of his business model and continued to make radical decisions, such as investing in the Kindle and allowing negative reviews on his site. His single-mindedness paid off. Amazon’s compound annual growth rate of 31 percent over the past 10 years and a stock price that outperformed eBay over the same period of time by a factor of 18 is the proof of that. “If I had a nickel for every time a potential investor told me this wouldn’t work,” he recalls. “A lot of people – and I’m just not one of them – believe that you should live for the now. I think what you do is think about the great expanse of time ahead of you and try to make sure that you’re planning for that in a way that’s going to leave you ultimately satisfied. This is the way it works for me.”
Like Zuckerberg, Bezos has always believed in the long term. Can Zuckerberg show the same resolve, or will he succumb to short-termism? Given that Zuckerberg is renowned for his focus and commitment to his product, the chances of him being swayed by the demands of Wall Street are slim.
“I’m here to build something for the long term,” Zuck says. “Anything else is a distraction.” One of the most famous Facebook slogans is: “The journey is only 1 percent finished.”
Some of Facebook’s most initially unpopular advances, such as the news feed or photo tagging, have also been the features that have brought in the most new users and pushed Facebook so far ahead of its rivals. It hasn’t grown to one billion users worldwide with traditional thinking. Somehow Zuckerberg will have to balance the needs of his investors and the needs of users, but given that Facebook has continually surprised us with its innovations, it’s entirely probable that Zuckerberg can do this. He is in it for the long haul and won’t be paying any more heed to his critics than he ever has in the past.