Zuckerberg Creates a Facebook Dynasty

February 11th, 2012

Mark Zuckerberg owns 57.1% of the company, controls three out of the five seats on the board of directors, and cannot be fired–even if he dies, his successors decides who will run the company. This CEO for life arrangement troubles me a bit.

This post explains what happens when an “Emperor” of this corporate empire no longer has clothes:

The unintended consequence of such absolute control may be the opposite of what Zuckerberg hopes. It isn’t a stretch to believe that he genuinely wants control in order to keep the business focused on the long-term social mission he described in his letter to shareholders, rather than the short-term gains often demanded by financial managers. What may happen instead is that the post-IPO business finds itself subject to whimsical decision-making and vulnerable to the inevitable securities lawsuits.

When founder-controlled companies sell shares to the public, they should plan for the possibility of the emperor at some point “having no clothes.” Eventually, even the best founders can lose their mojo, or appoint a successor who proves unequal to the task. This is when having independent views and fiduciaries can help shield the business from liability and guide it to a better place, even without legal control.

Even Steve Jobs was forced out of Apple. Let’s see what happens in years as Facebook grows.

I am in the process now of forming what may be a big deal operation at some point. I’m already grappling with these kids of issues.