Pando

Facebook's silver lining: Unlike Uber the founder has some level of board accountability

By Sarah Lacy , written on October 3, 2017

From The Travis Shrugged Desk

2017 isn’t a good look for Facebook.

Mark Zuckerberg’s “tour America” routine has drawn mocking, eye-rolling, and speculation he’s making a run for President.

That wouldn’t be so bad if the FBI weren’t actively investigating Facebook’s role in the last Presidential election. And that wouldn’t be so bad if Zuckerberg hadn’t called the idea that Facebook had an impact on the election “crazy.” And even all that wouldn’t be so bad if Facebook’s “algorithms” hadn’t pushed fake news and conspiracy theories the morning after the Las Vegas, Nevada shooting.

Facebook-- a company that knows as much, if not more, about us as Google’s search engines or Amazon’s eavesdropping Echo and fessed up last year to miscounting video views -- is just daring you to trust it at this point.

Still, there is at least one very thin silver lining. Reports have surfaced that show Facebook at least has one thing the newer generation of Silicon Valley darlings lack: A functioning board.

In any other era, Zuckerberg’s voting control over Facebook’s shares-- which were set to become even more extreme, before the plan was scuttled amid these scandals-- would be remarkable. It was, after all Zuckerberg, whose early negotiation to control the board and refusal to give VCs a seat during subsequent rounds set a new model for what in-demand entrepreneurs could demand. And -- to be clear-- the board signed off on that more extreme plan, allowing him to retain control even as he sells 99% of his shares and even if he had a job in government. It only came back up via a shareholder lawsuit.

And yet, in 2017, even Facebook has the comp of Uber: A company that is rumored to have lost nearly half its valuation in a single year. Not because of its business: Because it was run by a CEO and co-founder who controlled the board and routinely fired investors from it, all the while allegedly stealing billions of dollars in trade secrets, weighing whether or not to smear a woman who was raped while using its service, and treating its female employees like shit. (To name just a few Uber offenses…)

Uber is in the middle of an unprecedented fight between investors and Travis Kalanick for control over the company's board. One that got moved to arbitration and then right back in the midst of the public eye when Kalanick blindsided the company and named new board members to the very seats that investors were contesting. Meanwhile, the new CEO, Dara Khosrowshahi, appears to be playing both sides, as he flies to London to try to clean up one of Kalanick’s many messes. Despite everyone's hopes, his arrival at the company has certainly not stemmed its Kalanick-generated drama. 

This was all 100% self-inflicted, the result of a rogue CEO with an “A-Team” that couldn’t be fired with endless access to capital and absolutely zero accountability. This factor alone has destroyed-- what? $10 billion? $20 billion? $30 billion?-- of paper Uber stock in less than a year. 

Compare that to an exchange that leaked over the weekend on Business Insider: A conversation between Facebook boardmember (and Pando investor) Marc Andreessen (who’d helped sell the voting rights plan) and Zuckerberg. Zuckerberg wanted his philanthropic side-hustle, the Chan Zuckerberg Initiative, to work with Facebook on projects. It was Andreessen who stood up to Zuckerberg saying that some members of his management were uncomfortable with the idea, but didn't feel like they could say anything. From the emails, which came to light via the now scuttled lawsuit over voting rights: 

After the meeting, Andreessen elaborated to Zuckerberg via private text message that several members of Facebook's "senior staff" thought his proposed "entanglement" of The Chan Zuckerberg Initiative and Facebook was a "big mistake."

Andreessen sent the following text message to Zuckerberg about the meeting:

"1. All our feedback is entirely intended to protect you and the company. We love the intent. 2. You should know that the reality warping that I brought up has already started. Several of your senior staff think this [entanglement of CZI and Facebook] is a big mistake and wish you would stop but don’t want to challenge you. That said, I love the goals :). And I would be thrilled if Facebook proper pursued more long term science and tech efforts internally including health and education."

This may seem like another embarrassment for Zuckerberg, but what is shows is the limits of one person having total control. Set aside for a moment the public's eroding faith in Zuckerberg's judgement. It could have well been for laudable reasons that Zuckerberg wanted to combine both powerful, well-funded, organizations with unprecedented ability to influence billions of people and impact people's lives. But it took others inside the company to raise the red flags of the downsides. And it took someone that had enough power on the board and standing with Zuckerberg, for him to actually listen.

It shows that Zuckerberg's power isn't completely unchecked at Facebook. 

Put another way: Once again, Uber’s very existence makes another tech company - even Facebook 2017 - look not so bad.