If Investors Want More Voting Rights, They Should Have Invented Facebook

Guess who knows what’s best for the future of Facebook? It’s certainly not public investors looking to cash in on “social” 8 years after Facebook started. That’s why those same investors should actually be happy about a warning from Institutional Shareholder Services noting that Facebook’s CEO Mark Zuckerberg will own roughly 57% of the company after the IPO. He’s a lot more likely to steer the company to long-term mega-profitability than they are.
For background, ISS is a proxy advisor that tells common stockholder clients how to vote when companies they invest in need to make decisions.Reuters reports that ISS is in a huff because the corporate governance structure of Facebook gives Zuckerberg 10 votes per share and the sole ability to appoint directors, limiting the impact of ISS recommendations.
The thing is, Facebook is not a typical company. It’s not about ruthless efficiency and hammering out supply lines in order to maximize short-term profits. It trades on the transformative power of authenticated identity on the Internet — a concept that hardly existed a decade ago and that many technologists still don’t fully understand. There’s one guy who understands the power of identity better than anyone, and that’s Mark Zuckerberg.
He turned a fad into an essential utility by helping us express ourselves. He turned down premature buy outs. He shipped features everyone was scared of, aiming for the needs of tomorrow instead of giving into the demands of today.
Sure, there’ve been privacy slip ups, but they’ve primarily resulted from pushing the future too soon. And there’s big threats like Apple and Google’s dominance in mobile. But no army of analysts and researchers will see clearer than the visionary and his court. Facebook will honor investors, they’ll just need to be patient and believe.
Honestly, if I wasn’t a journalist and had to choose between investing in a version of Facebook where outside investors had a big say in the direction of the company, or one completely controlled by Zuck and his lieutenants and that’s protected from hostile takeover, I’d put my money in Zuckbook hands down.
There is a degree of inherent risk in giving Zuckerberg so much power. There’s always the chance he’ll become some Mad King, succumbing to erratic rule somewhere down the line. Still, that’s less risky but than letting outsiders grind down the value of Facebook in the name of immediate financial gain.
Potential investors should be relieved. They won’t have to pretend to see the future, or worry their peers will screw up trying. They can relax and watch the money pile up as the best man for the job does the work.
Source:http://techcrunch.com/2012/02/14/facebook-voting-rights/