Saturday, October 16, 2010

A Different Perspective on "The Social Network"

I went to see "The Social Network" expecting a hatchet job (if you haven't seen it yet, be warned that the following is mildly spoiler-ish, though, really, the history of Facebook is public knowledge). The film was based on an unauthorized and admittedly semi-fictionalized tale told in the book "The Accidental Billionaires", which takes the side of (and was fed juicy information by) aggrieved ex-partner Eduardo Saverin.

And, indeed, the
NY Times says Mark Zuckerberg "is presented as an arrogant, aloof, socially inept computer nerd, who eventually tricks Mr. Saverin into signing documents that diminish his stake in Facebook to near-nothingness".

I suppose that's how people who have never run businesses see things. I, however, had a very different perspective, perhaps because of my experience running a web site that also grew from humble beginnings to...well, to a miniscule fraction of Facebook's scale and success (on the other hand, Chowhound aimed for a niche audience, whereas Facebook strove to hook up the whole world).

Even as portrayed in this supposedly slanted film, the Saverin character is obviously the wrong guy to be CFO of that operation. Premature greed plus twitchy anxiety over his investment drive him to a determination to plaster ads on the nascent site, ignoring Zuckerberg's keen insight that all Facebook had going for it was "coolness", and that ads would have detracted from that. Sure, Facebook has ads now, but it's out of growth phase. If, back when they were confined to students of a few universities, Facebook had been festooned with ads, it never would have exploded. Conventional-minded and small-visioned, Saverin was a drag with his insistence on monetizing the operation even if the monetization might kill it.

It's a huge drag to run a business with a partner who lacks vision. And it was miracle enough that college kid Zuckerberg turned out to have the maturity and vision to take Facebook all the way to world scale. He was an aberration, and it's quite unsurprising his college kid partner failed to buck those same long odds.

So Zuckerberg found a way to get rid of him. It was the right thing to do for Facebook (removing a principal who was out of his league and dragging down a radical, fast-scaling online phenom), and it was even the right thing to do for Saverin. Because if Saverin had remained, retarding growth, Facebook would never have exploded, making Saverin a billionaire. And it did, in the end, make Saverin a billionaire.

In fact, the very means of Saverin's removal (he foolishly signed documents relevant to his future role in the company without consulting his own lawyer, a move which even he conceded was beyond stupid ) demonstrates that this kid was severely unequipped to serve as CFO of a burgeoning grown-up company...and that his further presence would have exerted a debilitating drag on the company's growth.

But here's where the public misses the obvious. Can you really imagine that when Zuckerberg forced out Saverin, he (and his team of big league corporate lawyers and advisors) didn't anticipate that the guy would sue, and wind up with tons of money? Does anyone really think this outcome was unexpected, or aggressively fought? No, Zuckerberg found a way to ditch the guy quick so the business could achieve the growth he knew was possible, allowing Severin to reap billions in the subsequent law suit. It was a conscious decision, and a smart one. It was exactly, perfectly right. Knock him out of a role he shouldn't be in, and let him sue to gain what's rightly his. Win-win.

So where's the problem with this story? Should Zuckerberg have kept his old buddy around out of sentimentality at the expense of the phenomenal outcome he saw possible for them both? (Note: I probably would have done this, myself - but I'd have been dead wrong) Is it a bad outcome that Saverin got rich in spite of having the business skills of a callow undergraduate? Or that Zuckerberg saved Facebook from a horrendously underqualified CFO, going on to tremendous success able to pay said CFO ten thousand times more money, standing on the sidelines, than he was qualified to ever earn via his own skill set?

2 comments:

Wayne said...

Zuckerberg is an adept entrepreneur, Saverin is an extremely lucky fool.

Jim Leff said...

I think "fool" may be harsh. In Zuckberg's shadow, any of us would seem fools by comparison.

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