Facebook, Mark Zuckerberg & The Search for the Next Jack Welch
Leadership is one of the most popular of business book categories and a personal favorite topic of mine. Over the years I wrote and edited close to a dozen books on Jack Welch, the near-legendary former leader of General Electric (the company founded by Thomas Edison more than a century ago). I also edited chapters and books on other visionaries like Michael Dell, Sam Walton, Herb Kelleher and Andy Grove, but whenever I hear the word “leader” I can’t help but think of Welch. Since Facebook went public in May, I have been struck by the contrast of the two men, and the 50-year difference in their ages is the least of it. Welch was ever-present, crafting a new vision for the firm, empowering others to execute on it, and launching company-wide initiatives (such as six sigma and globalization) that made the company more efficient and more competitive. But before I go too far with this example, let me say it is grossly unfair to Mr. Zuckerberg. First, Welch was not, well…Welch for a long time. Before he became CEO he was known as a brash, outspoken leader, a 40-something maverick so unlike the seven previous GE CEOs that he nearly did not get the top job.
The far more common comparison made in the press is between Mark Zuckerberg and the late Apple co-founder and CEO Steve Jobs. That’s a more fitting comparison since both were young innovators with grand visions, and both helped to shape technology revolutions (Jobs the computer revolution, and Zuckerberg the social media explosion). A footnote here: I find it interesting to discover that Jobs told his biographer that he truly admired Zuckerberg for doing the hard work of creating a great company, and not selling out earlier. However, the comparison between Zuckerberg and Jobs is also not fair to Mr. Zuckerberg. That’s because, like Welch, Steve Jobs was not Steve Jobs until a more mature version of himself returned to Apple for his second stint in 1997. It was only then that a more capable and charismatic Steve Jobs came up with incredible new innovations like the iPhone and iPad.
With Leadership Comes Responsibility
Maybe it isn’t fair to compare a 28-year old Mark Zuckerberg to iconic figures like Jack Welch and Steve Jobs. But I contend it is fair…and not just fair, but imperative, to assess the young CEO’s performance on what a leader is supposed to do. After all, it was his decision to maintain 57% of the voting stock, thus ensuring his tight rein over the company. What happens to Facebook is his responsibility. However, in the company’s third week as a publicly traded company, Mark Zuckerberg is nowhere to be seen. Following a headline-making fiasco of an IPO, Mr. Zuckerberg got married and went on a honeymoon to Europe. I am all for love and marriage, but the company lost an eye-popping 30 percent of its value in its first two weeks and shareholders—or anyone in the financial press—has not heard a word from Zuckerberg since the firm went public. That seems at best irresponsible, and at worst criminal (not literally, but from a leadership perspective). In addition to all of the people that call him boss, he now has millions of stockholders that own a piece of his company and has to answer to them. With each passing day that we don’t hear from Mr. Zuckerberg, investors grow increasingly impatient and frustrated (full disclosure, I am not a stockholder and in fact I am presently shorting the stock).
So what should we expect from a CEO from a Fortune 500 company?
Here, Welch’s rules of business provide much insight. First and foremost, a leader of any sized firm must face reality. The reality at Facebook, at least from a capital markets perspective, is that Rome is burning and there appears to be no one at at home with even the smallest of garden hose. Next, an effective CEO creates a vision and gets others to make that vision a reality. According to press reports, Zuckerberg has said that his vision is to bring people together. That’s a very laudable mission, but does nothing to monetize the 900+ million users of the site (which is made all the more difficult when more than half of its users access the site via mobile apps). In fact, the Facebook founder has specifically mentioned that profit is not his goal. While that is not necessarily a bad thing—many great CEOs take care of customers first and let the profits follow—he didn’t need to emphasize the point. After all, the company is now a publicly traded firm, and as important, many millions of his customers are now his stockholders. What few are talking about is how the stock price has soured so many of Facebook’s customers on the company. I wouldn’t be surprised to hear of millions of users who have lost real money on the company and are swearing off the site for good.
Time will tell if Mark Zuckerberg has the stuff that true leaders are made of. He has time, but not that much time. Now that he has relocated his company to Wall Street he is learning that he now resides in a very unforgiving neighborhood. In the next couple of months the stock will report earnings. With growth slowing and no fresh, big ideas on how to bring in new sources of revenue, that might be a very tough learning day for the young CEO. Maybe Mr. Zuckerberg should consider bringing in an outside CEO to run the company. Other great founders have followed that strategy and it has worked more often than not. But that is also no silver bullet. Social media tends to be a young person’s game. The Zuckerbergs of the world have grown up on the Internet. An outsider, and an older leader, is unlikely to have the same perspective as Zuckerberg. It would take the right person with just the right blend of youth and experience to excel at the job. But all of that speculation is probaby a futile exercise. Zuckerberg shows no sign that he is ready to relinquish the CEO role to someone else. So for the foreseeable future, the company’s fortunes will rise and fall on the shoulders of its founder.