

In Facebook Deal, Board Was All But Out of Picture - answerly
http://online.wsj.com/article/SB10001424052702304818404577350191931921290.html

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AVTizzle
Interesting. Kind of touches close to a thought I had when I first heard about
the deal... Board aside, what kind of signal did the acquisition send to
Facebook's rank-and-file?

There's plenty of extremely talented people who joined the party too late to
have any significant options. Now everywhere they go (including home, private,
and social lives...) they can't escape hearing about the gold mine that was
just dropped on Kevin and crew.

You literally can't escape this news in the connected world. Can't help but
wonder if that's weighing on morale at all in there.

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namenotrequired
Yeah, i don't usually read papers but on the few occasions i did, that week,
it was hard to escape :D

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staunch
I love what this says about Zuck. It takes real conviction to make decisions
this big and this fast. Most people would feel the need to build a faux
consensus of people around them for moral support.

Same thing that let him say no to his own $1 billion acquisition offer I
suppose.

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mkramlich
He's 26. He went straight from Harvard to Facebook. He still effectively
controls Facebook. And he's a billionaire. I don't think he really can take a
risk, in the sense that a normal person would think of a risk. As long as he
doesn't do something blatantly stupid like run in front of a bus, he's
probably set for the rest of his life. Instagram deal not approved, or
approved but doesn't "work out"? Shrug. Still a billionaire. And I'm sure he's
taken a lot off the table already so even if Facebook's value plummets, he
should still be gold.

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staunch
You think he doesn't have much to lose because at the end of the day he's
still a billionaire. I doubt he feels like that. He's got an opportunity to
succeed in ways most humans never do. You could argue that he's got _more_ to
lose than most, not less.

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andjones
Full article:
[https://www.google.com/search?q=In+Facebook+Deal%2C+Board+Wa...](https://www.google.com/search?q=In+Facebook+Deal%2C+Board+Was+All+But+Out+of+Picture)

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SomeCallMeTim
Doesn't work for me; WSJ must have shut it down.

Though Google cache pulled through, at least for now:

<http://bit.ly/IIBabu>

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guelo
WSJ seems to have made a recent change to stop the old search-for-the-title-
in-google trick. If you visit the article first and then leave and come back
with google referers it doesn't work anymore. But if you've never visited the
article and you come from google it does show it. Even when you delete your
cookies and then try to come via google it won't show the article. That means
they're using flash cookies or some other insidious persistent cookie
technique. Not sure if this violates Google's terms.

~~~
Djehngo
Incognito mode in chrome seems to evade whatever form of tracking they are
using.

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Horace
Well, this has been evident for a long time. Mark Zuckerberg intends to rule
Facebook, not by consensus, but by himself. When Zuckerberg was forced to make
an IPO, he did everything in his power to minimize outside control. I also
believe(not sure about this), that Zuckerberg still retains majority control
of the company.

~~~
primatology
Yep, he owns 28% of the stock but 57% of the voting rights, according to the
article.

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ealexhudson
I would really be surprised if this didn't affect the IPO. Why would people
put money into a business with corporate governance this poor?

~~~
staunch
You can't say yet whether it was a poor choice. Instagram was a very credible
threat to Facebook. Its growth curve and primary use bear a strong resemblance
to Facebook's.

People laughed at Google for buying YouTube for $1.65 billion. Now every
single big company wishes they had done it instead.

~~~
ealexhudson
You're missing my point; I'm not questioning the decision but the process, the
governance. The board is there to represent shareholder interests, if they get
bypassed like this on a decision this big, then what is the point of them
being there?

I think it was Sergey Brin who recently said something about an investment in
Google being a long-term bet on his/Page's decision making. It's like the
world has suddenly forgotten why businesses are structured the way they are.

To make an unrelated, more controversial, point: if a CEO can take arbitrary,
unilateral decisions, it's difficult to see why they should benefit from the
protection of corporate liability.

~~~
staunch
They weren't bypassed. The deal was brought to them by the CEO for
ratification. It will be subject to extensive due diligence, like any deal
such as this is. That's exactly how it's supposed to work.

There's nothing "arbitrary" about his decision to buy Instagram. And the fact
that he makes decisions like this shouldn't be any more cause for concern then
the fact that he makes decisions about whether to buy hundreds of millions of
dollars worth of servers, hire 5000 more employees, or whatever.

The board is there to advise and prevent malfeasance -- not to run the
company.

Complaining about how some of the most successful companies in history are run
(Google/Facbook/Apple/Microsoft) is rather odd. Do you really think their
shareholders would be better served with boards like HP's?

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spullara
"Mr. Systrom was just hours from signing a deal for a $50 million venture-
capital investment that would put a $500 million value on his company"

So this started before the deal was closed. Did the funding round close?

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CaveTech
Yes, the round closed the day before the acquisition, iirc.

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nikcub
that makes the IRR a crazy 1.33x10^3175% [1]

funny that they would only need to let their investment ride into equivalent
investments for another 21 days before reaching a return of 209 Trillion
dollars, which is in excess of the total value of all stocks, bonds and
currency in the world.

[1]
[http://www.wolframalpha.com/input/?i=%3D+%281+billion+-+500+...](http://www.wolframalpha.com/input/?i=%3D+%281+billion+-+500+million%29+%5E+%28365%2F1%29+-+1)

~~~
URSpider94
Odd as it may seem, this is not necessarily great for the VC's. Most VC funds
only get to invest each dollar once; when it gets cashed out after an IPO or
M&A event, the returns go back to the investors. I'm not sure if this money
still counts as being under management for purposes of their 2% annual
commission; if not, then it's almost certainly a bad deal.

~~~
pge
Many funds have provisions for recycling (ie calling a given dollar twice
instead of just once) that address cases like this that are quick flips.

One other note - for the first five years of a fund (typically), the 2 percent
fee is calculated on committed capital not invested capital, so an event like
this has no impact.

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ahsteele
Stupid pay wall.

~~~
jasondc
To view any WSJ article, search Google News for the exact title. WSJ has a
deal with Google to let visitors view the entire article.

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hartror
Deal? Or is this an artifact that Google doesn't index content behind a
paywall so WSJ has to display the whole article to the Google spider and
anyone who's refer is Google. If WSJ (or anyone else) doesn't want to lose the
search engine traffic they're force to do this.

~~~
SomeCallMeTim
Right, and as of right now (past midnight MT) that trick isn't working any
more.

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nikcub
do it through Google News:

[https://www.google.com/search?hl=en&gl=au&tbm=nws...](https://www.google.com/search?hl=en&gl=au&tbm=nws&q=%22In+Facebook+Deal%2C+Board+Was+All+But+Out+of+Picture%22)

try running the search manually yourself.

I had a feature in on of my chrome extension that would do this automatically
but it was too flaky to release - but I did find that referrals from the news
site worked most of the time.

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mrgreenfur
It's amazing that the Instagram guys started negotiations at $2B. I guess when
you're talking to FB you just pick a huge number out of the air. Why not $5B?

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Aissen
It's in the article (see google cache). They were about to be valued at $500M
in the next round of investment, _during the next week_. Zuck had to move
fast, and he did. He bought them 2 times the supposed valuation, which is
probably what Instagram expected.

(PS: Negotiation 101, start with a number 2x bigger than what you expect)

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shn
I really wonder if there's any favor factor in this deal. The deal is too good
to be true.

