Market Opportunities Unlimited (MOU) Blog

Facebook's Secret Board - Should Your Company Follow Suit?

The media has been having a field-day with the fact that the composition of Facebook's Board of Directors is not yet known...just months before Facebook's pending IPO.

 

What is known, though, is that it's an "all male" board and this fact has  invigorated arguments for equality at the top governance level in the company, especially from groups like the California State Teachers Retirement System(CalSTRS).

 

One of the reasons proffered by Facebook and other Internet companies like Zynga, to keep their board composition a secret, is that they really don't want (very legal) proxy takeovers to occur.

 

(Proxy takeovers or proxy fights allow either:

1) Shareholders who disagree with a company's management decisions or direction,  to install new management - one more amenable to shareholders' wishes.

Or

2) When there is a takeover bid, for the acquiring company to install a management team that's more amenable to the acquiring companies' wishes...making it easier to takeover the target company from its original founders).

 

So what Facebook and other Internet companies like Zynga and Groupon, have been doing, of late, is that when they file their IPOs, they keep the names of their board members  a secret, or they may only include the names of a few board members, on their prospectuses, who will be offered up for elections within a year.

 

Doing this, enables them to stagger the election of board  members, to prevent a proxy takeover, as an acquiring company really can't influence board members whom they know absolutely nothing about.

 

So the question is, if you're an entrepreneur with a successful company like Facebook, would you want keep the board members' names a secret?

 

I definitely would.

 

Even though you give up some control when you do get equity funding [in that your venture capitalist (VC) must sit on your board of directors to ensure that the VC's ROI projections will actually be realized]...

 

...You really don't want your hard work to go down the drain and you end up with a pittance, when your company is acquired by another, with deeper pockets.

 

So what I'd suggest to tech entrepreneurs and company owners, is to watch this Facebook IPO very carefully - Mark Zuckerberg (Facebook's founder) and his team have made and  are making very crucial  decisions in Mark's best interest.

 

Which is the direction in which entrepreneurs eying an IPO, should want to go.

 

It may displease a few shareholders, but you regain controlling interest in your company.

 

[Most shareholders don't mind founder's controlling interest, as long as the company is giving them above-average returns on their investment.

 

The only investors that may have problem with this, are the so-called "activist investors" interested in proxy takeovers].

 

Please read article, "Analysis: Investor activists see little to "like" in Facebook", to see the other corporate governance strategies that  Facebook is employing, to protect its founder's best interest.

 

Update

[Well, while Reuters is reporting that the members of the board aren't known, Hispanic Business is reporting that the members of the board are known - and that they are "founder and chief executive Mark Zuckerberg, Internet entrepreneur Marc Andreessen, former Clinton White House Chief of Staff - Erskine Bowles, Washington Post Chief Executive Donald Graham, Netflix Chief Executive Reed Hastings and venture capitalists James Breyer and Peter Thiel".

 

We will be following this up to see if these persons are just a few, or the total compliment of the board].

 

Gillian

Sources Include

 

1) Proxy Fight Definition, via Wikipedia.org, accessed  February 13,2012

 

2) ROI Definition via Investopedia.org, accessed  February 13,2012

 

3) Takeover Bid Definition via Investopedia.org, accessed  February 13,2012

 

4) Article, "Analysis: Investor activists see little to "like" in Facebook" by Paritosh Bansal, Reuters (US Edition), February 9,2012

 

5) Article, "Facebook's All-Male Board Draws Investor Scrutiny -- But Don't Count On Change", Bianca Bosker, HuffingtonPost|Technology,  February 8,2012

 

6) Article,"Facebook Blasted for Male Board Bias" by dpa Deutsche Presse-Agentur GmbH, via HispanicBusiness.com, February 8,2012

KLM Royal Dutch Airlines Helps You Screen Your Seating Partner Before Flights!

 

KLM Royal Dutch Airlines (one of Europe's premier airlines), has a new service out, that uses the power of social media to help you screen and choose your seating partner, before flights.

 

KLM Meet & Seat presents you with profiles of persons from LinkedIn or Facebook, who'll be on the same flight with you, in the same seating class (business or first class).

 

You then select people you'd like to be seated with, based on certain criteria:

E.g.

1) How interesting you find them and/or alignment of interests

2) Background e.g. schools, colleges attended

3) Business background e.g. companies worked/working for/owned

4) Similar events to be attended at your destination.

 

You can meet them in the business lounge prior to flights, sit beside them and even share a taxi if going in the same direction.

 

KLM Meet & Seat is a great way to build your business network, whilst ensuring that you/ your business is invigorated by great conversation on your next flight.

 

You should definitely try it out!

 

To do so:

1) Book your flight [To get up to 65% off your next flight: Enter your travel preferences in the "Search Best Airfare Deals!" window , choose "Advanced Options" at bottom of  that window, go to "Preferred Airlines" enter "KL" (without quotes) as the airline code]

 

 

2) Go to KLM -> Manage my Booking

 

3) Select "Seating" tab and click "Meet & Seat" 

 

4) Login using your Facebok or LinkedIn account (select aspects of your profile that you want to share with other passengers)

 

5) A heat map will appear of passengers who share similar profile details

 

6) Select the passenger (s) you wish to sit beside

 

...and that's it!

 

Please read ZDNet's article, KLM Meet & Seat: use Facebook, LinkedIn to pick seat mates for more details re  KLM's new Meet & Seat service.

 

(I'd like to thank KLM Royal Dutch Airlines for the use of their Meet & Seat YouTube video above).

 

 

Gillian

 

Sources Include

Article KLM Meet & Seat: use Facebook, LinkedIn to pick seat mates, Emil Protalinski, ZDNet:News & Blogs:Friending Facebook, February 5,2012

IPO Watch: Facebook IPO Update

Mention 2009 LeStudio1.com - Facebook / Mark Zuckerberg
Originally uploaded by LeStudio1.com

This is a follow-up to our previous post re the Facebook IPO.

 

Ok folks, so the Facebook IPO will go ahead...

 

...In fact, the initial filing, to get the proverbial IPO ball a rollin' started yesterday.

 

But the caveat is that instead of the rumored US $10 billion, the IPO will actually go for US $5 billion.

 

...what this means is that Facebook is hoping to raise US $5 billion dollars when its shares are first sold on the major US stock exchanges -namely NASDAQ and the New York Stock Exchange in May 2012.

 

So the lead underwriters - Morgan Stanley (sorry Goldman Sachs :)), did a pre-IPO filing, aka a S-1 filing yesterday, where they submitted Facebook's corporate information and financials to the US securities regulators - the Securities and Exchange Commission.

 

Whose main responsibilities are:

 

1. Protecting the interests of securities investors.




2. Developing and maintaining fair, transparent and efficient securities markets.




3. Ensuring the proper issuance of securities and compliance with securities laws.

 

Now, Facebook's shares on the private markets went for US $35.50, this week, said to indicate the potential IPO price when shares are eventually offered  publicly in May of this year.

 

(However, Facebook has reportedly stated in its IPO paperwork, that its own internal valuation puts their current value at $29.73 per share.

 

A pretty cautious valuation if you ask me).

 

The auction for these private shares ended today, according to leading technology news site, TechCrunch.

 

So, how this works is that as soon as a company is about to file an IPO, things slow down publicly, they aren't allowed to issue new product announcements and they have to stop trading on the private (secondary) markets.

 

However, the underwriters have a lot of work to do from now until May.

 

(JPMorgan Chase & Co., Goldman Sachs Group Inc., Bank of America Corp., Barclays Plc and Allen & Co. are the other underwriters who are helping Morgan Stanley with the IPO).

 

...not to worry, these guys are making tens of millions from the deal, from legal and other fees...not too bad for 5-7 months of work, eh? :)

 

Well, I can tell you that besides the underwriters, the other person with an even bigger grin on his face, right now, is Facebook founder and CEO, 27-year old Mark Zuckerberg and soon he'll be smiling all the way to the bank!..

 

(Mark Zuckerberg is pictured beside the Facebook logo in the inset picture above).

 

His share in Facebook is said to be worth $16 billion - from the 534 million shares he holds (at the current valuation of $29.73 per share)...but in paper money...

 

He only gets cash in hand when he sells a few of his shares...(of course when they burgeon up past $45 on day 1 of trading :)).

 

Which you can bet he will!

 

Will keep you posted re this and other updates re Facebook.:)

 

Gillian

 

Sources Include

1. Article,"Zuckerberg's Facebook stake is worth at least $16 billion", by David Goldman, CNNMoney.com, via Yahoo Finance, February 3,2012

 

2. Article, "Facebook Role May Win Morgan Stanley IPO Lead for Third Year", by Serena Saitto, Jeffrey McCracken, Carol Hymowitz and Michael Moore in New York and Brian Womack in San Francisco. Editors: Elizabeth Wollman, Jennifer Sondag Bloomberg Businessweek, February 2,2012

 

3. Article, "Facebook IPO: $5 Billion Filing to Sell Stock in May", ABC News Technology, by Ned Potter, ABC News: Technology,February 1,2012

 

 

4. Article, "Facebook to Celebrate 8th Birthday on Heels of IPO Announcement"by Samantha Murphy, Mashable, January 31,2012

 

5. Article, "Pre-IPO Filing, Facebook Trading Privately At $84 Billion Valuation", by Eric Schonfeld, TechChrunch.com, January 30,2012

 

6. Article, "Facebook IPO: Everything You Need to Know [VIDEO]", Zoe Fox, Mashable, January 31,2012

 

7. Article,"Brokerage Functions: Underwriting And Agency Roles", by Jason Van Bergen, Investopedia.com, November 6,2010

IPO Watch: Facebook IPO Imminent?

Mention 2009 LeStudio1.com - Facebook / Mark Zuckerberg
Originally uploaded by LeStudio1.com

Leading technology news and analysis site, TechSpot, is reporting that a Facebook IPO is imminent.

 

According to TechSpot article, "Facebook's long rumored IPO is imminent", we could know as early as this week, if Facebook will go public.

 

Two (2) big-wig IPO underwriters said to involved in the deal are Goldman Sachs and Morgan Stanley.

 

Facebook's Initial Public Offering is supposed to fetch 10 billion for the social media giant.

 

Which would put Facebook's valuation between $75-100 billion, according to the above article. (This is based on previous injections of capital into the social media giant and the value Facebook would fetch, if sold).

 

So, should we hold our breaths, folks?

 

After all, this isn't the first time we've heard of Facebook IPO rumors.

 

I say, let's give it a week and see. :)

 

Gillian

 

Sources Include

Article, "Facebook's long rumored IPO is imminent", by Julio Franco, TechSpot.com, January 30,2012

Re: Zuckerberg's Surprise That People Surprised That He's on Google+

Seems like the media will find almost anything to make news these days. :)

 

The latest from TechCrunch (a premier technology news and analysis site): "Zuckerberg Surprised That People Are Surprised He’s On Google+":

 

Now why should Mark Zuckerberg (Facebook owner), be surprised that people are surprised that he's on the most-touted replacement to Facebook, ever? 

 

Knowing the marketing and technical genius of these Google guys, if I were Mark Zuckerberg, I'd be concerned too!

 

And sure he's milking it for all the free PR he can get...why shouldn't he want to ride on Google's surf, created over the last few days since the release of Google+? :)

 

[The Google+ guys have really pulled out all the stops and have gotten the innovators and early adopters on board: celebrities, other influential people on Google+ who are not only creating waves cause they're on Google+, but inviting their whole circle of friends in on the Google+ act!

 

Innovators and early adopters are a marketer's dream, as although they only make up 15% of a potential market, their influence is so phenomenal, that they can bring in at least 68% of the market, thus making your product/service a huge success within a short period of time].

 

So the media can continue being bedazzled by Mark Zuckerberg...

 

...Mark knows exactly what he's doing: he's testing Google+'s legs, seeing how far it can be stretched...whilst  finding every flaw and constantly keeping an eye and ear out for any complaints, and other information that he can use to his advantage.

 

You can bet he's also on those infamous user forums that Google seems to prefer versus giving individualized customer service.

 

Google had better be careful, for if Zuckerberg's rise in "The Social Network" is mostly true, he may just pull the rug from underneath you!

 

Oh and Mark, welcome to the Spider's Web, for whilst you're testing and probing Google+, you can bet Google's monitoring your every move...

 

[You really thought you got an invitation to test Google+ because of your good looks? :)]

 

Friends, welcome to intricate world of competitive intelligence on the Internet, where market leaders keep each other sharp and push each other to the limit, in order  to create better services that we, mere users, can just gasp in awe at, while they rake in the ad revenue!

 

Long live the Internet!

 

(I'd like to thank jdlasica for the use of her Flickr inset photo of Mark Zuckerberg, Facebook's founder).

 

Gillian

 

Sources Include

 

1) Article,"Mark Zuckerberg Is The Most Followed User On Google+", by Alexia Tsotsis, TechCrunch, July 4,2011

 

2) S-Shaped Technology Diffusion Curve, named "File:Diffusionofideas.PNG", via Wikipedia.org accessed July 4,2011

 

3) Article, "Early Adopters of Technological Innovations" (which describes the different categories of technology adopters), via ZonaLatina.com, accessed July 4,2011

 

 4) Article, "Competitive Intelligence", via Wikipedia.org,accessed July 4,2011

 

5) Article,"Google+ will gobble up both Facebook and Twitter",via the International Business Times, July 3, 2011

 

6) Article, "Zuckerberg Surprised That People Are Surprised He’s On Google+", by Alexia Tsotsis, TechCrunch, July 3,2011 

 

7) Blog Post,"Introducing the Google+ project: Real-life sharing, rethought for the web", via The Official Google Blog, June 28,2011