Mark Zuckerberg Signed the Wrong Document • Hacker News Board

Re: Mark Zuckerberg Signed the Wrong Document

#31

Post by vezzy-fnord » Fri, Oct 30, 2015, 3:53 AM UTC

danieltillett wrote: post #30

vezzy-fnord wrote: post #24

Earlier quoted context omitted.

real name policy and only letting in elite uni students Are we really going to describe these things as "innovations"?

Well if you are the first to introduce something then I think it is fair to say you are being innovative. They were both critically important to the success of Facebook so I think we have to give credit where credit is due.

A real name policy cannot possibly be an innovation, or if it were it predates all modern technology. FWIW, Usenet culture was overwhelmingly based on people communicating under their real names. Ergo, not the first to do so. The second - initially limiting your userbase to an exclusive demographic, is but a restriction or marketing maneuver at best, and again hardly the first to do such a thing.

You have to be intensely desperate to list these two trivialities as innovations.

Re: Mark Zuckerberg Signed the Wrong Document

#32

Post by sawthat » Fri, Oct 30, 2015, 3:54 AM UTC

sportanova wrote: post #27

jmcatani wrote: post #19

Earlier quoted context omitted.

I really like your point on the Unicorns "having their cake and eating it too" in regards to public funding. I am very worried that the technology industry is creating this new capital market that reserves access for the super rich and is completely free from goverment oversight. Are there any points in history that had similar market structure? And if so, how did those markets respond to successes and failures?

It's turned that way because of onerous regulations (Sarbanes-Oxley). We made it way too painful to go public, and now we can't benefit from most of the tech growth

https://en.wikipedia.org/wiki/Dot-com_bubble

Re: Mark Zuckerberg Signed the Wrong Document

#33

Post by yeukhon » Fri, Oct 30, 2015, 3:58 AM UTC

> But the law sees him as just another shareholder, whose large shareholdings and job as CEO are coincidental, whose control of the company can be measured purely by numbers and without reference to his personal relationships and history.

Not being totally ignorant about this, but the strawman example would be "just because you are the President of the United States of America doesn't make you invincible; you are still a citizen in front of the law, you may get away with some immediate legal charges, but you still have to face the Congress for any misconduct."

However, I argue, while the law is supposedly being above all, the framework which gives the President the power to govern the Executive branch is exactly what makes him nearly invincible until someone yelling at him in the newspaper.

Mark can be a total prick, fire someone he doesn't like, make up evidences, as long as no one talks and proves that he is forging evidence. This sounds like a Hollywood plot? You bet it is, because he totally can do that as the Emperor of Facebook. He can lead the product to toilet. He can say he likes to own the entire floor alone and have everyone work from a cubicle instead of open-floor plan. Fine. You can sue him, challenge him, but he owns the company. Sounds cynical, you bet. The laws can take him away from the company, but it requires humans to actually make the laws or changes to replace him.

Re: Mark Zuckerberg Signed the Wrong Document

#34

Post by adventured » Fri, Oct 30, 2015, 4:05 AM UTC

> These startups are extensions of their founders in a way that public companies are not, and that public markets are not comfortable with.

Yeah, the public markets are so uncomfortable with it, they've given Google a $512 billion market cap, and Facebook a $295 billion market cap.

Re: Mark Zuckerberg Signed the Wrong Document

#35

Post by obrero » Fri, Oct 30, 2015, 4:05 AM UTC

chollida1 wrote: post #5

I feel kind of bad for Mark here. There is an entire cottage industry of firms that will do nothing but look for ways to use these types of procedural errors to extract money from companies. There are law firms whose sole form of income is to have hedge funds send them their daily trades so they can cross reference them against companies who had to restate earnings, the implication being that if hedge fund A owned so…

> companies who want the benefits of being public - access to capital as they need it

While traditionally this is the purpose of IPO's and secondary stock issuances, if you look at corporate financing in 2015, this has become such a miniscule percentage of how capital is raised, even for public companies, that it is almost irrelevant. So the standard reason given for a stock issuance, raising money, is really no longer the reason for stock issuance.

Re: Mark Zuckerberg Signed the Wrong Document

#36

Post by adventured » Fri, Oct 30, 2015, 4:07 AM UTC

danieltillett wrote: post #4

EwanG wrote: post #2

OK, but who was the legal eagle or director who gave him the wrong form? I would expect that somebody besides Zuckerberg had a job to get it right, and probably should be on the hook for screwing up one way or another.

Yes.I would imagine Z. just signs whatever the lawyers produce for him to sign after the meeting. I wonder what the outcome will be now? Doesn’t this ruling just give the lawyers the right to sue and they now have to prove the compensation was excessive?

The excessive compensation argument has already been dropped. There's no scenario under which a few hundred thousand dollars in compensation is going to end up being considered excessive for being a director of a $300 billion corporation. It simply will never happen.

"Espinoza had sued alleging breach of fiduciary duties, waste of corporate assets and unjust enrichment. Bouchard tossed Espinoza’s waste claim, saying he couldn’t prove the directors’ compensation was unjustified. He allowed the other two claims to proceed."

http://www.bloomberg.com/news/articles/2015-10-28/facebook-a...

Re: Mark Zuckerberg Signed the Wrong Document

#37

Post by forrestthewoods » Fri, Oct 30, 2015, 4:10 AM UTC

choppaface wrote: post #26

An interesting issue here is if the 2-voting-class design is sustainable for new companies. The bottom of the article notes the issue with the legal docs "took place in 2013." I wish the author would have spent more time grappling with 2-class voting (which TBH the major focus of the article) rather than Zuck's clerical error. The problem with 2-class voting is that it dilutes the inherent value of non-voting shares…

What makes you say it's not reflected in price?

Re: Mark Zuckerberg Signed the Wrong Document

#38

Post by danieltillett » Fri, Oct 30, 2015, 4:13 AM UTC

vezzy-fnord wrote: post #31

danieltillett wrote: post #30

Earlier quoted context omitted.

Well if you are the first to introduce something then I think it is fair to say you are being innovative. They were both critically important to the success of Facebook so I think we have to give credit where credit is due.

A real name policy cannot possibly be an innovation, or if it were it predates all modern technology. FWIW, Usenet culture was overwhelmingly based on people communicating under their real names. Ergo, not the first to do so. The second - initially limiting your userbase to an exclusive demographic, is but a restriction or marketing maneuver at best, and again hardly the first to do such a thing. You have to be inten…

The application of an old idea to a new domain is what most innovation is. The real name policy had an important effect on the early Facebook in discouraging trolling. This made it a far more friendly environment for most users. I am a strong believer in the importance of using real names online - after all I am using my real name here even though I do not have to.

I personally think that limiting the early user base to elite universities was the more important innovation for Facebook’s success. It allowed them to control their growth while creating an “aspirational” platform that could be scaled out later. I am surprised that more companies haven’t tried the same approach - it would be hard to do now, but the value in targeting this community is still there.

Re: Mark Zuckerberg Signed the Wrong Document

#39

Post by pbh101 » Fri, Oct 30, 2015, 4:24 AM UTC

sopooneo wrote: post #28

If a share barely gives you voting rights, and the company does not, and does in the foreseeable future plan to, issue dividends, then what is the inherent value of the stock? Is it just my portion of the proceeds in case of a firesale?

The right to sell it when the price rises. You own a part of the company which you acquired at a price that you presumably considered below fair value. Even though there is no premium for voting rights nor expected dividends, but you still own a fraction of the company.

Re: Mark Zuckerberg Signed the Wrong Document

#40

Post by glesica » Fri, Oct 30, 2015, 4:25 AM UTC

forrestthewoods wrote: post #37

choppaface wrote: post #26

An interesting issue here is if the 2-voting-class design is sustainable for new companies. The bottom of the article notes the issue with the legal docs "took place in 2013." I wish the author would have spent more time grappling with 2-class voting (which TBH the major focus of the article) rather than Zuck's clerical error. The problem with 2-class voting is that it dilutes the inherent value of non-voting shares…

What makes you say it's not reflected in price?

There are a ton of reasons for the price to be "wrong" if a particular practice is unusual or new. Markets only function as well as the people involved in them. If the people are all acting (unwittingly) on incomplete, incorrect, or insufficient information, then one would expect there to be risks that haven't been "priced in".