As Facebook prepares to do an Initial Public Offering, founder and CEO Mark Zuckerberg faces some difficult decisions as the company moves from private venture to listed company with thousands of stockholders. Harvard Business School associate professor Noam Wasserman offers "the Zuck" some advice on how to manage this monumental change.
With your company about to go public, Mark, I offer both kudos and words of caution. Kudos come your way for becoming this generation's iconic founder – one of the few who will be at the top of everyone's list of the rare and exceptional "Rich and King" founders who led their startups to great heights and reaped the benefits. During your journey, you have made key early decisions – often difficult ones at the time – that turned out to be wildly successful. Your disciplined approach to broadening Facebook's user segments and product focus, for example, has impressively promoted growth while avoiding its potential problems. Your recoveries from major missteps, such as the failure of Beacon, an information collection tool for advertisers that fanned a furor over privacy, have also been impressive, though it took those mistakes to force you to reconsider your priorities.
But as you become the CEO of a public company, a word of caution: Proactively anticipating those kinds of missteps and then avoiding them will become even more critical for you. It will be a lot more costly to react to them after they have happened; your instincts and gut-level decisions will now need more checks and balances. Focusing more on those potential pitfalls might help you avoid some of them, but even more important is revisiting the people around you who should be pushing back on your instincts and intuition.
One important realm you have not yet systematically revamped is your board of directors, which still looks more like a private-company's board rather than one guiding a $100 billion public company. Whether it is finding an experienced public-company leader with a strong personality to take over leadership of the board or replacing long-time board members with whom you feel comfortable since they dare not disagree, you may have to make further difficult decisions about how to make the board more than a rubber stamp.
This is essential for any founder-CEO, but even more so for one (like you) who controls the voting power in the company. Phil Knight, the founder of Nike, also controlled his board after Nike's IPO, and then ended up missing a competitive threat from Reebok because his management team and board had failed to counter his assumption that Nike could just keep doing what it had been doing for so long. To continue being this generation's iconic founder, Mark, I hope you will find ways to avoid the bumps along the road to becoming Rich and King.
Associate Professor Noam Wasserman is an expert in entrepreneurship at Harvard Business School and author of The Founder's Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup, to be published in March by Princeton University Press..