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The Power to Decide
Folks love to talk about strategy when it’s sexy, full of big plans and grand ambitions. But they’re often uninterested when it’s boring, the stuff of org charts and marching orders. But we find the little things, the “fine print,” endlessly fascinating. After all, that’s where the devil is. Understanding the details, and being able to leverage them, are the hallmarks of smart tacticians and megalomaniacs alike, and they’re usually at the heart of big shake ups.
Take, for instance, the Facebook advertiser boycott that continues to attract new firms. On the surface, it’s a story about a public reckoning, a political moment, and speaking truth to power. When you get down to it, though, it’s a case of a company getting exactly what they planned for.
Prior to going public, Facebook established a dual-class stock structure. Boy wonder Mark Zuckerberg wanted control, and for good reason: he had spent so much of Facebook’s early years defending his position against co-founders and outside interlopers. So it came as little surprise when Facebook introduced the Class B shares. As recently as 2016 the company was spewing the wisdom of their governance model:
This is not a traditional governance model, but Facebook was not built to be a traditional company. The board believes that a founder-led approach has been and continues to be in the best interests of Facebook, its stockholders, and the community.
That last sentence is a particularly hilarious piece of rhetoric, as the board of a founder-led company has, by definition, no say so in the matter. And that’s sort of been the problem over the past four years as Facebook. The Cambridge Analytica fallout and fears around antitrust action have made investors nervous about Zuckerburg’s iron grip on the company: in 2019, 83% of outside shareholders voted to eliminate the dual-class stock structure. Unsurprisingly, the motion failed.
This is actually the only phrase Facebook’s Board of Directors is allowed to say at their meetings.
If no one inside Facebook has any power to disagree with Zuckerberg, than it stands to reason that the only viable challenge to his omniscience would have to come from the outside. Public backlash is the only thing that can trump the voting power of those Class B shares. And big companies like the North Face and Pepsi are joining the movement of advertisers pulling their ad spends in response to Facebook’s handling of hate speech. Most of the companies frame their decisions as a “pause,” and it’s worth noting that analysts say the boycott won’t hurt Facebook’s revenues. But it’s not about hurting the social network’s bottom line. It’s aimed at the firm’s decision-making apparatus, which at present is one individual who is on record saying he doesn’t feel good about the deciding on the issue at hand.
Public backlash was the inevitable terminus of a “Founder-led approach” for a company of this size. Facebook won’t have any problem weathering an advertiser boycott, but with bigger storm clouds on the horizon, one hopes that they get their proverbial affairs in order.
Word on the Street
Bayer announced it will pay close to $11 billion to settle RoundUp lawsuits, a legal battle the German firm bought into when it acquired Monsanto for $63 billion. Their Monsanto merger is quickly becoming the worst in history: it’s dragged down the stock price, upset investors and led to calls for the CEO’s ouster, but at least it exposed Bayer to billions in litigation. What’s not to like?
Executives at eBay were caught stalking and intimidating critics, a truly bizarre story that speaks volumes about Silicon Valley’s nefarious win-at-all-costs culture
Thanks to COVID-19, brands are axing non-essential product varieties and extra options that slow down supply chains and service delivery
Pepsi drops Aunt Jemima and Mars Inc. will change Uncle Ben, all while Unilever is still hawking skin lightening cream, a product that directly contributes to colorism more than pancake batter or rice ever could
Masayoshi Son and Jack Ma broke up. They even issued the “everything’s fine” statement to prove it: “It’s not like we had a fight… This was perfectly amicable.”
The IMF warned that a global economic recovery was unlikely in 2021
In what sounds like a very inside insult for the Forex crowd, Bank of America analysts claim that the British Pound should be regarded as an emerging market currency “due to Brexit and liquidity conditions.” Ouch.
$FWB:WDI - Wirecard AG
The storm clouds of scandal had been brewing over German payments group Wirecard AG since 2018, when the first of many allegations of fraud in its foreign offices were published. But the flood walls were breached last week when auditors reported €1.9B missing. Wirecard’s longtime CEO is now in jail, a fraud investigation is underway, and the firm is filing for insolvency.
The episode is being called “Germany’s Enron,” and boy, does this thing have everything:
a firm that conveniently avoided IPO scrutiny
an aggressive acquisition strategy to grow the business
a track record of blaming legitimate questions on a cabal of short sellers
a prominent regulator entirely abdicating its duty
vocal critics who became the targets of international espionage
and of course, Softbank money
The headlines, too, have been a revelation for their stark, “the emperor has no clothes” frankness: “Wirecard says missing €1.9b likely does not exist;” “EY failed to check Wirecard bank statements for 3 years.” The Financial Times, which has been intimately involved in uncovering this story, has a must-read timeline here.
They Said It Best
“In a strange way, this sort of became an anti-statement against what we’d all seen on tech Twitter. We’re a diverse, ragtag group of young technologists tired of the status quo tech industry, and thought that we could make the industry think a bit more about its actions. Despite calls-to-action like that “It’s Time to Build” essay we’ve all read, most of the industry (from product teams to VC) still stays obsessed with exclusive social apps that regularly ignore — or even silence — real needs faced by marginalized people all over the world, and exclude these folks from the building process. As an industry, we need to do better.”
- The team behind It Is What It Is, aka 👁👄👁
The group caused a Tech Twitter mystery earlier this week when they began including the emojis in their handles. Everyone thought they were prepping a new social product for launch. Instead, they turned out to be a quasi collective, raising money for social justice causes and amplifying their talents. Tech desperately needs newer, more diverse voices, and it brings a bit of hope that those folks are finding one another in nascent ways.
That’s all for now.
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