The social networking service behemoth Facebook has grown from a forum purely meant for connections to an all-encompassing platform that has, as of late, found itself embroiled in the midst of many serious controversies.
How it began
Though it hasn’t always been like this. In the beginning, Facebook had an excellent PR image. Famously known to have been built in Harvard dorm rooms by Mark Zuckerberg and his roommates: Eduardo Saverin, Andrew McCollum, Dustin Moskovitz, and Chris Hughes, the product was launched on February 4, 2004.
Initially positioned as a very exclusive forum, Facebook was open only for Harvard students. It then expanded to other Ivy League colleges, further opening up to other high schools after finally letting the floodgates open, unveiling it to the entire public.
Facebook then began to position itself as a mediator facilitating connections between old friends, a forum for new friends and later for businesses and events. As the company steadily grew, so did the public’s reverence for its CEO, Mark Zuckeberg, who had by then not only bravely dropped out of the esteemed-Harvard college without a degree but also became touted for his unique approach that took Silicon Valley by storm. Famously, he attended business meetings in a hoodie, much to the shock of suit-wearing investors and partners.
Through this Facebook had crafted a powerful weapon. Zuckerberg used it to his advantage, fending off lawsuits from the Winklevoss twins who claimed that the idea for Facebook was theirs. Typically this would have been a red-flag for many venture capitalists and likely the general public, yet Facebook was able to sweep the issue under a rug.
They weren’t just alone in their battles, Zuckerberg and co. were able to find partners, many of whom, to this day, are still related to Facebook in some way. Facebook received an angel investment of $200,000 from Peter Thiel and Greylock Partner-backed Reid Hoffman. It later went on to take 10 series of funding worth a total of $2.3 Bn after finally going public. In that journey, it grew from a simple networking app to a force to be reckoned with in the industry, breaking many records in incredible fashion.
Some of these accolades include:
- Becoming the most used social networking service (based on monthly active users), just 2 years, 3 months after its roll out to the general public.
- Amassing over 500 million users under 4 years.
- Touted to have created a shift towards heavier mobile usage for tasks otherwise thought to be accomplished only on PCs. This may not seem like much, but, now everything we expect from a PC is expected from a phone. Less than a decade ago, this was deemed impossible.
- Having the largest IPO valuation of $104 Bn till date.
What it is now
Now, just shy of two decades later, Facebook is an established leviathan. Headquartered at the cleverly-named 1 Hacker Way in Menlo Park California, Facebook boasts a revenue of $70.7 Bn (estimated for 2019). However, the company has seen a considerable slowdown in its revenue growth for the past few years primarily because their advertising revenue has fallen. According to an investopedia article, advertising makes almost 99% of Facebook’s revenue but with many other platforms like Google, YouTube, Apple and Amazon popping up, it is hard for Facebook to attract the marketers who so desperately seek the platform with the most eyes. As a result user growth has also seen a tremendous slowdown, also due a significant increase in public distrust for the platform. This has created a vicious cycle which is ultimately leading to dwindling revenue.
However Facebook has been crafty. Previously investing and acquiring other platforms in the social connection sphere like Instagram and Whatsapp, they are still reaping the rewards of holding a strong leash over this sector. They have been proactive too. Finding new avenues to establish their dominance. Over the years, Facebook has aggressively pushed their range of VR products by Oculus promising the idea of a futuristic, idyllic world where cyber-bullying and the worries of the real world are no more. While how they manage to achieve this is a question, it is undeniable that Facebook is now more than just a social media website. It is clear that they have overgrown the days when their business model was solely the ‘language of friendship’.
Attempt to foray into AI and cryptocurrency have been made but those have not seen the resounding success that Facebook is used to. A reason for this is that the media is on their backs. Ever since the Cambridge Analytica scandal, the media have been ready to pounce at Facebook. This has sometimes leads to inaccurate and almost harmful portrayal of their work. For example, when headlines broke of an AI bot from Facebook having developed a new language altogether, skeptics were quick to blame Facebook but what they didn’t realize is that these bots were simply making communication more efficient between themselves by deriving a shorthand, not an entirely new language. The claim that the headlines made were dangerous. Due to this fiasco Facebook had to suspend the program so that the public would lower their pitchforks.
Similarly, their cryptocurrency project Libra also received fiery opposition. Fears of its volatility, lack of regulation and general agitation towards blockchain and cryptocurrency caused a general sense of apprehension and scrutiny. France and Germany were quick to prohibit it, claiming that a private corporator dictatating monetary policy impugned on the sovereignty of the nation. These nations which hold strong influence in the EU also promised that all EU nations wouldn’t adopt it. Even in their home ground, US lawmakers were wary and critical of how Libra would be implemented. Many senators threatened the corporations which backed this project to pull out. In the resulting days, the Libra Association crumbled with the departures of fin-tech giant PayPal, financial behemoths like Visa, Mastercard, Stripe and more.
While what is in the books for Facebook’s future seems uncertain, they definitely aren’t going anywhere. It seems very clear that Facebook is ready to pivot from the once beloved, harmless connecting platform that was made in the dorm rooms of Harvard.
- Created the company at his Harvard dorm room and has been at the helm of the company ever since. CEO of the company
- Has controlling shares of the company. Owns 60% of Class-B shares so he has a majority. Thus all other board members are essentially just glorified advisors.
- Was senior executive at Google, then became COO at Facebook. She has deep understanding of Facebook’s (Zuckerberg’s) mission and long-term plans so can support his ideas
- Also has political experience, serving under the Clinton administration.
- She rose to spotlight with her book ‘Lean In’ which made her a popular figure for women’s rights and feminism.
- While she was considered an icon with a resounding PR image post the release of the book, reports of her doing opposition research on Google and George Soros and other instances have tainted her public image.
- Early seed investor who has been in the board for a long time.
- His advice is usually different from the other left-leaning members. For example he heaving advocated not fact-checking political ads, which happened to be a very polarizing issue.
- Due to his conservative political views, he often clashed with Reed Hastings and Erksine Bowles.
- Despite not being well-liked by some of the other board members, he is somewhat considered a mentor to Zuckerberg.
- Prominent VC who has made impressive personal investments like BusinessInsider & Slack and professional one like Airbnb & Lyft.
- In 2016, Zuckerberg wanted to sell his voting shares (ie Class-B) but still maintain majority voting status. To appeal this, he had to present a formal idea to a sub-committee of the board consisting of Susan Desmond Hellen, Erksine Bowles and Andreessen. During the process, Andreessen would text Zuckerberg which ideas worked and which didn’t. Coached him through the process. This was seen as a conflict of interests as he is supposed to be an independent board member (so are the other two).
- Sold a lot of his own shares.
- Both actions are very sketchy but the investments into FB aren’t just his own but also the firm’s. This adds another layer of complexity that becomes harder to navigate.
- Appointed due to her “rare expertise in business management to finance operations to product development”.
- Held prominent positions at PayPal, eBay and Rent.com
- Additionally she served as CFO and head of operations for the Chan Zuckerberg initiative (Zuckerberg’s philanthropy foundation).
- One of the replacements to Reed Hasting & Erksine Bowles both of whom were known to openly challenge Zuckerberg. Her personal relation to Zuckerberg makes people seem sceptical that she will be just as critical as her predecessors were.
- CEO, founder of Dropbox and also good friend of Zuckerberg
- Can provide good oversight on technical aspects.
- Shareholders have multiple times tried to oust Zuckerberg as CEO but the board hasn’t voted for such a deal.
- With shareholders wanting more board members to challenge Zuckerberg it’s surprising that a good friend and mentee is the new addition.
- Assumes that he is taking the position of independent board member but personal relations again seems to make critics apprehensive.
- Has held many prominent positions in many companies like CFO at Estée Lauder and Ralph Lauren. Also holds a board position at Accenture.
- According to a press release from Facebook, she is being added due to “strong and corporate leadership background”. Might be useful as Facebook has, as of late, seen senior leadership leave the company and seen a decline in users for Facebook platform.
- Worked at the US Department of Treasury during the Obama administration so she brings invaluable government oversight that shareholders and the general public think the company is sorely missing.
- Somewhat replacement to Erskine Bowles, in terms of qualifications and experience.
- Deputy Secretary of the US Treasury during the Bush administration as well as distinguished political figure, known for his role as Ambassador to Germany and more.
- Brings his public sector experience to the company which is necessary for the company.
Other prominent ex-members
- Often ferociously clashed with Peter Thiel primarily due to difference in political views.
- Consequently questioned Zuckerberg.
- Famously was vocal against when Facebook was used as a political manipulation tool by the Kremlin. Has notable government experience.
- Was known to pushback against Zuckerberg.
- Representative of Bill (and Melinda) Gates as she was their foundation’s CEO.
- Independent board member.
Why it’s important
The public has made it abundantly clear that their trust for Facebook has disappeared and rightfully so. It is alarming, to say the least, that any skilled engineer could use Facebook as a tool to invade our privacy. This is unconstitutional not only on a human rights level but also on a democratic one. Even the idea that Facebook could be used for political manipulations is a chilling one. Never has a single tool been so powerful in threatening the sanctity of democratic elections. This rocked countries around the world. Many countries have pulled in Facebook executives demanding answers and action yet Facebook has done virtually nothing. A fiasco of this scale has called multiple times for Zuckerberg’s head yet many, skeptics and fans alike, still think that he is the man for the job.
Whether or not that is true, the ossification in the Facebook boardroom must stop. It can no more be the echo chamber for just Zuckerberg’s opinions and actions. The current set of board members doesn’t seem like the typical group of people who will go against and question Zuckerberg, given their personal connections with him. This puts the company in a precarious position as ‘independent’ board members are likely to not voice out their own opinions or those of the other shareholders.
While it may have been okay in its early frat days to hold board meetings with Zuckerberg’s buddies and agree to everything in some basement, Facebook has outgrown that phase, yet is still stuck with that mentality.