Anyone who feels Facebook (NASDAQ:FB) could have prevented the firestorm it’s faced over the past two years as a result of the Cambridge Analytica data scandal is fooling themselves. That said, FB stock rightfully got hammered after the company took its eye off the privacy ball.
Perhaps Mark Zuckerberg and Sheryl Sandberg could have reacted differently, but when someone’s house is on fire do you question how they got out?
Growth companies, at least the ones growing as quickly as FB, don’t have a lot of time to examine their decisions. Business moves too quickly for that. All you can do is hope you’ve covered all the bases and self-correct when things fall through the cracks, as they did in 2016.
Today, as Facebook celebrates 15 years as a social-media phenomenon, it’s easy for naysayers to question the company’s leadership. But that doesn’t make the skeptics right.
Game of Thrones Culture
Former Facebook security boss Alex Stamos believes the corporate culture at the world’s leading social- media platform makes it very hard for executives to admit they’re wrong.
“The truth is there is a bit of a Game of Thrones culture — among the executives,” Stamos told CNN’s Laurie Segall recently. “One of the problems about having a really tight-knit set of people making all these decisions … if you keep the — the same people in the same places, it’s just very difficult to admit you were wrong, right?”
While Stamos is said to be respected in Silicon Valley, is it a good idea to blindside the company’s COO (Sandberg) at a company board meeting? If Stamos didn’t appreciate the Game of Thrones culture, he ought to have approached the board meeting a bit differently.
You do not win friends by stabbing them in the back.
Of course, I’ve never worked at FB or been anywhere near its inner circle for that matter, so I don’t know if Stamos was the one stabbed in the back. All I know is that Sandberg suffered through the death of her husband with an incredible amount of grace; it’s unlikely that she became a nastier person as a result of that experience.
Zuckerberg Is the True Culprit
Stamos lays the blame for what happened with Zuckerberg.
“In the end, the real root responsibility for why these things happened was not in Sheryl’s control,” he told CNN. “Facebook wasn’t measuring the bigger impact and thinking about the ways people could twist it to be misused. And in the end, that is Mark’s responsibility.”
Wouldn’t it be equally valid to assert that the head of security is responsible for understanding and assessing the way people could misuse FB? It would seem that a company of Facebook’s size wouldn’t run efficiently without a considerable amount of delegation.
So, the idea of separating the CEO and Chairman’s roles to rein in Zuckerberg’s power (50% of outside shareholders voted to do so in 2017) seems incredibly naive. I don’t care who the new Chairman would be; he or she would not have been able to prevent the Cambridge Analytica scandal.
You either believe one of two things.
Zuckerberg isn’t telling the truth about the events that led to the scandal and was fully aware of the risks FB was taking, or he was caught incredibly off guard by the entire affair. Either way, Zuckerberg and Sandberg are the ones who got FB into the mess it’s in. They should be the ones to get it out.
The Bottom Line on FB Stock
Good leadership faces adversity and fights through it.
InvestorPlace contributor Luke Lango recently recommended FB stock, suggesting that 2019 is already proving to be a bounce-back year for FB and Facebook stock.
“Calendar 2019 is off to a very different start. FB stock is up 30% year-to-date already, as a huge double-beat fourth-quarter earnings report eased slowing growth and compressing margin concerns,” Lango wrote in a column published on Feb. 8. “The takeaway is that Facebook didn’t suffer any lasting damage from 2018.”
I couldn’t agree more.
Changing Facebook’s leadership at the top is not going to help turn the corner. Only hard work and increased profits will do the trick. I expect Zuckerberg and Sandberg will rise to the challenge.
FB stock is a buy.
As of this writing Will Ashworth did not hold a position in any of the aforementioned securities.