For younger readers How to Succeed in Business Without Really Trying was a 1961 Broadway hit not a Mark Zuckerberg biography. Every once in awhile it's time for the media, politicians, and Wall Street to lock arms and goose step over the edge. We saw that happen with horrendous results in 2008 and it's probably a sound rule to run the other way when this begins to happen. The latest lapse into giddy, pie in the sky optimism, one hundred percent guaranteed win, was the FaceBook IPO. The media went wild with enthusiasm because they are enthusiastic about Mark Zuckerberg, the last good one per center. The wunderkind from Harvard who shares fashion tastes with the late Trayvon Martin, and sometimes the stage with Barack Obama was about to let the great unwashed masses in on his tremendous success.
Politicians tried with some success to bask in Zuckerberg's glow and as we saw it was a win-win proposition for them. Had the IPO been a mad success they could stood in the afterglow and prattled inanities about capitalism, free enterprise and how with fortitude one can succeed in business in spite of the impediments they have placed the path. As it turned out the IPO was a bust and they began a witch hunt to track down the miscreants who had engineered this inglorious denouement. Notice that the underwriter, Morgan Stanley, not FaceBook, got the blame for the failure. The investors who bought the IPO have assumed a victim status similar to those who ran up too much student or credit card debt, or bought their dream home with no money down and an adjustable rate mortgage.
Wall Street hyped the IPO because that's what Wall Street does. Brokerage houses make just as much money on losing trades as they do on out-of-the park grand slams but there is the other side of the street to consider. The segment of Wall Street that invests its customers money such a mutual funds and their own money such as hedge funds looked askance at the CEO in a hoodie who kept a controlling interest in FaceBook and announced for the whole world to hear if not heed that his social concerns would take precedent over profit. To hell you say? They had no intention of buying into some latter day hippie's social media that may be run like a half-assed not for profit endeavor. In the end the FaceBook IPO failed because investors don't trust Zuckerberg.
Compare Zuckerberg to Bill Gates or Steve Jobs and you will see my point. It's like comparing the Beatles to the one-hit-wonder, the Kingsmen. Both Gates and Jobs could write code but both were uncommonly great businessmen. They learned their businesses inside and out. They understood production schedules, public relations, inventory control, personnel, and they probably checked the market value of their companies six times a day. Gates was still writing code when Windows 95 hit the market. Did I set the bar too high for Zuckerberg? Okay compare him to AOL founder Steve Case. The company Case went to work for sold computer games that could be downloaded over a phone modem. It went out of business shortly after he went to work for them. The dial-up market was dominated by Compuserve and Prodigy. Prodigy was a joint venture between IBM and Sears. No one told Steve Case he couldn't compete with IBM and Sears and he beat their asses flat.
FaceBook has no assurances that AOL didn't have. When Zuckerberg has been fired and rehired by the company he founded as was Jobs or survived an anti-trust suit as did Gates then maybe he will have earned my trust but until he learns to separate business from politics and show business I'll put my money in oil stocks.