Seven lessons from Zuckerberg the CEO
Friday, May 18, 2012/
Since the release of the film The Social Network, it has become difficult to envision Mark Zuckerberg as anything other than an arrogant, nerdy and immature teenager. The one who thought it’d be a good idea to write a program letting students compare the relative attractiveness of their female colleagues, or who acted less than openly with the Winklevoss twins who asked him to build a social network for them. Last week, Zuckerberg turned up to investor roadshows in a hoodie, which would have cemented the opinion to some that he remains, at heart, just another bombastic whiz kid.
But this view isn’t entirely fair. A lot about Zuckerberg has changed and developed in the eight years since he founded the social network.
With the Facebook IPO only hours away, it’s worth taking a moment to reflect on how far Zuckerberg has come, and what lessons leaders can take away from his management style.
1. Zuckerberg is willing to acknowledge and fix his flaws
The years before 2005 were unforgiving ones for those who worked at Facebook, according to an impressive piece in last month’s New York Times magazine.
As Zuckerberg toured the world soliciting venture capital, he disappeared, leaving his employees in the dark about his plans and goings on. Morale at Facebook plummeted.
One early morning (2.30am), a senior executive finally managed to pin him down and confront him. She told him if he wanted to stick around, he needed “CEO lessons”.
He took his team’s concerns on board, and got a panel of respected CEOs to mentor him. Over the next few months his communication skills improved. He held more one-on-one meetings and explained his priorities more clearly.
2. Zuckerberg acts fast when it is needed
Last month Zuckerberg shocked the world by quickly hammering out a deal to buy photo-sharing and editing app Instagram. He didn’t consult his board, who found out about it only hours before the general public.
While this may concern would-be investors, it was a strategic move. He judged Instagram’s CEO Kevin Systrom would baulk at being approached by lawyers, so he invited him to his house for a chat. Zuckerberg successfully halved Instagram’s asking price, and closed the deal in less than three days.
Despite heading one of the world’s largest brands, Zuckerberg can still move very quickly when circumstances call for it.
3. Zuckerberg isn’t far removed from his staff
Zuckerberg still tries to do at least a little coding every day. This is one of many things he does to show he respects the work of Facebook’s brains trust, its engineers. He pays them well too, better than is common in Silicon Valley. And as a result, he gets the best. Former Facebook alumni have gone on to prestigious achievements, such as YouTube founder Steve Chen and Path founder David Morin.
4. Zuckerberg knows when to wait
The offers to buy Facebook off Zuckerberg have been numerous. When it was only four months old, an unnamed investor offered Zuckerberg $10 million. Later that same year, Google came knocking. In March 2005, Viacom offered $75 million. January 2006 saw News Corp have a go. In the middle of 2006, Yahoo offered Facebook $1 billion. A year later, Microsoft offered $15 billion. The would-be owners eventually got the idea – Zuckerberg wasn’t interested.
If all goes according to plan, he’ll make far more for himself and his investors through the IPO than he would have by taking up any of the offers.
5. Zuckerberg knows how to fire people
But of course, treating your staff well doesn’t mean holding onto them when they’re not up to scratch or no longer needed in the company. There are two ways to build a great organisation – be adept at hiring, or at firing. A former Facebook employee told the New York Times Zuckerberg excels at the latter.
“We made some hires that weren’t the right ones,” the former employee is reported at saying. “And we were pretty good at correcting that quickly. [Zuckerberg] deserves the credit for identifying and following through with that.”
For example, the company eventually parted with the high-profile Sean Parker, the Napstar founder who helped create Facebook’s centralised voting share structure and helped tweak the website’s name, to make way for Owen van Batta, an experienced executive. And when he had done well for Facebook, he was, in turn, let go.
6. Zuckerberg headhunts the best
It’s a little-known fact that Facebook isn’t just about Zuckerberg. It has a fantastic management team, boosted not insignificantly by Facebook’s COO and second in command, Sheryl Sandberg. The partnership between her and Zuckerberg has been described by other executives as “a blessing from the gods”.
Sandberg is a highly celebrated executive, having built and run Google’s online-sales organisation. She met Zuckerberg at a Christmas party in 2007. He would spend more than 50 hours over the next few months trying to lure her over to Facebook. He finally succeeded, and she’s been a spectacularly fruitful hire. She increased Facebook’s annual revenues to $150 million to nearly $4 billion, a no doubt significant fact in its high share price today.
7. Zuckerberg walks the talk
Many have doubted the $38 price for Facebook shares, but Zuckerberg has put his money where his mouth is. From January 1, 2013, the cash component of Zuckerberg’s salary will be US$1. With his vast shareholdings, his compensation will be virtually entirely tied Facebook’s share price.