When you invest in a company (public or private), you’re betting on the CEO and management team, not a product or service. A CEO can torpedo or lift a company’s prospects overnight.
- Microsoft under former CEO Steve Ballmer and current CEO Satya Nadella underscores the importance of the CEO. Ballmer was a Marketing exec that was famous for having sharp elbows. Nadella is an engineer that favors a unified design language, a focus on AI/ML and the remote server/cloud business and believes in cooperating with competitors when it makes sense to do so.
- Steve Jobs vs. Tim Cook (Apple) is another of my favorite CEO comparisons.
- Intel did itself a favor by replacing its former CEO (a CFO by experience), with a technical exec.
- Mark Zuckerberg is a new, ready-made example as to why the CEO and management team matters. Zuckerberg is the classic headstrong entrepreneur. That’s fine, however, the senior execs that would have challenged Zuckerberg in the past are no longer with META. Investors are stuck with a stubborn founder CEO who is hell bent on the shiny new object (the metaverse), at the expense of the core business – which has been left for dead.
- Zuckerberg is META’s largest shareholder and there is nobody at META to save him from himself. His supervoting shares make him essentially untouchable (SNAP has similar supervoting share structure for its founder and CEO Evan Spiegel which we wrote about in 2019).
- The first sign of trouble was when Zuckerberg focused on consolidating FB, Instagram and WhatsApp several years ago. Around this time Instagram’s co-founders left the company (which we wrote about). For Kevin Systrom to have walked was a huge loss and Instagram was doomed from that point forward as Zuckerberg flooded the platform with Ads.
- When Apple bloodied Facebook with its changes to iOS, Zuckerberg’s response was to leave the core business for dead and to focus the vast majority of capital and resources on his pet project – the metaverse. At the first sign of trouble Zuckerberg folded. He abandoned ship.