I don’t think company success can be rationally and independently attributed to senior executives vs exogenous factors. Its kinds of like attributing outperformance of active mutual funds to the portfolio managers. Maybe, but unless you let Zuck run thousands of companies in a fully competitive market against thousands of competing execs/companies and get massive amounts of data, you’ll never really know. Based on my collected wisdom about the world, I am much more confident that exec performance attribution has way more to do with post hoc narrative building + innate human fear of admitting that many outcomes are pure luck + cultural indoctrination of the Great Man Theory of history.
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For sure there is tons of this as well.
I should add, I dont think that leaders don’t matter. I think some people are great leaders. But I think there is a highly competitive and selective process to get to be a CEO of a large company, so the margins are very thin between leaders at that level.
I dont agree with this. Leaders have more control and impact on the culture and ethics of their company than sales and profit and market valuations.
They are linked no?
The only ways Facebook has even remained relevant of late is through overtly trying to profit off of political anger/disinformation and either buying competition or stealing their ideas. They haven’t been innovative in a long time and that’s why they’re not used by the under 30 crowd.
Facebook was never a “good” product.
I’d argue that early Facebook was good, when it was just a place to share pictures and updates before they opened it to everyone and it gradually got taken over by teens and then boomers. Could be rose-colored glasses as I haven’t used Facebook in the last five years and for several years before that had been gradually using it less and less.
I have no idea how much Zuckerberg is individually responsible for its success but I do know that he’s been plenty happy to have it used as a tool for political strife to keep people engaged.
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That’s probably true, but the far left’s hate of Great Man theory (because we are all the exact same!) doesn’t allow for any doubt on the point, like you express above. The argument isn’t “I don’t think” it’s “it’s not”.
I would say small correlation over the long term, probably a negative correlation over the short term.
Zuck has crushed M&A.
These acquisitions seem obvious in hindsight but he was widely mocked for overpaying when they were announced.
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Yup. Also crushed not being acquired. IIRC, he turned down an insane amount of money from Microsoft to buy FB. I don’t think he was widely mocked, but there was certainly doubt about whether he should have turned it down. Now he and FB are worth orders of magnitude more than that bid, so, in hindsight, it was not even close.
I wonder what will happen with Facebook in the future. As others have pointed out, younger people don’t use it. But I know they use Instagram. So who knows.
Gonna be wild when the current stock market bubble pops. This shit is way worse than the dotcom bubble.
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Penny stock speculation? Pump and dump? Reddit?
Buy gold
The Instagram merger was a super ballsy move. It’s been retconned as some sorry of obvious move, any moron could have made that call.
At the time it was widely seen as massive overpayment (one whole billion dollars!) and was extremely risky.
For the size of the company were talking about, FB has made relatively few acquisitions and none of them have been disasters. Zucc’s biggest weakness may be that he’s too conservative in this area.
So my fundamental problem with this whole argument is that it doesn’t matter and is inherently contradictory.
It doesn’t matter because no matter how hard these CEO’s of major corporations work they are grossly overpaid full stop. No one deserves that much money for any amount of work, it’s enough money to hire someone equally as good fifty times over. And the argument that you need that much money to ‘attract the best talent’ is totally empty because most successful CEO’s have spent their entire careers with the company they are the CEO of. A big part of what makes them successful is understanding exactly how that company, as an institution, works. That isn’t transferrable to another company, and a great many of the most disastrous CEO tenures I can think of off the top of my head were companies poaching talent from companies they aspired to compete with. It never works out because the guy who runs Apple’s retail has no goddamn idea how to turn around JCPenny. He doesn’t know anything about JCPenny.
So what you have is a situation that calls for creating a prize big enough to be worth competing for for internal hires. This means the company really has all the leverage in the salary negotiation since the would be CEO wouldn’t be worth anywhere near as much to anyone else in an efficient market.
But instead they hire consultants to help them figure out what the ‘market’ is for CEO’s so that they can make a ‘competitive’ offer. There’s no market for people qualified to run JCPenny outside of JCPenny and there’s no competition going on at all.
But secondly the argument that CEO’s is stupid. Riverman is right that they mostly do M&A and make the big calls, but those aren’t small matters and it is very clear that very intelligent people get those disastrously wrong all the time. And not in ways that can be dismissed as just being random chance only viewable in hindsight either. There are some really incompetent CEO’s in history. There are also brilliant people who built large companies through large numbers of excellent high risk decisions who were right too often for it to have been anything resembling chance AND it’s extremely safe to say those companies would not exist without that series of decisions. Facebook is one such company.
You can’t on one hand call Zuck the most dangerous destructive human on planet earth while at the same time stripping him of any responsibility for FB’s success. He’s a very intelligent human being who is actively choosing to do evil. He has agency. I’m sure he works a lot. We should tax him and everyone remotely like him economically into the ground ldo.
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The problem with CEO Pay is basically the same problem with pay for College Football Coaches.
The few guys at the top who are actually worth the $$ set the pay scale for everybody else.
Nick Saban is actually worth $10 Million a year to Alabama, but that means that some random pud now makes $4 Million per year to coach Tennessee to their 6th straight 4-8 record. That guy should make like $300k at most!
The few super successful and worth it CEO’s set the comp table for everybody else, and that means you get a shit ton of grossly overpaid CEOs who contribute very little to the material success to their company and their job could be done just as well by any replacement level Executive person.
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Yeah and this is largely unintended consequences of the regulation that C-level salaries must be disclosed. Had the exact opposite effect regulators wanted.
And also a good lesson why this norm we have about not discussing salary in polite company only helps the owner class.
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I dont think this is true for the CEOs of, say, Fortune 500 companies.
Edit - I just checked out the top 10 and I was wrong about those ones, maybe this is the case.
My experience is probably coloring my judgment, about 5% of my work is exec comp but it mostly happens when an exec leaves or we hire a new exec.