L2inc.com video above published Nov 29, 2018--Scott Galloway's digital winners and losers--it's time for Facebook's Board of Directors to stand on their feet.
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Auto-generated transcript:
00:00 A Winner: Microsoft earlier this week00:04 Microsoft dethroned Apple even if just
00:07 for a minute as the most valuable firm
00:10 in the US boasting a market
00:11 capitalization north of 800 billion
00:15 dollars to be fair it's not that
00:16 Microsoft passed Apple but that Apple
00:19 fell below Microsoft shedding a quarter
00:21 of a trillion dollars in value as
00:23 analysts wonder if we've reached peak
00:25 iPhone what explains Microsoft success
00:28 or more specifically their staying power
00:31 two things first
00:32 diversity Microsoft maintains a diverse
00:35 revenue stream from software hardware
00:36 and cloud services meanwhile Alphabet
00:40 and Facebook are mostly ad dependent
00:42 Apple is a hardware firm and Amazon
00:44 relies mostly on product sales to
00:47 recurring revenue successful
00:49 organizations have convinced customers
00:51 to enter into a monogamous relationship
00:53 via recurring revenue streams think
00:57 Netflix Spotify and Amazon run what
01:00 Amazon Prime has done with the consumer
01:02 market Microsoft has done with the
01:04 business market visa vie their office
01:06 offering it's much easier to plan a
01:08 business against recurring revenue and
01:10 the market loves it a Loser the Facebook
01:14 Board of Directors our 2018 award for
01:17 most spineless and damaging Board of
01:19 Directors what is the role of a Board of
01:21 Directors care and duty specifically
01:24 serve as fiduciaries for stake holders
01:26 that includes teens that includes the
01:29 Commonwealth and of course shareholders
01:31 who have seen the value of their shares
01:33 shed a third of their value because of
01:36 irresponsible reckless negligent
01:39 behavior on the part of the CEO and the
01:42 CEO oh so at the end of the day what is
01:44 a board supposed to do they decide if
01:46 and when the company gets sold and to
01:48 hire and fire the CEO what has the board
01:51 done here nothing what should they do
01:54 first they should fire Sheryl Sandberg
01:57 the problem with a two-class shareholder
01:59 structure and the reason the SEC should
02:02 revisit the concept of banning all to
02:05 class companies or perhaps making it
02:08 such that when a company punched through
02:10 a hundred billion in market cap it
02:11 reverts to one class of stock
02:13 it has a ripple effect of unintended
02:16 consequences in the unintended
02:17 consequence here is that their COO that
02:20 should have been fired a year ago is
02:22 still here because quite frankly the
02:24 board does not want to be the board that
02:26 fires the woman in a sea of men in big
02:29 tech and that's a legitimate excuse
02:31 however she has made a billion dollars
02:35 and she will move on and do just fine
02:37 every day executives are fired for a
02:39 fraction of the infractions of Miss
02:42 Sandberg and the Zuck at the end of the
02:45 day the person ultimately responsible
02:47 for all of this reckless behavior that
02:49 this company is Mark Zuckerberg and he
02:52 should be removed from the CEO role he
02:55 should likely maintain his chairmanship
02:56 his DNA and programming genius is key to
03:00 retention of the value of this firm he
03:02 deserves to stick around he owned 16% of
03:05 the company however he can be fired and
03:08 this is how he could fight back he
03:11 controls 60% of the voting shares so if
03:13 he is removed from the CEO role it is
03:15 technically feasible that the next day
03:17 he removes the entire board what would
03:20 actually happen play this out the day
03:23 after he is removed from the CEO role he
03:26 fires his entire board that would be
03:29 utter chaos a five-car alarm alerting
03:33 legislators shareholder rights lawsuits
03:36 and governments globally we have to ask
03:38 would in fact the Zuck burn his castle to
03:42 save it the board should not be asking
03:44 this the board should be asking what is
03:47 the right thing to do as Emiliano Zapata
03:49 famously said it is better to die on
03:52 your feet than to live on your knees it
03:54 is time for the Board of Directors at
03:56 Facebook to stand on their feet ....