Photo: By: Spencer Platt/Getty Images
Adam Lashinsky, a senior editor-at-large at Fortune, just laid into Facebook management and employees.Their arguments for why the company had to go public don’t make sense, he writes.
Early in its life as a private company, because of its unexpectedly fast growth, Facebook faced an SEC rule that would have required it to start disclosing its financials as if it were a public company.
But Lashinsky points out that Facebook wasn’t required to go public—it just figured it might as well, since it would have had to start filing quarterly and annual reports and complying with other public-company rules.
But Lashinsky gets really savage when he accuses Facebook employees of “whining” about wanting to cash out the equity they receive as compensation:
In Silicon Valley it is not enough for employees to be well paid for the fruits of their labour. If the “risk” they take by making the “investment” of their time doesn’t pay off, they leave. That’s what passes for loyalty in the technology industry. Employees say (read: whine, rationalize) that they need to “diversify” their investments, but that’s poppycock. Facebook easily could have found a way to cash out its employees. Asset manager Pimco recently worked out a deal with SecondMarket to hold regular private auctions for company stock. But such “shadow equity” schemes are by definition slow and gradual. They certainly allow for diversification. Tech-industry workers want their wealth, and they want it now dammit.
We think that’s more than a bit unfair—and also completely unrealistic. It assumes that Facebook operates in a vacuum. It doesn’t. It’s in the middle of one of the most fiercely competitive markets for talent in the world.
Facebook recruited a lot of its key employees from public companies like Google and Microsoft, which pay their employees in both cash and stock. Those stocks are publicly traded and liquid.
It would have been far harder for Facebook to recruit and retain those employees if it didn’t have a clear path to Facebook shares becoming a liquid, publicly traded security.
Also, it seems a little off for someone who works for a publication called Fortune to take an issue with people who want to take risks that might make them wealthy.