11615 (cache) Who Is to Blame for Facebook's I.P.O.? A Mix of Responses - NYTimes.com
I.P.O./Offerings September 4, 2012, 4:53 pm

Who Is to Blame for Facebook’s I.P.O.? A Mix of Responses

By ANDREW ROSS SORKIN
David Ebersman, center, Facebook's chief financial officer, after a meeting at Goldman Sachs in early May, before its stock debut.Victor J. Blue/Bloomberg NewsDavid Ebersman, center, Facebook’s chief financial officer, after a meeting at Goldman Sachs in early May, before its stock debut.

My column on Tuesday, pinning the blame of Facebook’s mess of an initial public offering on its chief financial officer, David Ebersman, has caused quite a reaction — including Mark Cuban denouncing my view, saying “Facebook Handled their IPO Exactly Right”, and Forbes saying “The Man Responsible For Facebook’s Stock Debacle Is Mark Zuckerberg.”

As Facebook’s stock continues to fall — it slumped 1.8 percent on Tuesday to close at $17.73. — let me offer some additional perspective and background to the various views emerging online on Tuesday.

First — and perhaps I should have said this in the column itself — I take no pleasure in faulting Mr. Ebersman publicly. Really. Good people make mistakes. Mr. Ebersman is human. I would like to see Facebook succeed. Everyday, I see blame assigned to someone or another for a problem and think, “There but for the grace of God go I.” I have made mistakes before, and I will surely make them again.

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Having said that, I remain baffled that there has been no accountability for what has to be considered a failed I.P.O. Facebook’s market value has fallen more than $50 billion. $50 billion! That’s a fact, not an opinion. Mr. Ebersman was the captain of the ship in the case of the I.P.O., and the ship — or at least the stock — is sinking.

Mr. Cuban, whose career deserves enormous respect, argues that the I.P.O. was a success because Mr. Ebersman maximized the total amount of money Facebook was able squirrel away by selling shares at $38 a share.

“If the C.F.O. of Facebook came on SharkTank and told me that he was able to sell his shares to the public for $38 a share, but turned down the opportunity, I would crush him for being an idiot,” he wrote.

That might make sense if a company is selling itself for cash to a buyer in a merger or acquisition — which is a one-time event — but it misses the long-term nature of the relationship a public company is supposed to have with its investors. If every company sought to use the I.P.O. process simply to fleece investors, selling at the absolute highest price without any sense of room for investors to make a return, no investor would buy shares again. (In some regard, that’s what’s happening to Facebook now.)

Forbes made the case on Tuesday that the blame should be assigned to Mr. Zuckerberg, not Mr. Ebersman. “It’s not just that Zuckerberg is the C.E.O. and the buck stops with him. He purposely and deliberately created a culture at Facebook that was dismissive of the stock market and the responsibilities of being a publicly traded company,” Nathan Vardi, a staff writer at Forbes, wrote.

I could not agree more with Mr. Vardi’s view of the culture Mr. Zuckerberg created. It may come back to haunt Facebook. But given that Mr. Zuckerberg distanced himself from the I.P.O. from the beginning, it’s hard to fault him directly.

Happily, Eric Jackson, a contributor to Forbes, appeared to agree with my column. (He often disagrees with my column, so thanks, Eric.) He noted: “Ebersman had only ever worked at Genentech since 1994 and Oppenheimer briefly before that. If Facebook had hired a C.F.O. who’d brought a hot young tech company public before, that would have been a valuable skillset. But they didn’t.”

Steve Bell said that the column was a missed opportunity for Facebook to publicly back Mr. Ebersman.

A reader who goes by “btanen” and was critical of the column, calling it “rediculous” wrote a rather funny rewrite of my column that is worth reading and laughing about, even if it is at my expense.

And finally, Felix Salmon at Reuters takes issue with certain parts of my column. But I will agree with him on this part about Mr. Ebersman: “He didn’t much care about investors before the I.P.O., and he doesn’t seem to care much about them after it, either. If they react by selling Facebook’s stock, that’s their right. But Zuckerberg — the guy who really matters — has made it very clear he’s concentrating on the long term. And so long as Zuckerberg has confidence that Ebersman is a good steward for Facebook’s finances, Ebersman is going to be safe in his job. No matter what investors think. “

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