This post is completely unreadable. Hypothetical conversation, random boldings, all sorts of logical failings, speculation, and appeals to emotion. Is there anything solid behind this 'article'?
I know I shouldn't judge a book by it's cover, but... with all the photoshop, comics, and general editorializing on this article, I'm just going to have to wait til someone with a bit more candor decides to write about it.
I agree. She raises some interesting questions, but aside from the fact that Marc Andreessen is both a board member at Facebook and an investor in Instagram, there's very little information here.
On the other hand, there are signs that Donna Kline is a crank:
- list of previous posts shows that she's got an axe to grind against Facebook
- repeated use of the phrase "Meep. Meep."
- repeated invitations to the reader to fill in details for which she has no evidence
I agree with walexander and brodney in regards to the quality of this article. However, would the Instagram deal have came off had Facebook been trading on the market? I don't think it would have.
Then again what do we really know? I for one don't know what is going on in the confidential meetings involving Zuck and the Facebook board.
Does anyone have any background on who this "Donna Kline" is? Her brief bio paints her as a 'reporter', but her blog backlog looks like a constant and consistent attack against Facebook. I don't want to suggest that she is perhaps being paid to attack a particular corporation, but she doesn't seem to report on much else, or in any kind of balanced way.
It is not clear what Leader Technologies & conflicts of interest have to do with each other. It appears that Leader Technologies' patent was thrown out by a jury[1] (list of stories on TechDirt: [2]).
Until the IPO, Facebook is still a private company is it not?
I for one don't think the Instagram deal was that bad in terms of value. I mean didn't Facebook have something like 9million users when Yahoo bid $1billion for it? Imagine if Instagram had said no and history repeated....
Be sure to check out Andreessen's follow up comment to his own post, which goes into more detail about the Instagram-FB deal. For some reason, this comment is hidden when the comments are expanded.
Here is an excerpt from the part about instagram-fb deal:
"The second potential conflict was when Facebook approached Instagram for acquisition, since I am both a director of Facebook and a general partner at AH which owned a meaningful percentage of Instagram (from our original seed investment in Burbn). As described elsewhere on this page, that conflict was averted by (a) me not even knowing about the potential acquisition until the day it happened and (b) me being recused from all discussions and decisions on both sides (Facebook and Instagram). By being recused, the conflict was averted."
(b) and (a) seem, on the face of it, to be mutually exclusive.
Either Marc found himself being recused from meetings that happened without his knowledge, at both his own company, and at Facebook, or he -was- aware of his recusal and either didn't know ("plausible deniability"?) of the subject of discussion (which, if he was recused, seems redundant), or he -was- aware of the subject, aware of his being recused from multiple board meetings, and being "surprised" by the "Oh, hey, Facebook now owns that company your company owns a meaningful percentage of".
That, and we're also being asked to believe that Facebook makes billion dollar acquisitions not only by recusing directors with related interests, but by deceiving and misleading them.
AND that the board of Andreessen Horowitz feels that it should / can act the same way to its namesake founder, Mr Marc Andreessen, and feels it proper to accept ten digit acquisition offers without him.
As I said, color me a little skeptical that (a) and (b) of his claims are accurate.
It's easy to paint in a dim light if you don't know the facts, in particular the big picture, including the competitive landscape.
The value of Instagram to Facebook in particular is different than the value to any other company. If Facebook is worth $100 billion and Instagram poses a 1.1% threat to the value of the company then it's worth it to pay $1 billion to take them out. In particular Instagram being bought by twitter probably poses much more risk to Facebook than $1 billion. Twitter wasn't in a position to buy them for $1 billion in stock so Twitter loses out. I have a feeling that even a year or two from now buying Instagram is going to look like a very smart play, in 10 years it might just look genius.
Remember that Yahoo had the opportunity to buy Google for $1 million and turned it down. Given that Instagram added 10 million users on the news of acquisition it seems fairly sane.
Thus with those figures in hand it's easy to paint a picture where the board acted with fiduciary duty in the interests of shareholders. Even on a balance of probabilities this would be a difficult case to prove in court.
If nobody jumps to this conclusion, who's going to investigate it?
I don't think "If you can't say something nice, don't say it at all" applies when money and legal issues are on the line.
Stick to the facts we know, but don't fill in the gaps with the "high road" being taken by those involved. The fact that there was a lot of room for abuse should be seriously looked at.
I know Marc has said he recused himself (see above), but it's worth adding the following:
You might think a board needs to approve it, but offers are often allowed within certain parameters prior to closing a sale. Facebook might have a higher tolerance for what that limit is.
It's entirely possible the board had previously, unrelated to any specific transaction, passed a motion that allows management to offer any M&A transaction up to one billion dollars barring anything that comes up in diligence. This is not uncommon.
We know FB is oriented to streamline processes and this might be another case of that.
For instance, I know that the Salesforce acquisition of Heroku involved a price ceiling at which point the deal would require board approval, so the purchase price was kept (just) below that ceiling so that it could be expedited internally.
This is ridiculous. I'm embarrassed Hacker News is sending her pageviews.
Mark Zuckerberg controls Facebook. His board couldn't make him spend a billion dollars on an acquisition against his will. Instead of admitting this gaping hole in her reasoning, she turns it into another exciting speculation: that Matt Cohler must therefore be blackmailing him.
22 comments
[ 2.8 ms ] story [ 32.1 ms ] threadOn the other hand, there are signs that Donna Kline is a crank:
Then again what do we really know? I for one don't know what is going on in the confidential meetings involving Zuck and the Facebook board.
Until the IPO, Facebook is still a private company is it not?
[1] http://www.reuters.com/article/2010/07/28/us-facebook-patent... [2] http://www.techdirt.com/blog/?company=leader+technologies
Conjecture: this is a poorly executed PR campaign by Leader Technologies to embarrass Facebook into settling during their quiet period.
http://www.quora.com/Conflicts-of-Interest/With-Andreessen-H...
I for one don't think the Instagram deal was that bad in terms of value. I mean didn't Facebook have something like 9million users when Yahoo bid $1billion for it? Imagine if Instagram had said no and history repeated....
Here is an excerpt from the part about instagram-fb deal:
"The second potential conflict was when Facebook approached Instagram for acquisition, since I am both a director of Facebook and a general partner at AH which owned a meaningful percentage of Instagram (from our original seed investment in Burbn). As described elsewhere on this page, that conflict was averted by (a) me not even knowing about the potential acquisition until the day it happened and (b) me being recused from all discussions and decisions on both sides (Facebook and Instagram). By being recused, the conflict was averted."
(b) and (a) seem, on the face of it, to be mutually exclusive.
Either Marc found himself being recused from meetings that happened without his knowledge, at both his own company, and at Facebook, or he -was- aware of his recusal and either didn't know ("plausible deniability"?) of the subject of discussion (which, if he was recused, seems redundant), or he -was- aware of the subject, aware of his being recused from multiple board meetings, and being "surprised" by the "Oh, hey, Facebook now owns that company your company owns a meaningful percentage of".
That, and we're also being asked to believe that Facebook makes billion dollar acquisitions not only by recusing directors with related interests, but by deceiving and misleading them.
AND that the board of Andreessen Horowitz feels that it should / can act the same way to its namesake founder, Mr Marc Andreessen, and feels it proper to accept ten digit acquisition offers without him.
As I said, color me a little skeptical that (a) and (b) of his claims are accurate.
The value of Instagram to Facebook in particular is different than the value to any other company. If Facebook is worth $100 billion and Instagram poses a 1.1% threat to the value of the company then it's worth it to pay $1 billion to take them out. In particular Instagram being bought by twitter probably poses much more risk to Facebook than $1 billion. Twitter wasn't in a position to buy them for $1 billion in stock so Twitter loses out. I have a feeling that even a year or two from now buying Instagram is going to look like a very smart play, in 10 years it might just look genius.
Remember that Yahoo had the opportunity to buy Google for $1 million and turned it down. Given that Instagram added 10 million users on the news of acquisition it seems fairly sane.
Thus with those figures in hand it's easy to paint a picture where the board acted with fiduciary duty in the interests of shareholders. Even on a balance of probabilities this would be a difficult case to prove in court.
I don't think "If you can't say something nice, don't say it at all" applies when money and legal issues are on the line.
Stick to the facts we know, but don't fill in the gaps with the "high road" being taken by those involved. The fact that there was a lot of room for abuse should be seriously looked at.
You might think a board needs to approve it, but offers are often allowed within certain parameters prior to closing a sale. Facebook might have a higher tolerance for what that limit is.
It's entirely possible the board had previously, unrelated to any specific transaction, passed a motion that allows management to offer any M&A transaction up to one billion dollars barring anything that comes up in diligence. This is not uncommon.
We know FB is oriented to streamline processes and this might be another case of that.
For instance, I know that the Salesforce acquisition of Heroku involved a price ceiling at which point the deal would require board approval, so the purchase price was kept (just) below that ceiling so that it could be expedited internally.
Mark Zuckerberg controls Facebook. His board couldn't make him spend a billion dollars on an acquisition against his will. Instead of admitting this gaping hole in her reasoning, she turns it into another exciting speculation: that Matt Cohler must therefore be blackmailing him.