Over the past few months I have read innumerable articles dealing with venture capitalists and the social media experiment. I do not know one person who has not covered the topic and shown it in a relatively negative light. At first I was skeptical of the masses’ gloomy opinions of the entrepreneurship of our generation. Today, all that changed, I was sitting in a talk by one of these entrepreneurial elite and this fellow proceeded to slap me in the face with the negative realities that I had so fervently tried to avoid. The loyalty of these new and young CEO’s lies not with the investing public, but rather with their buddies, the venture capitalist. I had once thought that their loyalty could lie both with their masters, the venture capitalist and us, the investing public. Today, however, his presentation combined with the destruction in social sector over the past few months showed me the light. When I see the decimated stock prices in the social media sector, when many are calling this the tech bubble 2.0, pointing fingers and blaming someone, I finally see the forest for the trees and now question the CEO’s that I put my money behind.
The fellow, who will remain unnamed, that I heard speak today shocked me. He felt accomplished, maybe because he was not negatively affected by his decimated stock price, because he had made his money in the companies heyday. Maybe he felt accomplished because he had succeeded in the technology space. In his opinion he succeeded. In my opinion he failed. This discrepancy stems from the lens in which I view the situation. I see a guy who screwed over many investors and walked away unscathed. He sees himself as entrepreneur who can and wants to do that again. No loyalty. No sense of responsibility. And that bothers me. Though his company failed, at least in my opinion, he walked away with funds and stated that his venture capitalists all made a hefty profit. He felt good about the fact that he made many men rich but never spoke once of the investors left to suffer. I for one could not believe my ears. Who runs a publicly traded company and does not feel an obligation to the investors that put their money to work in his companies? The heart of the issue lies within the mentality of these entrepreneurs of the younger generation. These men and women have put their allegiance with the venture capitalist community, the people that gave birth to their experiments, the ones who will give them another chance in the years to come. Their allegiance does not lie with the investing public where as the older companies (Apple, etc.) live and breathe by their investors.
Just like I have mentioned in many of my previous posts, it is crucial to know your CEO. In this particular situation, it is crucial to know where you CEO lies in terms of his or her loyalty. As I have seen in the past few months, many of these newfound CEO’s just don’t have the back of the investing community. I have seen it repeatedly over the past few months: stock prices cut in half, and these CEO’s can’t even give even give the investing public the time of day. Where is the reassurance for the markets? Where is Zuckerberg telling the people that he will monetize mobile? Why don’t these CEO’s have our back? As you have most likely heard over the past week, many are calling for Peter Thiel to step down for the simple reason that he no longer has Facebook’s back. This issue has been beat to death. In the simplest forms, I will refraining from hoping and praying for a recovery in the sector when it comes to these new technology companies until I am assured they have my back. I would like to see nothing less than to see Zuckerberg sending Thiel packing. Just as I have wished that Zuckerberg would have stepped into the public eye of investors and calm those that have their money with him.
I spoke some time ago and analyzed this mess in a different light. I suggested that if social media failed then they could buy their way into the next round of successful technology companies. In my eyes this still holds true. My belief in the ideals and potentials of these companies don’t mean anything. Until the CEO’s can come down from the clouds and show us they have our back, we are lost. Rather than running from faltering companies as the above individual whom gave his presentation did, these CEO’s should instill hope and faith. Faith that insures if their business model falters or slows, they will change said model. If these companies are going through a transition period, which I believe they are (you know, monetizing mobile, I am sure you have heard something about it), then they should let us know and inform us. These CEO’s don’t say or do anything and the investing public sees the end of these companies only months away. Obviously the end is nowhere near, mobile continues to show astronomical growth, and the masses will socialize with each other via texts and social apps for years to come. Though as investors this all means nothing if these CEO’s don’t show us, the stock people, that they have our backs.
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