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One of Facebook Musketeers begins to pull out

August 23, 2012 1:06 by Muhammad Aldalou

Reflecting back on endless days spent in his Harvard dorm room, Kipp wonders whether Mark Zuckerberg ever envisioned his unique start-up to one day be worth billions of dollars and a corporate mess.

Earlier this week, Peter Thiel, the company’s first big investor sold almost his entire share of stock in the company. His initial investment that helped launch and nurture Facebook since 2004 was $500,000. This week, he cashed in a little over a billion. His withdrawal from the company has made headlines all over the world, particularly due to its surprisingly controversial nature. Funnily enough, as attention grabbing as it has proven to be, analysts say that there should have been no surprise as most angel investors do tend to pull out once the company they invested in goes public.

Secondly, Facebook’s lockup rules (set of rules used to determine the fate of investments) dictates that certain early investors, including Thiel, would be unable to sell or unload their share of the company until a certain date. That expiration period struck last week and Thiel took the liberty of emptying the register moments later.

The expiration date of the lockup rule, which affects only certain investors, has nevertheless sounded a noisy reminder because reports have announced that Dustin Moskovitz, one of the four co-founders of Facebook has now also cashed in a part of his share. It is unclear whether Moskovitz saw Thiel’s move as an encouraging push for him to follow in similar footsteps. But unlike Thiel, he was not bound by the lockup rule and so he could have unloaded his stock at any point in time. Why he chose a date so close to the expiration remains a mystery.

He is however, bound to legal laws to publicly disclose the percentage of shares that he sells due to the fact that he owns a sizable chunk of the public company. His slice in Facebook topples $2 billion and although he has unloaded a mere $9 million of it, it has proven to be equally if not more controversial.

But someway down the road, Moskovitz may be unloading an even bigger percentage of his shares, as he hinted by converting his “class B” shares to “Class A” common stock. Class B shares are a general standing of more power and influence in voting and corporate control while ‘Class A’ shares can be sold publicly.

As if to make matters worse, Brazilian-born Eduardo Savern renounced his American citizenship just shortly before Facebook’s IPO. While he insists that his motives was not to avoid paying capital gains tax, other less than convinced senators drafted a legislation barring him from entering the United States again.

The more posing question, asked currently all around the world, is whether Mark Zuckerberg should remain on the creative side and hand the corporate leash to someone with decades of business experience before more shareholders are pushed out? Sure the ‘hoodie’ lover does manage to put on a suit on special occasions like meeting the president but the fact remains that he has proven to be a strong creative and productive force while producing disappointing results from a corporate angle.

Photo credit: www.boston.com

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