Tom Gardner: 1 Reason These Companies Win in the Long Run
Dec 28th 2012 8:30PM
Updated Jan 4th 2013 12:16PM
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Brendan Byrnes: One of the things that you really like are founders that are also CEOs, continue to remain. Why do you like that so much? Let's take an eye specifically with [Mark] Zuckerberg at Facebook.
What do you think? Do you still like the fact that he's the founder and the CEO? A lot of people maybe didn't like the fact that he lacked experience, coming up. Is this something that you like in Facebook's case as well?
Tom Gardner: Let me give three examples of why the founder-run company -- let's stick exclusively in the world of technology -- why that matters.
The reason I think it matters is the world changes so rapidly. We're going back just 10 years, the cell phone was marginal, and now it's the dominant platform out there, and usage is just skyrocketing across the world.
I don't want to have a CEO turnover every three years, four years, and the company has to shift its internal culture a little bit and try and adjust to that. If you look at the great technology investments, look at Microsoft during the years of Bill Gates, Steve Jobs in the tenure when Jobs was at Apple, [Amazon.com] and Jeff Bezos.
Think how much has changed during Jeff Bezos' tenure. They started out and I remember the CEO of Barnes & Noble saying, "Amazon's business does not even add up to the sales of a single store in New York City, of ours," and really talked Amazon down.
Now, you look at Amazon -- books are obviously an important part of Amazon's business, but it's grown so dramatically.
In the case of Facebook, I love to see the founder there. Now I will admit that, overall, I would love to see Facebook develop more businesses where the user of their services was buying the service from Facebook, was paying a subscription.
That starts to align Facebook with the billion people that are out there using it. Until that happens, we're just being sold to Facebook's advertisers, and I think the more that a community learns how their information is being sold around the Internet to other organizations, the more concern they're going to get about their relationship with Facebook.
I'm not saying that advertising is not going to be a great business for Facebook. I'm simply saying they have a great opportunity to start building subscription out there with their one billion-plus members. They don't have to have huge success. Small uptake rates out there are going to generate great business for them.
I see a lot of change coming for Facebook's business over the next 10 years. I would not be surprised to see the stock down another 30 or 40% from where it is today at some point. I think you'll see a lot of turnover in Facebook's leadership as well, but I think Zuckerberg's there to stay. He's got control of that business.
I think that's a good thing for the company, long term, but it's going to be a bouncy, volatile stock. But sure, I would say below $20 a share I would definitely be a five-plus-year investor in Facebook.
The article Tom Gardner: 1 Reason These Companies Win in the Long Run originally appeared on Fool.com.Brendan Byrnes owns shares of Apple. The Motley Fool owns shares of Apple, Amazon.com, Facebook, and Microsoft and has options on Facebook. Motley Fool newsletter services recommend Apple, Amazon.com, Facebook, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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