Zuckerberg (not) smarter than I thought

by Mathew on December 8, 2007 · 6 comments

Update:

Glad I added all those sarcastic caveats to my description of Valleywag below — it seems someone at Facebook played Owen Thomas like a fiddle, and the rumour about Zuckerberg cashing in isn’t true. Owen’s attempt to talk his way out of having been played is here. I still think it would be a smart thing to do though, even if it isn’t actually happening.

Original post:

According to the scrupulously honest and eminently reliable folks at Valleywag, young Mark Zuckerberg has taken an early cash-out from Facebook, by selling some of his stock in the company’s latest financing round. The gossip site says he picked up a not-too-shabby $40-million as part of the deal with Microsoft.

As Valleywag’s Owen Thomas notes, this isn’t how VC financing typically works. And it’s not how founders of startups typically work either — many hang on long after they could have maximized their return, either because they aren’t allowed to sell any shares or because they don’t want to make it look like they are losing faith.

But why shouldn’t Zuckerberg get a little something for his effort — and take advantage of the market’s valuation frenzy? He still maintains a huge stake in the company. I think it’s a smart move.

  • http://smoothspan.wordpress.com/ Bob Warfield

    It's a good move for all concerned if the consensus is to swing big for the fences. Taking enough off the table not to worry about liquidity leaves Zuckerberg ready to focus on the long haul.

    Cheers,

    BW

  • http://www.robhyndman.com Rob Hyndman

    What's interesting to me is that this demonstrates what admittedly is a painfully obvious fact – you are strongest when you have lots of alternatives. Hype and possible cash machine that FB is, Zuckerberg was in the driver's seat. And when you are, old “rules” – which, after all, in financing are all about how much you get and how much I therefore don't get – go out the window.

  • Pingback: Zuckerberg Sells $40 Million of Stock - The Unofficial Facebook Blog

  • http://www.robhyndman.com Rob Hyndman

    LOL – there's a post in the reversal, I think. Is that coming?

  • http://www.robhyndman.com Rob Hyndman

    What's interesting to me is that this demonstrates what admittedly is a painfully obvious fact – you are strongest when you have lots of alternatives. Hype and possible cash machine that FB is, Zuckerberg was in the driver's seat. And when you are, old “rules” – which, after all, in financing are all about how much you get and how much I therefore don't get – go out the window.

  • http://www.robhyndman.com Rob Hyndman

    LOL – there's a post in the reversal, I think. Is that coming?

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