Thursday, January 20, 2011

A Tale of Two Entrepreneurs, or Why Mark Zuckerberg Deserves More Privacy than Steve Jobs

The usual conversation about privacy in the tech world has been turned upside down recently.  The CEOs of Apple and Facebook have been in the news a lot about privacy recently, but not for the usual reasons.  Although I'm not a big fan of the way they chose to structure it, Mark Zuckerberg and Facebook´s investors certainly have the right to keep their company private for as long as they want and for whatever reasons they want, including Zuckerberg's own privacy.

Steve Jobs on the other hand, is running a public company with a $300Bn+ market cap.  That means that the public absolutely has a right to ask about the possibility that he will be unable to continue to contribute to Apple.  Obviously I am sympathetic to Steve Jobs' medical situation, and I wish him the best and speediest recovery, out of general humanistic empathy as well as a recognition of the loss his passing would represent to the technology ecosystem that I love and live off of.  I am also sympathetic to the general need for privacy, which only grows in times of personal duress.  But the trade-off for going public is surrendering your privacy.  Want your privacy?  Don't go public (see exhibit A, "Mark Zuckerberg.").

The degree to which you have to surrender your privacy as the CEO of a public company is also roughly proportional to how big your company is (represented by market cap) and how much media attention you get.  Let's put Apple's >$300Bn market cap in perspective then:

  • That makes Apple the second largest public company in the world (source roughly as of the writing of this post; source that seems to be automated or updated regularly, but no guarantees).  Apple holds more of the public's money than any other company besides Exxon-Mobil.  Given that Steve Jobs plays a bigger role in Apple's value than the Rex Tillerson plays in Exxon-Mobil's, his health is arguably tied to more shareholder value than any other individual in the world (except maybe for Warren Buffet at Berkshire Hathaway, who in turn is subject to his own health and succession rumors). 
  • That's more than the total debt of Greece, whose potential default has been a "spectre haunting Europe" for the past year.  Granted, if Steve Jobs died or was otherwise medically unable to contribute to Apple, it wouldn't wipe out all of Apple's market cap, and equity investors are structured to be better able to tolerate loss than debt holders, but it's still a ton of money.
  • The ~4% change in Apple's stock price between market close before Jobs announced his medical leave and the market's open the next day represented ~$13Bn in value.

For that reason I was shocked to read in Bloomberg that "Apple Analysts Heed Jobs's Call for Privacy, Don't Ask About CEO's Health."  As stellar as Tim Cook has been in Jobs' absence, no one would dare say that Jobs' contribution is not material to the company's ability to innovate and deliver long term performance.

Kara Swisher argues in AllThingsD that Jobs deserves his privacy because he's been able to come back from his prior two medical leaves, has done a great job following both.  While this is true, the real question investors (rightly) want to know is is not will Jobs' continue to create value for Apple after he comes back from his leave, but will he come back at all?  At the very end of her post she writes "the public Steve Jobs has given his large audience more than enough since he got back after the last time he was sick," and then voice a plea that readers "settle" for a video of the "tremendous onstage interview he gave to Walt Mossberg and me last year at the eighth D: All Things Digital conference."  This is striking for two reasons: first, it betrays a motivation to argue for Jobs' privacy based on her admiration for the man, rather than based on consideration of investors' right to know material information.

It is even more striking because it it reminds us how much Apple has benefited from its media attention, of which Jobs himself has been chief hype officer.  In fact, you could even argue that Jobs' talent as product innovator is only surpassed by his ability to drive Apple's marketing machine.  Another reason to push back on his requests for privacy.

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