Wednesday, January 5, 2011

Public and Private

With more time, one could write a lot about this question, but I just wanted to pass along a quick bit of commentary from John Battelle on the big financial news of the week: Facebook's decision to stay private.

Facebook is the greatest repository of data about people's intentions, relationships, and utterances that ever has been created. Period. And a company that owns that much private data should be accountable to the public. The public should be able to review its practices, its financials, and question its intentions in a manner backed by our collective and legally codified will. That's the point of a public company - accountability, transparency, and thorough reporting.
If Facebook wants to stay private and not be part of the social mores which we've built that govern major corporations (flawed though they may be), well I think that would be a major strategic blunder, one that would ultimately doom the company. It's fine for all sorts of companies to stay private, for all sorts of reasons. But a company like Facebook, with its unprecedented grasp of our social data, should be accountable to the public. If it isn't, we'll migrate our "social graphs" to a company that is.
If Zuckerberg doesn't want to be a public CEO and deal with the realities of that, as this Reuters piece argues, well, he should find a CEO who is willing to do the job.

I think this is absolutely a valid point.  Privately owned businesses are still part of a larger democratic system, and they shouldn't be able to hide from scrutiny if they become an important part of that system just because they are able to pull off some fancy financial shenanigans.  The reasons for having publicly regulated markets go beyond their usefulness to the companies that list on them. They serve to improve transparency in the overall economy, which improves price discovery, policy making, and strategic planning for everyone.  I don't know what size is too big to be private, because I haven't thought carefully about how to quantify the social benefits involved, but I'm
positive that Facebook is bigger than that.  

If your gut reaction is to disagree, I recommend you follow through, and only invest in countries where most of the big companies are sprawling family run conglomerates.  

No comments: