For a founder of a highly touted Internet company undertaking an IPO, the “Letter to Shareholders” in the S-1 prospectus has become a rarefied form of performance art. Going public is the purest capitalist act — a deep and unambiguous genuflection to Mammon. But a founder’s letter provides an opportunity to explain that while the company is indeed tapping the rapacious forces of Wall Street to solicit investments on the open market, it’s not really about the billions of dollars set to tumble into the wallets of company executives, angel investors, venture capitalists, investment bankers and the squeegee guy who wiped the founder’s windshield and took his tip in stock instead of quarters.
It’s about making the world a better place.
Mark Zuckerberg aced the test. In hisletter to investorswho may be considering buying shares of Facebook to enhance their portfolios, he proclaims that as CEO -- one who controls 57 percent of the voting stock -- his focus is not reaping the highest profits, but profiting from a righteous mission. That mission is “rewire the way people spread and consume information.” The point of that epic rewiring job is to facilitate sharing — to convince people that sharing among themselves is not a surrender of privacy, but an act of empowerment. Not necessarily accumulating the biggest pile of cash.
It is that lofty impetus, Zuckerberg claims, that drives him and his company. Elsewhere in the prospectus, Facebook makes a case to raise $5 billion, and reveals that Facebook made a billion dollar profit last year from $3.71 billion in revenue. But founder’s letters like Zuckerberg’s are accompanied by a soundtrack of trilling cherubs, not ringing cash registers. (The prime example isLarry Page’s 2004 IPO message, the “Catcher in the Rye” of this genre.) “We don't build services to make money; we make money to build better services,” writes Zuckerberg. “These days I think more and more people want to use services from companies that believe in something beyond simply maximizing profits.”
I think Zuckerberg is sincere in this expression, at least the sharing part. (It's hard to make a case that money is secondary at that same time you're establishing your net worth at upwards of $20 billion.) He has been consistent in pursuing this course, and, even more important, Facebook as a company has been consistent in pursuing a course true to the sharing principle. At every turn, Facebook has been pushing us to share more and more. Zuckerberg feels strongly that once we do this, we will not only like it, but we will realize the value that such sharing has for our lives and the world at large. You may disagree with his views, but you must understand them to know why Facebook does what it does.
After stating those principles, the letter takes an interesting turn, as Zuckerberg begins a rant about what he calls “The Hacker Way.”
I have to admit Zuckerberg’s treatment of hackers here is personally gratifying. Thirty years ago, I began writing a book about hackers, a subculture that most people did not know even existed. As I researched the book, I discovered a way of thinking, a way of being, shared among hackers of different generations. In my book Hackers, I codified this collective sense of values, calling it the Hacker Ethic. In many ways those implicit values are what basis of The Hacker Way that Zuckerberg describes in his letter.
For instance, one of the precepts of what I identified as the Hacker Ethic was, “Hackers should be judged by their hacking, not bogus criteria such as degrees, race, or position.” Zuckerberg writes in his letter, “Hacker culture is … extremely open and meritocratic. Hackers believe that the best idea and implementation should always win - not the person who is best at lobbying for an idea or the person who manages the most people.”
While elucidating the Hacker Ethic, I referred to the "doing, not talking about it" aspect of hacking, calling the impulse “The Hands-On Imperative.” Zuckerberg addresses this, too. “Hacking is …an inherently hands-on and active discipline,” he writes. And he has shaped his company to embody that value.
In my book, I wrote, “Hackers believe that essential lessons can be learned about systems—about the world—from taking things apart, seeing how they work and using this knowledge to create new and interesting things…. This is especially true when a hacker wants to fix something that (from his point of view) is broken and needs improvement.”
Zuckerberg writes, “Hackers believe that something can always be better, and that nothing is ever complete. They just have to go fix it -- often in the face of people who say it's impossible or are content with the status quo.”
Obviously, I am pleased that Zuckerberg has identified the aspects of hacking that I wrote about in 1984 as key components in making a company successful. But what about the very first part of the Hacker Ethic, the one that continues to resonate in controversy? I am talking about a key characteristic of hackers as I saw them, an implicit belief that “information should be free.” (Later on some people clarified that this meant “free as in freedom, not as in beer.”)
When interviewing Zuckerberg for the 25th Anniversary of Hackers in late 2009, he explained to me how he saw this aspect of the Hacker Ethic. “From everything I read about hacker culture, that’s a very core part-- information wants to be free, and all that,” he said. “I think our view [at Facebook] is maybe a little bit more pragmatic, that people need to have control over their information, that that is the way to eventually make it so that information is open. But fundamentally we view information being open as a very good thing.”
Indeed, many of the original hackers at MIT eschewed the traditional view of privacy—they hated passwords, for instance—on the basis that making information accessible promotes more general understanding of systems, the better to hack and improve those systems. Not exactly the same thing as letting everyone see your wedding pictures, or telling them that you’re listening to the newtUnE-YarDs record. But there is a genuine connection between the world-view of original hackers and the vision of Facebook. Zuckerberg, as a hacker, believes that sharing information increases its value.
Over the years, the term “hacker” has had a tough time, used most often to describe high-tech malfeasance. For instance, the vile behaviorof Rupert Murdoch’s staffers who violated the phone and e-mail privacy of sources, is casually referred to as “hacking.” This is an insult to the proud hackers of yore, but there’s not much anyone can do about it. Language takes its own course. The good news is that more and more, people are using the term “hacker” in the original sense. And Zuckerberg’s letter will contribute to the term’s rehabilitation. “Hacking just means building something quickly or testing the boundaries of what can be done,” he writes. “Like most things, it can be used for good or bad, but the vast majority of hackers I've met tend to be idealistic people who want to have a positive impact on the world.”
Even the best founder’s letters straddle the line between bombast and brilliance, and that is certainly the case in the Facebook S-1. But by elevating the status of hackers to a level that would presumably entice investors to take a stake in Facebook, Mark Zuckerberg has done a great service to tech in general. Well played, Mr. Z.
