In the late 19th-century comedy Cyrano de Bergerac (and in the brilliant 1987 Steve Martin adaptation, Roxanne) the clever-but-homely hero coaches the handsome-but-dull Christian to help him win the affection of a beautiful woman.
There was a similar dynamic at work this year in a Silicon Valley conference call involving Facebook CEO Mark Zuckerberg and a handful of company directors.
According to Bloomberg, Zuckerberg, in a critical negotiation with a committee of Facebook board members, was coached through the meeting by Marc Andreessen, another board member and a longtime Zuckerberg supporter.
Zuckerberg was proposing a new stock structure that would weaken the voting rights of investors, and he needed the endorsement of independent board members Erskine Bowles and Susan Desmond-Hellmann, as well as Andreessen, to proceed.
As the conference call with the board members proceeded, Andreessen sent Zuckerberg texts warning him when his arguments weren’t convincing, and cheering him on when they were.
“This line of argument is not helping. ☺” read one. “NOW WE’RE COOKING WITH GAS” said another, according to Bloomberg.
After the call, Andreessen continued to work the board on Zuckerberg’s behalf, and sent him text updates over the following weeks. But Zuckerberg, playing Christian to Andreessen’s wily Cyrano, was at times puzzled by his cryptic messages: “The cat’s in the bag and the bag’s in the river,” read one. The apparently confused Zuckerberg texted back: “Does that mean the cat’s dead?”
The texts are included in the filings of a lawsuit brought by Facebook shareholders against the board, which stands accused of not safeguarding investor interests when agreeing to Zuckerberg’s proposed structure.
The stock plan was concocted by Zuckerberg so he could sell his shares to fund his philanthropic efforts without losing control of the company. According to the plan—now on hold pending the outcome of the suit—all shareholders will receive two Class C shares, which have no voting rights, for every Class A and B share. Under the proposed structure, Zuckerberg could sell or give away $32 billion worth of shares while still retaining his voting power. (The current two-tiered share structure gives Zuckerberg 54% of Facebook’s voting rights while controlling just 15% of its shares).
Shareholders were concerned that their stock would lose value because the voting rights, useful in the case of a potential buyout scenario, would have less weight.
The lawsuit accuses Andreessen of helping Zuckerberg convince Bowles, a former Clinton White House official, that the stock plan was sound. Bowles was particularly skeptical of a condition that would allow Zuckerberg to work for the government for two years without giving up control of the company. Bloomberg reports:
Bowles remained unconvinced, Andreessen wrote Zuckerberg later that month. “Erskine is just massively uncomfortable with you getting to low economic ownership and then going off on leave with no involvement by the board and retaining control,” he wrote. “We rediscuss it on every call … I’m going to try to drag it over the line one more time. ☺ ”
Andreessen and Zuckerberg ultimately succeeded in winning the board’s support, and ultimately the majority of shareholders endorsed the plan, creating a “benevolent dictatorship,” according to Fortune.
Andreessen’s venture capital firm, Andreessen-Horowitz, declined to comment on pending litigation. Facebook’s PR firm emailed a statement saying the special committee of Andreessen, Bowles, and Drummond-Hellmann “engaged in a thorough and fair process to negotiate a proposal in the best interests of Facebook and its shareholders.”