Mark Zuckerberg appears to be sending a message with the latest addition to Meta’s board: the company will continue to do things its own way – concerned activists, politicians and shareholders be damned.
Zuckerberg’s company said last week that Tony Xu, co-founder and CEO of unprofitable food delivery giant DoorDash, would become the newest member of its 10-person board.
Xu and Zuckerberg have a lot in common: They’re both 37-year-old billionaires, they’ve both engineered ownership structures that give them an unusual degree of control over their own businesses — and they’re both ready to burn ‘huge sums of money money to fight their political enemies.
“They are birds of a feather,” Melanie Sloan, a government and business ethics lawyer, told The Post.
In a typical publicly traded company, shareholders can elect a CEO in times of crisis — like when Instagram was caught pushing eating disorder photos of teenage girls, or DoorDash was accused of pocketing tips that customers thought were going to delivery people.
But Zuckerberg and Xu are essentially immune to such crises due to a mechanism called dual-class shares, which generally give more votes to shares held by founders than to those held by members of the public. This system means that Zuckerberg controls about 58% of all votes at Meta, while Xu and his two co-founders control about three-quarters of all votes at DoorDash.
“No matter how many shareholders Facebook has, they can never beat Mark Zuckerberg,” Sloan said.
Sloan said Zuckerberg’s selection of Xu, another founder with almost complete control of his own company, shows he has no plans to relinquish all power in the future – no matter how many criticisms like the Facebook whistleblower Frances Haugen and hordes of angry lawmakers on Capitol Hill can complain.
“You just put someone who wants to keep full control of his company on the board of another company with another founder who wants to keep full control of his,” Sloan said.
Proponents of founder control and dual-class equities argue that empowering successful founders like Zuckerberg and Xu is not a problem since they build the companies in the first place.
Zuckerberg’s move comes as no surprise as Silicon Valley founders increasingly keep an iron grip on their companies even as they go public, according to Jay Ritter, a finance professor at the University of Florida, who studies corporate governance and technology IPOs.
According to Ritter’s Research.
“Dual-class actions have definitely become more common,” Ritter told the Post. “I’m sure Zuckerberg wouldn’t have invited someone to the board who is a vocal opponent of dual-class shares and founder control, but I don’t think that’s something that would exclude many potential board members.”
Additionally, Xu’s appointment could help Meta fulfill a recently passed request. California law that requires boards to include some directors from minority groups, Ritter said.
The DoorDash CEO could also teach Zuckerberg a thing or two about how to beat pesky politicians and activists.
In 2020, DoorDash joined other “gig economy” companies like Uber, Lyft, and Instacart to push Proposition 22, a California ballot initiative that made it easier for businesses to opt out of basic benefits like sick pay and minimum wage to delivery people by counting them. as entrepreneurs rather than employees. The companies spent $200 million to blanket the state with ads supporting the effort, which passed with 58.6% of the vote despite objections from Joe Biden, unions and legions of activists.
As Meta seeks to ward off politicians on both sides of the aisle who want to regulate the company, the lessons Xu has learned pushing Prop 22 could help an increasingly defiant Zuckerberg mobilize voters against his enemies.
DoorDash declined to comment on the story’s record. Facebook referred The Post to a press release announcing the appointment in which Zuckerberg said Xu had “direct experience both running a technology company and solving complex challenges in commerce.”
