World's youngest billionaire: Will he keep it?

March 7, 2008 8:45:45 AM PST
It's an almost-brilliant move.This has been a landmark week for Mark Zuckerberg, the 23-year-old founder of social networking site Facebook.

First, Forbes magazine ? that arbiter of all things obscenely wealthy ? declared Zuckerberg to be the youngest "self-made" billionaire on the planet. Then, associate editor Matthew Miller took the title up a notch by adding, "He is the youngest billionaire in the world right now ? and we also believe he is the youngest self-made billionaire in history."

That last probably isn't true ? but unlike, say, Alexander the Great, Zuckerberg didn't have to lead an army to conquer Asia Minor but merely created a venue for college girls to post photos for which they'll have to apologize for the rest of their lives (appropriately enough, because Facebook reportedly started out as a coed rating service for Zuckerberg's classmates at Harvard).

The actual historic value of Zuckerberg earning this title is probably negligible, because I doubt he'll hold it very long ? or, for that matter, whether he'll still be a billionaire a few years from now, when Facebook follows MySpace as the Last Big Thing.

Here in Silicon Valley we are used to young geniuses who wave their paper billions ? then get creamed by a stock price collapse just before their lock-out period ends.

That's why I can still count the real billionaires in this town on two hands (though I wouldn't worry about Mark: no matter what happens he'll walk away very rich and with at least seven decades to enjoy it).

Nevertheless, this is a watershed event of a sort. It is a reminder, as if we need another one, that the barriers to entry into tech by a bright young entrepreneur get lower every year, while the chances of early success get higher.

I may have written this a few years ago, but now's a good time to revisit it: In the 1950s, about the only way you could start a high-tech company was if you were a Ph.D. in solid-state physics or electrical engineering.

It wasn't until the end of the 1960s that the first professional businesspeople (Irwin Federman of Monolithic Memories comes to mind) actually began to run tech companies.

But two trends were already at work.

First, the infrastructure of entrepreneurship ? facilities, venture capital, consultants, marketers ? grew more sophisticated by the year, which enabled fewer veteran managers into the game.

Second, the technology itself became increasingly removed from the silicon-and-code world of early tech to high-level applications ? i.e., now you didn't need to be a chip guy or a code writer to start a tech company.

By the 1970s, fewer and fewer tech companies were being started (or at least run) by lab types and more were in the hands of MBAs and marketing folks.

Then came Atari and Apple, two companies founded by the least likely entrepreneurs: a former carnival barker and two hackers. Apple's two Steves ? Wozniak and Jobs ? had gray-beard Mike Markkula, an Intel veteran, behind the scenes, but Nolan Bushnell ran Atari almost on his own.

The gates were now open, the support system in place, and each generation of tech entrepreneurship has been opened to an ever-wider (and younger) circle of candidates: engineers and sales types in the 1980s, young marketing professionals during the first dot.com boom of the 1990s, and now, with Web 2.0, a whole bunch of very bright young men and women with shockingly short resumes and a far greater understanding of the customer base than the technical underpinnings of their companies.

I don't think this trend is going to change anytime soon. Indeed, the process of creating new Web apps and services is now so simple that essentially anyone can do it ? and the world is filled these days with post-adolescents who are creatures of the Web.

That suggests that as young as Zuckerberg is (and he looks about sixteen), there are younger future billionaires already waiting in the wings, virally marketing their new idea to their high-school classmates via their cellphones.

Now, having celebrated teenaged tycoonship, let me add a big caveat. Though I'm convinced that it is now possible for just about anyone to create a great tech company, 30 years of covering Silicon Valley as a journalist has also convinced me that it is almost impossible for one of these children to actually run one of these companies for any length of time.

Leaders may be born, but great managers need to be taught, and that takes experience that no 23-year-old has. We celebrate Steve Jobs now as a great executive, but I watched him fumble and almost destroy Apple in his early twenties. It took him twenty years to learn how to run a big company right. And what was true then is true now: Brilliance and good luck will only carry you when times are good; when times get tough, experience and maturity are your best assets.

Some of the Web 2.0 tycoons understand that. Max Levchin (Paypal, Slide), who may be this generation's Bill Gates, is very consciously putting aside his past job-hopping to now put himself through the training to become a real CEO. Evan Williams (Blogger, Twitter) is doing the same thing, as is Reid Hoffman (Linked-In), and will likely end up as great venture capitalist or board chairmen.

And Mark Zuckerberg? Well, he made a second move this week that suggests he may be halfway to understanding all of this.

To my mind, one of the most brilliant strategic management moves in high-tech history was when Jeff Skoll, the president of eBay, essentially demoted himself and brought in a professional manager, Meg Whitman, to run the company. At the same time, eBay founder Pierre Omidyar kicked himself upstairs to become chairman of the company and get out of Meg's way. There is a famous moment, apparently true, when at a eBay board meeting a frustrated Whitman said to Omidyar, "This is your company, Pierre, don't you want to be more involved in it?" To which Omidyar replied, no, it was Meg's to run.

That was a moment of breathtaking maturity by two entrepreneurs not much older at the time than Zuckerberg. Pierre and Jeff knew that they weren't professional business executives and that they were not prepared to run a company that might double in size every quarter and reach a billion dollars in revenues in a handful of years. So, they wisely found someone who could and got out of her way. As they say, the rest is history.

If other entrepreneurs in the Valley's history had done the same ? instead of attaching their egos to the CEO desk? this town would be a whole lot richer than it is, and a lot more great-potential companies would have survived.

And that brings us to Zuckerberg's half-brilliant move. Tuesday, Facebook announced that it had recruited Sheryl Sandberg away from Google, where she had run that company's Adwords and Adsense keyword advertising businesses.

This was Facebook's second major raid on Google: last year it stole Gideon Yu (who had also once been YouTube's CFO) to become chief financial officer. The company also has a new VP of marketing, also an industry veteran.

These are all smart moves ? the rumor on the street being that Facebook's venture capitalists ordered the moves and Zuckerberg dutifully responded. It suggests that the company understands that with an estimated market value of $15 billion (based on Microsoft's investment) or $5 billion (probably more accurate), it is time to turn the company into a serious enterprise. (It is also yet one more indication that Google is a company headed for trouble.)

But there is one more move that Facebook needs to make. Call it the eBay Play: Zuckerberg needs to fire himself, take over the chairmanship, and bring in a real CEO to run the place. Facebook needs to monetize those 70 million users, fast, if it is stay on top and not fade like last year's news. The company obviously knows that ? hence, last year's attempt by Facebook at an embedded advertising feature, Beacon.

But Beacon was a PR catastrophe, a classic example of young entrepreneur/CEO confusing what was technically possible with what was culturally proper. Facebook can't afford this kind of mistake again ? and it will happen with a 23-year-old in charge, mark my words, no matter how many old pros he surrounds himself with.

Facebook is one of the great success stories of the new century. But now it has to turn those users into spenders. And then the company needs to either find a sugar-daddy buyer or go public, all within the next three years, before its expiration date as a Teen Beat fad.

That's going to take a real pro. Not Mark Zuckerberg. He needs to swallow his ego and kick himself out of the CEO's job. If he pulls this off both smartly and soon, he will still be famous ? and he'll get to keep that billion.

Tad's Tab

A perfect product of Web 2.0, Younoodle.com is a website where you can search for the most interesting early stage companies and college experiments. It's quite ambitious: their startup predictor (not yet launched) claims it will be able to predict successful start up companies with mathematical analysis and and historical data. If you ever wanted to get involved in a new start-up -- or become an angel investor -- and perhaps strike it rich, this is the site for you.

This is the opinion of the columnist, and in no way reflects the opinion of ABC News.

Michael S. Malone is one of the nation's best-known technology writers. He has covered Silicon Valley and high-tech for more than 25 years, beginning with the San Jose Mercury News, as the nation's first daily high-tech reporter. His articles and editorials have appeared in such publications as The Wall Street Journal, the Economist and Fortune, and for two years he was a columnist for The New York Times. He was editor of Forbes ASAP, the world's largest-circulation business-tech magazine, at the height of the dot-com boom. Malone is the author or co-author of a dozen books, notably the best-selling "Virtual Corporation." Malone has also hosted three public television interview series, and most recently co-produced the celebrated PBS miniseries on social entrepreneurs, "The New Heroes." He has been the ABCNEWS.com Silicon Insider columnist since 2000.

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