Twitter goes public: a few tweets

September 13, 2013

When Twitter announced it was going public, Leaders we Deserve Editor in Tweet provided his own tweets to mark the news

Friday 13th September 2013

1. Tudor Rickards ‏@Tudortweet now
@smh Thanks.Your article on twitter has encouraged me to review my earlier blogs from the time I wondered what Twitter’s business model is
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2. Tudor Rickards ‏@Tudortweet now
Further thoughts on Twitter. What I like: unexpectedness of tweets from people with primary focus to communicate not capitalize
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3. Tudor Rickards ‏@Tudortweet now
Further thoughts of twitter: What I dislike, Use as crude and sometimes covert advertising [lessons to be learned from TV commercials]
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4. Tudor Rickards ‏@Tudortweet now
I tweet therefore I am. I don’t tweet because I am something else
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5. Tudor Rickards ‏@Tudortweet now
Last twitter tweet for now. Twitter will split into several services whose form and function will be shaped by us the tweeters.
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A more formal analysis on how Twitter makes money came from The Sydney Morning Herald. This triggered the Tweets above.

Other early tweeters

1. Reuters India ‏@ReutersIndia 2h
Twitter takes first step toward going public
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2. James Hirsen ‏@thejimjams 3h
Things to know before you load up on Twitter stock
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3. Los Angeles Times

Twitter files for an IPO; five things you should know
As you may have heard, Twitter has filed for a confidential initial public offering of stock, so in case you aren’t too familiar with the company, here are five quick things you should know.
[Also shows original Twitter announcement]


Why business students like the Alibaba case and Jack Ma

March 23, 2013

Jack Ma wikipediaWhen Asian business students are asked to write about leadership, one of their favourite topics is the Chinese telecommunications giant Alibaba, and its dynamic leader Jack Ma

This is hardly surprising. The company has grown through the vision and enterprise of its founder. Already a host of corporate stories are developing around him and his giant baby, recently valued at 35 billion dollars.

The Jack Ma story

Jack Ma fits the profile of the creative entrepreneur. His decisions are imaginative. He describes his leadership journey in vivid anecdotes which suggests that he has a well-developed transformational style. An English teacher and graduate of Hangzhou, Mr Ma became a skilled web site builder, one of the first in China.

When he was thinking about going international he looked for a corporate name that worked in Chinese but which also had global connotations. Once when in America, someone mentioned the story of Ali-Baba to him, and he thought he had found what he was looking for. He tested his idea quickly and locally, as found there was surprising recognition of the story from the Arabian Knights, and the magic password Open Sesame which opened up a cave full of treasures.. Yes, my company could be remembered for opening up a place full of treasures, he thought. Ali-Baba had brought prosperity to his village.

He listed the new name slightly differently, noticing that it was also effective when written in Chinese characters.

A sprawling conglomerate

Alibaba, founded in 1999, was to grow into the largest private corporation in China. It was described by Bloomberg Business Week as a sprawling conglomerate of web-based companies. The largest elements are Taobao and the Alibaba group. The former is a Chinese version of E-Bay and was to become market leader in e-commerce in China

Its Business relationship with Yahoo has been controversial. Alibaba grew and prospered under its founder-leader, Yahoo struggled to compete in its more global business.

Time to quit says Jack Ma

Recently, the founder has decided to hand over the leadership to a senior executive Jonathan Lu in advance of an anticipated initial public share offering which is being predicted to match that of Facebook [or more, as Facebook's shares have dipped this year]. The South China Post stated:

The announcement came a few days after Alibaba, which Ma founded in 1999, announced a sweeping restructuring that will divide the group into 25 business units under the direction of two committees, one for strategy and the other for operations. In an e-mail sent to Alibaba’s more than 24,000 employees worldwide on January 15, Ma said he decided to relinquish his position as chief executive because the company had people who “are better equipped to manage and lead an internet ecosystem like ours”.

Ma described how he realised years ago that he was not suited to be a traditional chief executive of a big firm. He said that “at 48 I am no longer ‘young’ for the internet business”. What he aims to be is “a good partner to more capable colleagues”, which he intends to accomplish by continuing his role as executive chairman.

Ma described the restructuring as “the most difficult reorganisation” in Alibaba’s history. But it is a bet to stay competitive in the mainland’s fast-growing e-commerce market. JP Morgan has estimated this market to be worth US$436 billion in 2015. The move fuelled speculation that Ma was laying the groundwork for Alibaba’s initial public offering, which the company has denied.

What happens next?

Predictions are generally favourable. I agree with The Economist [March 23rd 2013] which noted that while the future is promising “…there is nothing inevitable about Alibaba’s future fortunes”. I urge students of leadership to do a little ‘map testing’ before accepting that newspaper’s casual SWOT analysis: [1] that Alibaba could overreach itself; that [2] it would face the risk that ‘foreign governments will clamp down’ and [3] face an internal threat because ” The Communist Party is bound to be jealous of an outfit that has so much data on Chinese citizens.”

I’m afraid that piece of analysis would have not obtained a particular high grade, if it had been supplied in a student assignment on Alibaba’s prospects.

Update

September 10th 2014

Jack Ma biographic note on the man who is changing china.

In China, where sellers don’t trust buyers and vice-versa, Alibaba has provided protection for both parties.


Facebook IPO helps define the American dream

May 19, 2012

The initial public offering for Facebook shares reveals much about the American dream

The valuation

When the dust settled after the first day of trading [18th May 2012], Facebook’s valuation, of just over $100 billion placed it roughly on a par with Amazon.

The dream of wealth creation

The wealth accruing to Mark Zuckerman and the other young co-founders has been widely noted. In America, much has also been made about what is seem as tax-dodging by Eduardo Saverin, who has taken up residency in Singapore and renounced his American citizenship, although his actions are seen differently in Singapore

Expectations

On the date of the public offering [18th May 2012], The Verge attempted to answer the question of why the stock appeared to be trading at a figure based so much on expectations.

Why would so many smart, rich people put such a premium on the stock? IPOs are an insider’s game. Buying the stock today at $38 means paying a premium to the founders, early investors, bankers, and even the bankers’ best clients, all of who have passed the stock down the food chain and taken their bite along the way.

Can Google and Facebook be compared easily?

The success of Google and its continued growth after its own share launch is now being used to justify the excitement. Google’s revenues are roughly three times those of Facebook ($9 billion to $3.5). But the prospects for the two companies seem difficult to assess (although the graph offered in The Verge article is worth studying).

The Initial Public Offering [IPO] was considered less than a success. The Los Angeles Times put it this way

“There was all this pressure and hype and attention with all eyes on Facebook — and the starlet tripped on the red carpet,” said Max Wolff, an analyst at GreenCrest Capital Management in New York. What went wrong? Analysts point to a variety of factors that might have given investors pause. Its valuation at about 100 times earnings likely struck some as too high. Its growth in new users is slowing. And Facebook has not yet found a way to cash in on mobile devices, where social media is gravitating.

This week’s decision by General Motors Co. to stop advertising on Facebook because it wasn’t getting results heightened concerns about how Facebook can profit from its 900 million users.

But perhaps the biggest blunders came in recent days as the company and its largest shareholders moved to maximize their profits at the expense of new investors.

Friendship and economics: The dilemma for Facebook

Other commentators have gone beyond the financials, suggesting a flaw in the proposed growth model of Facebook. The massive popular reach of the corporation comes with a belief that ultimately it was a social phenomenon primarily about achieving social goals. In particular it has redefined personal identity and the concept of friendship. There was always something apart from economics in that set of beliefs.

The dilemma for Facebook becomes more visible now that the corporation is legally obligated to conform to economic principles and governance. Considerations of ethics, stock price and social vision increasingly will interplay. Even its efforts to promote the American Dream may be scrutinized more coolly and globally.


Glencore, the IPO and how to make shedloads of money

May 5, 2011

The Swiss Commodity traders Glencore has announced its initial public offering (IPO) of shares to arrange a subsequent upswing in the market.  The commercial logic of the move seems convincing.  The corporate governance side less so.

The announcement of the IPO drew attention to a secretive corporation.  At first the news was mostly on the scale and timing of the IPO. The company offering of $11 billion shares set a corporate value of around $60 billion. The IPO documentation alerted journalists to remuneration paid to its cadre of top traders. I couldn’t help thinking of the advertisement to be seen as you arrive at Geneva airport “Money talks but wealth whispers.” The Swiss have developed a well-justified reputation for financial discretion.

History

An earlier post oulined the discete nature of Glencore [global energy commodity resources].  Some stories were about the company’s avoidance of public scrutiny. More was made public of interesting remuneration statistics.

 The remuneration packages of Glencore’s traders dwarfs the average payout by banks to their star employees. For example, Glencore’s London-based oil traders earn almost four times the average paid to Barclays Capital’s investment bankers.

Simon Murray

Another story produced unfavourable comments on the uninhibited views expressed by its new chairman Simon Murray
Ruth Sutherland of The Mail online noted

Say what you like about Simon Murray, the veteran Hong Kong entrepreneur appointed to chair Glencore, but he cannot be accused of dullness. The choice of a 71-year-old polar adventurer and former French Foreign Legionnaire as chairman of Glencore always promised to be entertaining and so it has proved. Murray created a furore with his views on women in the boardroom, making it clear he wouldn’t be rushing to recruit any.

In contrast, someone who was appointed a director was Tony Hayward, the man at the centre of the BP oil-spill disaster. However, the BBC’s top business commentator Robert Peston was forced to retract a story that Lord Browne, Haywood’s mentor and former boss at BP, was to become chairman of the new floated company and at the same time revealed the appointment of Simon Murray. According to Peston, Lord Browne was rather too keen on conforming to corporate governance guidelines.

Citiwire reported that

Ivan Glasenberg [CEO, pictured above] will become one of Europe’s richest men after Glencore’s initial public offering, as the value of his stake will surge to almost $10 billion. Glencore priced its initial public offering on Wednesday [April 3rd] at a level that will give the commodities trading house a current valuation of between $48 billion and $58 billion.


City custom and practice

The Financial Times suggested that in time-honoured city practice, “Glencore set the price of the IPO below expectations in hope of stock rally”. Which, if I understand the euphemism is really good news to those who have signed up to the floatation. Words like “money, shedloads of” cross the mind.


Glencore and invisible leadership

April 26, 2011

The Swiss Commodity traders Glencore has avoided much of the hype centred on successful businesses and their leaders. So when they announced an initial public offering (IPO) of shares for next month in London and Hong Kong [May 2011] a very interesting story began to emerge

At first the news was mostly on the scale and timing of the IPO. The company offering of $11 billion shares set a corporate value of around $60 billion. The risks of commodities trading as well as its rewards are more well-known, although as one commentator put it

“They have been a private-run company and made a truck-load of money and you’d have to think that these guys would have more market intelligence than most”

The IPO documentation alerted journalists to remuneration paid to its cadre of top traders. I couldn’t help thinking of the advertisement to be seen as you arrive at Geneva airport “Money talks but wealth whispers.” The Swiss have developed a well-justified reputation for financial discretion.

History

Glencore [global energy commodity resources] changed its name from Marc Rich & Co. after a management buy-out in 1994. Mr Rich has been described as a former fugitive U.S. financier. [He was indicted in the United States on federal charges of illegally making oil deals with Iran during the Iran hostage crisis. He was in Switzerland at the time of the indictment. He subsequently received a presidential pardon from U.S. President Bill Clinton on his last day of office. One report described The Rich Boys: "an ultra-secretive network rules independent oil trading. Its mentor: Marc Rich". The network includes former 'Rich Boys' who spun off and founded Trafigura, the company at the heart of a superinjuction story in 2009].

More stories developed

More stories developed. Some were about the company’s avoidance of public scrutiny. More was made public of interesting remuneration statistics.

According to financial data from Glencore Energy, a wholly owned subsidiary of Glencore UK, its 32 traders earned a total of $US41.5m. In addition, traders are understood to be paid substantial performance-related share awards. The remuneration packages of Glencore’s traders dwarfs the average payout by banks to their star employees. For example, Glencore’s London-based oil traders earn almost four times the average paid to Barclays Capital’s investment bankers.

Simon Murray

Another story produced unfavourable comments on the uninhibited views expressed by its new chairman Simon Murray
Ruth Sutherland of The Mail online noted

Say what you like about Simon Murray, the veteran Hong Kong entrepreneur appointed to chair Glencore, but he cannot be accused of dullness. The choice of a 71-year-old polar adventurer and former French Foreign Legionnaire as chairman of Glencore always promised to be entertaining and so it has proved. Murray created a furore with his views on women in the boardroom, making it clear he wouldn’t be rushing to recruit any.

In contrast, someone who was appointed a director was Tony Hayward, the man at the centre of the BP oil-spill disaster. However, the BBC’s top business commentator Robert Peston was forced to retract a story that Lord Browne, Haywood’s mentor and former boss at BP, was to become chairman of the new floated company and at the same time revealed the appointment of Simon Murray. According to Peston, Lord Browne was rather too keen on conforming to corporate governance guidelines.

Leadership lessons

I hesitate to offer more than a few tentative questions at this stage of the unfolding story. Glencore has rarely been held up as an example of effective corporate leadership, preferring to avoid publicity. Its current chairman is quickly labelled as an old-fashioned charismatic frontiersman impatient with conventions of political correctness. Lord Browne, himself once seen as someone prepared to take risks in the interests of corporate growth, is cast as the prudent upholder of corporate governance principles. Is the polar explorer a perfect match for the once discrete corporation? Will its wealth now not so much be whispered about, but shouted in business headlines? Will Goldman Sachs, who was not invited to the IPO party, be shown right in its reservations about the whole business?


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