Facebook is taking a beating.
Its growth has fallen from the stratospheric levels once expected, making early comparisons to Google or Apple seem silly. Its first earnings report as a public company was mediocre at best, barely meeting Wall Street expectations. Its stock price has plunged to an embarrassing $23 or so, nearly 40 percent below the opening price of $38 when the company went public in May.
Facebook CEO Mark Zuckerberg, considered a boy wonder for most of his short career, is now something of a laughingstock among Wall Street's seen-it-all veterans. "The conference call was excruciating," wrote Charles Payne, CEO of investing firm Wall Street Strategies, while describing Facebook's first earnings call. "Zuckerberg tried to sound cool on one hand and like a seasoned vet on the other. It sucked--just like the IPO."
It's an abrupt comedown for Zuckerberg, but he should count his blessings: Guiding Facebook through a period of turmoil could be the best thing that ever happened to him.
The best leaders aren't usually the ones with an unbroken string of successes. Rather, they're the ones who know how to survive and even thrive when things go wrong. And the way they learn how to do that is by falling down, struggling for a while, and then figuring out how to get back up.
Steve Jobs is an obvious example. He was arrogant and overconfident after the company he co-founded, Apple, went public in 1980, clashing frequently with his board of directors. Apple fired him in 1985. Years later, Jobs famously described how devastated he felt, only to realize that getting fired from Apple helped him develop the sustained creativity that turned him from a one-hit wonder into a great business leader.
Many other CEOs considered the best in their fields developed grit and equanimity by overcoming setbacks. Jamie Dimon of J.P. Morgan Chase lost a corporate battle at Citigroup in 1998 and was fired by his longtime mentor, Sandy Weill. Jeff Bezos struggled for years to turn a profit at his company, Amazon, after it went public in 1997. Warren Buffett's firm, Berkshire Hathaway, foundered after he bought it in the 1960s, and only became successful when Buffett converted it from a fading textile manufacturer into a holding company for insurers and other businesses he bought.
For my recent book Rebounders: How Winners Pivot From Setback to Success, I interviewed former Coca-Cola president Don Keough, who told me, "Ask 100 people, 'What have you learned from success?' and most of them will just look at you. But ask, 'What have you learned from failure?' and you'll get lots of answers." Keough was at the company in 1985, when it rolled out New Coke, now considered one of the biggest blunders in corporate history. For Keough, it became one of the key learning experiences of his career.
You don't gain insight just because you struggle, of course. You also have to be open to learning the lessons that present themselves. Facebook's difficulties could make Zuckerberg a much better CEO, but only if he does three things:
1. Examine his own contribution to Facebook's comedown, instead of blaming others. Zuckerberg has asserted an unusual degree of control at Facebook. He can basically make all the big decisions by himself if he chooses to, completely bypassing his board and his executive team. The buck really does stop with him, and he needs to take the responsibility that goes with that. The controversial IPO, for example, might have been botched by Facebook's bankers, but Zuckerberg should forget about that and focus on what he could have done to make it go more smoothly--then incorporate the takeaways into future decision-making.
2. Admit mistakes. Breakthrough success can breed a kind of madness, leading some people to believe they can do no wrong. The result can be disastrous. Harvard Business School professor Bill George wrote recently about how an expectation of perfection may have led the late Penn State football coach Joe Paterno to cover up allegations of child molestation by one of his assistant coaches, instead of exposing them. "Many leaders feel tremendous external pressure to be perfect, but in reality they are far more successful when they are authentic," he wrote. Like a lot of young people, Zuckerberg needs to realize that admitting mistakes is a sign of strength, not weakness.
3. Stay humble. At least a little. Facebook made Zuckerberg a billionaire, but his company still has a long way to go if it's going to change the world the way Zuckerberg has envisioned. Heck, it has a long way to go just to prove it's a solid investment.
At 29, Zuckerberg has attained a rare pinnacle of success, and he still has time to pursue three or four follow-on careers. There will be plenty of time for him to relish his accomplishments and be as brash or defiant as he wants. But for now, his shareholders and employees don't need him to be cool. They need him to work on becoming a seasoned vet.
Rick Newman is the author of Rebounders: How Winners Pivot From Setback to Success. Follow him on Twitter: @rickjnewman.