Facebook - the Social Network & the Smartest Guys in the Room

Current Issues in Business and Society |France

Michelle Wielhouwer 500742749

Stijn Terstappen 500691326

Pauline Wolf

Tracy Wilson 500713345

Renske Wijma 5007089

Documentaries: The Social Network & The Smartest Guys in the Room

Chapter 5: Ethics and Corporate Governance

The Social Network

Summary of the documentary (Michelle)

- Mark Zuckerberg and Severin first created “Facemash” by hacking into Harvard database which made the system crash.

- Together with the Winklevoss brother they came up with the idea to set up a website comparable to Facebook for Harvard students.

- However, Zuckerberg decides to set up the website “Thefacebook” together with Eduardo Severin without informing the Winklevoss brothers.

- Consequently, the Winklevoss brothers claimed that Zuckerberg stole their idea and sued Zuckerberg

- Zuckerberg and Severin partner up with Sean Parker

- Mark moves the company’s base of operation to California, while Severin stays in New York looking to advertising support

- Mark signs huge business deal with Parker’s investors behind Severin’s back

- As a result, Severin’s shares decreased from 30% to 0.03%, while maintaining the ownership percentage of all other parties

- Severin sues Zuckerberg.

- In 2004, Mark removes Parker from the Facebook company after he got arrested for cocaine possession. It implies that Mark anonymously made the call to tip off the police.

- In the end, Zuckerberg loses the lawsuit against the Winklevoss brother and had to pay them $65 million

- Mark agrees to settle with Eduardo to avoid going to court and pays him and unknown amount of money

Ethical Leadership (Tracy Wilson)

- Zuckerberg is portraied in the film as a hypocritical leader: Leader who's not perceived to be a strong moral person, but who attempts to be a moral manager

- Weak moral person: His actions are not motivated by the traists, behaviours and desions making style associeted with a moral person.

- “Strong” moral manager: In the movie, Zuckerberg seems to lead by example. as a moral manager he is able to recognize the importance of proactively putting ethics at the forefront of his leadership agenda.

Deadly sins related to Mark Zuckerberg in the movie; his actions in the movie were motivated by the below mentioned ‘deadly sins’

- Anger

- Greed

- Envy

- Pride

Corporate Governance (Stijn Verstappen)

Scandals

- Cambridge Analytica illegally gained acces to Facebook data which was used to help gain votes for Donald Trump during the election. Facebook knew about the data harvesting and asked them to delete the data but never checked if they actually did.

- Data was obtained though a personality quiz that asked Facebook users to provide information about themselves.

Enron: The Smartest Guys in the Room

Summary of the documentary (Renske Wijma)

- Documentory about Enron Corporation who caused one of history greatest business scandals

- Enron was founded in 1985 by a merger between two engery companies

- Enron experienced glorious years by cooking the books by using the mark-to-mark accounting technique which gave them the ability to recognize revenue on their financial statements before actually receiving the money

- Communication of false numbers to investors and financial advisors.

- After failed contract with Blockbuster, Enron still recognized $100 milion in revenue when they didn’t make any money from the deal.

- Debt increased, but CFO Andrew Fastow used creative accounting by setting up multiple side companies to transfer their debt to. In this way, the debt was no longer shown on Enron’s financial statements which kept the stock prices high.