Going Public Means Never Admitting You’re Wrong


Sometimes I really wish I wasn’t always right. It’s a curse, I tell you.

Linus Torvalds said this on Google+ recently. He wasn’t talking about why he won’t pull from Github. He was talking about his prediction of what Oracle will do next now that their copyright case against Google has gotten thrown out.

Prediction: instead of Oracle coming out and admitting they were morons about their idiotic suit against Android, they’ll come out posturing and talk about how they’ll be vindicated, and pay lawyers to take it to the next level of idiocy.

And he does have the curse, but he isn’t using some Torvalds-style telepathy. Most companies with stockholders have this odd way of not admitting their mistakes. If you had to bet, always bet on endless legal battles rather than honesty in public companies. For startups this is not a concern — they apologize anytime something goes wrong. So much so that TechCrunch made fun of this fact. If you’ll remember with me, Path was found to be uploading their users’ entire address books without so much as telling them only a few months ago. They apologized, corrected their mistake, and everyone moved on. People still want to use Path.

So its obvious that now that Facebook has shareholders they will not admit they did anything wrong this past week. Even though pre-IPO Facebook did admit mistakes, post-IPO Facebook can not. Bloomberg reported this on Wednesday:

“Morgan Stanley followed the same procedures for the Facebook offering that it follows for all IPOs,” Pen Pendleton, a spokesman for the New York-based investment bank, said yesterday in an e-mailed statement. “These procedures are in compliance with all applicable regulations.”

Even if it is legal, it is obvious they made a mistake.

It comes off to me that the stock market can’t handle mistakes. Its not that companies don’t make them, lately it seems to be the opposite, you just can’t call them mistakes. Otherwise, you fear a stock plummet. Companies have to keep fighting every battle they start just because making a mistake is bad for business.

So Facebook is not going to admit a thing, but they will begin doubling their legal costs. Is this what a company must do to go public? Do they have to shut off honesty?