Would You Sell Your House to Save Your Employees?
Zuckerberg’s $300 million yacht arrived as Meta laid off nearly 1,400 Washington workers. The outrage was predictable. But are we asking the right question?
Imagine this.
Your company is in trouble.
You have 20 employees. They have families, mortgages, car payments and children. Some have worked for you for years.
Your accountant tells you the numbers don’t work. Expenses have to come down.
You have to lay off five people.
Would you sell your house to save their jobs?
Think about that before you answer.
Because the answer tells us a great deal about the controversy surrounding Mark Zuckerberg, his enormous wealth, his $300 million yacht and Meta’s recent layoffs.
Sometimes You Have to Lay People Off
“Sometimes you have to lay people off. You hope you can hire them back when business is better.”
Norman Smith told me that years ago. He helped build one of the largest commercial refrigeration companies in the Midwest.
He was also my stepfather.
I’ve never known anyone who enjoyed laying people off. I certainly didn’t.
But sometimes businesses have to do unpleasant things to survive.
Meta recently announced layoffs affecting 1,395 employees in Washington State. At virtually the same time, Zuckerberg’s reportedly $300 million yacht, Launchpad, arrived in Seattle’s Lake Union.
Talk about bad optics.
Nearly 1,400 people were losing their jobs while the yacht associated with one of the world’s richest men was sitting nearby.
People were understandably angry.
But anger isn’t an economic argument.
And I think the reaction illustrates something our schools do a poor job of teaching:
A billionaire’s wealth, a corporation’s money and an employee’s paycheck are not the same thing.
Put Yourself in the Owner’s Chair
Let’s go back to your imaginary company.
You don’t want to lay off those five employees.
So instead, you sell your house and put the money into the company.
Problem solved.
For now.
Six months later, business still hasn’t improved.
What do you sell next?
Your retirement account?
Your investments?
Your car?
Eventually, your personal money is gone.
Now what?
You still have a failing business, except now you’ve lost your personal assets too.
Small-business owners actually do this. They keep feeding money into a struggling business because they believe things will turn around.
Sometimes they do.
Sometimes the owner loses everything.
That is one reason bankruptcy laws exist.
Why Do Businesses Hire People?
Here’s a statement that may offend some people:
Businesses don’t hire employees to provide jobs.
They hire employees to make the business more productive and, ultimately, more profitable.
That isn’t cruel.
It’s economics.
An entrepreneur makes money by providing goods or services people want at prices they’re willing to pay.
If hiring another employee allows the business to serve more customers, produce more products, improve quality or operate more efficiently, hiring that person makes sense.
If employing that person costs the business more than the value created, eventually something has to change.
We should teach this in school.
In fact, I think we should teach every student to regularly ask one question:
How can I be more valuable?
The business owner should ask:
How can my company become more valuable to our customers?
The employee should ask:
How can I become more valuable to my employer?
Those questions can change careers—and businesses.
“You Just Want Me to Do the Jobs You Don’t Want to Do”
I once hired a young woman to run the front desk of my chiropractic office.
She needed training, so I trained her.
Later, I moved my office and my needs changed. Among other things, I wanted her to make coffee and clean the restrooms.
She objected.
“You just want me to do the jobs you don’t want to do.”
I told her:
“That’s right. I did them yesterday.”
That may sound harsh until you understand the point.
Cleaning the restroom wasn’t beneath me. Making coffee wasn’t beneath me.
I had been doing both.
But I could also examine and treat patients.
She couldn’t.
So, which made more sense?
Should I clean the restroom while she sat at the front desk waiting for the telephone to ring?
Or should she clean the restroom while I treated another patient?
That’s division of labor.
That’s productivity.
That’s why I hired her.
I wanted her doing the things she could do so I could spend more time doing the things only I could do.
There is an important lesson there.
I’ve met people who have difficulty finding work because they think certain jobs are beneath them.
They’re waiting for someone to give them the job they want rather than becoming exceptionally good at the job they’re qualified to do today.
There is nothing demeaning about starting at the bottom.
Learn.
Work.
Become valuable.
Then become more valuable.
Now Let’s Make You a Billionaire
Suppose I start a corporation for you.
Your company issues billions of shares, and you own almost all of them.
Then investors begin buying shares.
As the price rises, financial websites calculate the value of your holdings.
Suddenly they announce:
YOU ARE WORTH $5 BILLION.
Congratulations.
But there’s a problem.
Where’s your $5 billion?
You don’t have it.
You own stock that the market currently values at $5 billion.
Those aren’t the same thing.
If you want cash, you have to sell some of your stock.
And the price you receive depends on whether someone else wants to buy it.
That’s important when we hear that Zuckerberg is worth hundreds of billions of dollars.
He doesn’t have hundreds of billions of dollars sitting in a checking account.
Most of that wealth represents the estimated value of his ownership interests.
Now Hire Meta’s 1,400 Employees
Let’s say you’re feeling generous.
You decide to hire approximately 1,400 employees.
Suppose their average compensation were $379,000.
Do the arithmetic:
1,400 × $379,000 = $530,600,000 per year.
More than half a billion dollars.
Every year.
And that’s before considering all of the other costs involved in operating the business.
Here’s the important part:
Your employees cannot be paid with your net worth.
They have to be paid with money.
Your landlord wants money.
Your electric company wants money.
Your suppliers want money.
The IRS wants money.
You can’t tell them:
“Don’t worry. Forbes says I’m a billionaire.”
So Why Doesn’t Zuckerberg Just Pay Them?
This is where the discussion gets interesting.
Zuckerberg is extraordinarily wealthy.
But Meta’s own filings show something that might surprise you.
His annual salary is essentially nothing—$1.
He doesn’t receive the kind of salary, bonus and stock awards people might imagine when they hear “CEO of Meta.”
Most of his wealth comes from owning stock.
So imagine Zuckerberg sold billions of dollars of his personal Meta shares and gave the proceeds back to Meta so the company could keep employees it had decided it didn’t need.
What happens next year?
Does he sell more?
And the year after that?
At what point does his personal responsibility end and the corporation’s responsibility begin?
Which brings us right back to you.
Would You Sell Your House?
Remember those five employees in your imaginary company?
Would you sell your house to save their jobs?
If you say yes, I have another question.
Would you sell your retirement investments too?
Your savings?
Your car?
How much of your personal wealth are your employees entitled to before you are allowed to say:
The business has to support itself?
That’s the question hidden underneath the Zuckerberg controversy.
The Yacht Is Almost Irresistible
I understand why the yacht bothers people.
A $300 million yacht is almost unimaginable to most of us.
Put that yacht next to 1,400 people receiving layoff notices and you’ve created an image practically designed to generate outrage.
The optics are awful.
But the optics can also interfere with our thinking.
You can believe that spending $300 million on a yacht is obscene.
You can dislike Zuckerberg.
You can criticize Meta’s management.
You can argue that executives have moral responsibilities toward their employees.
You can even argue that our economic system allows individuals to accumulate too much wealth.
Those are all legitimate subjects for debate.
But they’re not the same argument as:
“Zuckerberg is a billionaire, therefore Meta shouldn’t lay off employees.”
That statement confuses personal wealth with corporate finances.
We Should Be Teaching This
This isn’t really an article about Mark Zuckerberg.
It’s about economic literacy.
It’s about understanding where money comes from.
It’s about understanding why businesses hire people.
It’s about understanding the difference between income and wealth.
And perhaps most importantly, it’s about understanding value.
Businesses survive by creating value for customers.
Employees prosper by creating value for employers.
Investors prosper when the businesses they own become more valuable.
None of that guarantees fairness. None of it means every corporate decision is wise or ethical.
But before we decide whether something is fair, we should at least understand how it works.
So the next time you hear that a billionaire’s company is laying off employees, don’t start with the billionaire’s net worth.
Start with a different question:
If you owned the company, what would you do?
And before answering, remember:
It’s your house we’re talking about.
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