Check the Small Things….Always!

“Always check small things.”
                                                                          ~ General Colin Powell, My American Journey, 2003

A few years after my wife and I bought our first small business, we decided to offer our General Manager (who also happened to be our Sunday School teacher), the opportunity to buy into the company by accepting a few shares of stock as part of his compensation. His first question was, “Do you have a rights offering in your charter?”  Thus began my education about this little detail.

In 2010, a movie called The Social Network told the story of Eduardo Saverin.  Mr. Saverin was the other founder of Facebook (besides Mark Zuckerberg).  However, he ultimately lost his position and most of his stake in Facebook.

Saverin was Facebook’s initial source of funding and the only member of the early team with any sort of business training. However, he overlooked a key provision in a corporation’s charter known as a rights offering.  A rights offering is designed to protect existing shareholders.  It guarantees any new shares issued by a corporation must first be offered to current stockholders, allowing them to maintain their proportional ownership of the company.  This is where it gets interesting.

Advised by professional venture capitalists, Mark Zuckerberg incorporated the company in the summer of 2004.  The new corporation’s charter did not include covenants for a rights offering, a fact Saverin overlooked (mistake # 1).  At the time, Zuckerberg was growing increasingly frustrated at his partner’s lack of engagement in the company.  Partly to appease Zuckerberg, in October of 2004, Saverin signed a document granting him 3 million shares in the new corporation (about 24%), but also turning over his voting rights to Zuckerberg, making him the sole director of the company (mistake # 2).

In January of 2005, Zuckerberg caused Facebook to issue 9 million new shares, none of which went to Saverin. The new issue of shares made Saverin’s stake in the company immediately fall below 10%.  The resulting flurry of lawsuits was the focus of the future award-winning movie.

It turns out my friend and business partner had experienced the same trick years before, causing him to lose control of a chain of convenience stories he had created. So he knew to check this little detail.

I hope you will check the details, too… Or, like Saverin, it may just cost you 8 billion dollars!

Rule #8 (of 13): Check Small Things!

While leaders live in the “big picture” world, they should never forget the importance of the details and ensure they are attended to. It is often the small things, or little foxes as King Solomon put it, that ruin the best-laid plans [Song of Solomon 2:15].  Don’t forget the details!  (Colon Powell, as cited in Tanner, 2017, para. 10) [i]

[i] Tanner, R. (2017, October 30). Revisiting Colin Powell’s 13 rules of leadership. Retrieved November 3, 2017, from

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