The Reward Is in the RisksFacebook filed an amended S-1 on Wednesday. Generally, the risk factors section of these and other Securities and Exchange Commission filings contain plenty of boilerplate and several legitimate concerns. For every example of a simple copy and paste, you have another entry where, in unusually candid fashion, a company discloses something investors should take under advisement. Often, these warnings do not present anything we did not know before, but the formal language a company must use sets them up in a different light. As I read through Facebook's risks, I turned increasingly bullish. Let's review some the risk factors that piqued my interest. Our culture emphasizes rapid innovation and prioritizes user engagement over short-term financial results. In other words, Facebook is a perpetual start-up. More on that in the amount of time it takes you to read the next line. Our CEO has control over key decision making as a result of his control of a majority of our voting stock. If I went home with Jenna Jameson, I would let her run the show. If somebody is good at something, there's no reason not to give them complete control. This is particularly true at perpetual start-ups such as Facebook. Mark Zuckerberg -- with 57.3% voting power after the IPO -- renders Facebook's board of directors powerless. Do you really want Netflix ( NFLX) CEO Reed Hastings to have any legitimate say whatsoever in Facebook's future?
"Our culture also prioritizes our user engagement over short-term financial results, and we frequently make product decisions that may reduce our short-term revenue or profitability if we believe that the decisions are consistent with our mission and benefit the aggregate user experience and will thereby improve our financial performance over the long term."That's right out of Jeff Bezos' playbook at Amazon.com ( AMZN). The folks who have been trotting out the same old tired bear case against Amazon for more than a decade tend to be the same people who question Facebook's long-term worth and Zuckerberg's level of control. They're also the same bunch who think Apple ( AAPL) can maintain an unprecedented level of greatness without Steve Jobs running the show. I'll need to trot out one of my tired old lines, courtesy of Haruki Murakami in his epic novel 1Q84: "If you can't understand it without an explanation, you can't understand it with an explanation." Even so, I'll keep trying to explain. Growth in use of Facebook through our mobile products, where our ability to monetize is unproven, as a substitute for use on personal computers may negatively affect our revenue and financial results. Speaking of epic, this will become the bear trap of all-time. As I have detailed in previous articleson TheStreet, the world sits on the cusp of a mobile ad revenue explosion. Years ago, we saw the beginning of a trend as people bopped their heads and tinkered with pinwheels on subway cars, buses and sidewalks all around the world. Apple's iPod led to iPhone, which made way for iPad. Because of Apple (or I should say "because of Steve Jobs"), eyeballs across the globe now stand at attention to their smartphones. The world continues to adopt these devices, iPhone or otherwise. Advertisers have a captive audience of mobile users, who are ready to be "social" and interact with a device that has become more than a way of life. Smartphones are part of the culture. They are part of us. And they're not going anywhere. And Google ( GOOG), Facebook and Pandora ( P) will dominate mobile advertising this decade. Bears and purveyors of the bubble thesis sit sadly behind the curve. It takes vision to be a good long-term investor. Part of that vision means investing in perpetual start-ups with once-in-a-generation leaders who do not take on risk just for the sake of taking it on.