At a Salesforce.com event, Facebook COO Sheryl Sandberg announced that the social network has hit 120 million users — up from 100 million in late August. The company is succeeding in its stated plan to emphasize growth over revenues. A pity that, with the lack of a strong advertising business to support the growth, more users just means more spending on servers.
Is Facebook making money? Losing money? One would think that investing $240 million in a company entitles one to answers to such questions. But one would be wrong. Microsoft executives are so in the dark about the social network's finances that they have taken to quizzing reporters for information, we hear. (Photoillustration by Richard Blakeley)
Google and Yahoo target search ads based on mere keywords. How passé! Facebook's targeted ads, which draw on the personal information users enter into their profiles, are clearly the future, right? If only the company's engineers could competently write the code that targets those ads. A Facebook advertiser who has spent thousands of dollars on campaigns targeted by age and country says that the site's new reporting tools for advertisers have exposed a serious problem: Either the targeting routines are broken, or the reporting is completely off. An ad meant for U.K. teens went mostly to the U.S. and other European countries instead. A campaign meant to be placed in front of Irish users saw 1 in 14 ads go elsewhere. It's a poor reflection on Facebook COO Sheryl Sandberg, whose expertise in running Google's automated ad systems was touted as her main qualification for the job. Here are screenshots of some of the advertisers' reports:
Gideon Yu is flying back from Dubai today, we hear. His coworkers at Facebook are surely anxious to know what gifts he's bringing back — and we don't mean the duty-free kind. TechCrunch reports he was there on a fundraising mission. The Persian Gulf's sovereign wealth funds are swollen with petrodollars. But Yu's assignment was tough. Maintaining the $15 billion valuation Facebook obtained from Microsoft and Hong Kong investor Li Ka-Shing in the face of a declining advertising market will require a lot of Yu's demonstrated slickness. But if Yu can squeeze cash out of Bill Gates, surely he can navigate a Middle Eastern bazaar.The bad news: The company needs the cash. TechCrunch editor Michael Arrington has a detailed estimate of Facebook's expenses:
Another embarrassing outage for Facebook: The homepage for Facebook.co.uk is displaying a set of directories, as if the server had been wiped clean. Before you blame Facebook COO Sheryl Sandberg for this one, check out the domain-name registration. Facebook.co.uk is registered to one Cameron Winklevoss; last year, it displayed a placeholder homepage. So who's Cameron Winklevoss, and what makes this deception so intriguing?Cameron and his twin brother Tyler famously sued Facebook founder Mark Zuckerberg, claiming he copied the code for his site from ConnectU, a similar social network they asked him to help code while they were all students at Harvard. Facebook and ConnectU settled the lawsuit earlier this year. One wonders if Facebook's lawyers forgot to ask for the UK domain name.
There's a "Steven P Jobs" on Facebook. But it's not Apple's CEO. How can I tell? The biographical details, which anyone can get from Wikipedia, are all correct. But the "About Me" section is a dead giveaway.It reads, "Have a passion for really great products!" The exclamation point kills it for me. Add to that: He's not even in Facebook's Apple network. His wife, Laurene Powell-Jobs, and his daughter Lisa Brennan-Jobs both have Facebook profiles, and they aren't on his friends list. Sadly, 75 Apple employees, drawn to any electronic hint of their cult leader, are. I'm left wishing Dan Lyons had been the one to pull this stunt. The original Fake Steve Jobs would have made this Facebook page so convincing I would have believed it. And gladly.
Mark Zuckerberg's college-spawned startup is supposed to hire its 1,000th employee sometime this year. I don't think that's going to happen. If Zuckerberg isn't talking about layoffs behind closed doors, one of his executives must be brave enough to bring it up. I don't think the company is going to issue pink slips. But I do think its headlong growth in employees will come crashing to a halt before the end of the year.Here's some back of the envelope math on Facebook's burn rate. Figure the company's operating expenses are divided roughly half in labor, half in operations like running its servers. Count $100,000 in salary per employee, and double that in benefits and other overhead; double that again to account for the company's non-labor costs. You end up with an annual cost structure of $400 million. Facebook's revenues for this year are projected to be $300 million to $350 million; if the company isn't already operating in the red, it's headed there fast. Microsoft's $240 million investment? Most of that is already gone towards buying servers — and it's not like Facebook can stop buying servers as usage of its site continues to boom. Publicly, Zuckerberg has talked about the company making growth its priority. But a $400 million a year ship can sink fast, especially if the advertising market faces a hard contraction and media buyers cut back on their more experimental ad buys. And none of Facebook's new ad formats have proven to be a breakout hit, as Google's AdWords was earlier this decade. That's why I think Facebook's braintrust is talking about whether they can afford to keep hiring — and whether they need to cull their existing ranks. Here's where Facebook COO Sheryl Sandberg, the law-and-order type Zuckerberg hired from Google, comes in. She's already made hiring considerably more bureaucratic, instituting new requirements straight out of the Googleplex, like a 3.5 GPA from a top school. Getting strict on recruiting is just the start. Facebookers should expect to see more rules, rules, rules. And even the slightest violation will prove cause for firing — especially for employees who are within weeks of vesting their first batch of stock options, which only come after a year on the job. Sandberg's very savvy about keeping up appearances. Google thrived in part because, in the darkest days of the dotcom crash, from 2001 through 2003, it was the only company hiring. Until it bought DoubleClick, Google had never done a layoff. That's part of Google's image, and I'm sure Sandberg wants it to be part of Facebook's image, too. So we won't hear about a Facebook hiring freeze. We certainly won't hear about layoffs. Whatever happens will be quiet: Candidates won't get called back about jobs they applied for. Managers will find their hiring requests tied up in bureaucracy. And employees will quietly box up their things and go. The sad thing is that those Facebookers will think they screwed up. They won't even have the saving grace of a layoff — the corporate kiss-off that says, "Hey, kid, chin up — it's not you, it's me." A layoff would be the honest thing. But it's the one cost-cutting move Facebook can't afford.
Many developers are giving up on Facebook's third-party applications platform, finding it too hard to follow the social network's strict rules for programs which piggyback on its lists of friends and news feeds to find new users. But one application has thrived: Joe Green's Causes has seen traffic triple in the past month, helped in part by interest in the election. But only in part.Causes, Inside Facebook notes, is part of Facebook's "Great Apps" program — handpicked applications which enjoy special treatment from Facebook, including more frequent appearances in users' news feeds. What makes Causes a Great App? One hopes it doesn't have anything to do with Green being Facebook CEO Mark Zuckerberg's Harvard roommate. (Chart by Inside Facebook)
Even Bono's privacy is an illusion. A picture of the U2 rocker (and venture-capital investor at Silicon Valley's Elevation Partners) with two comely teenagers, Hannah Emerson and Andrea Feick, was leaked to the Daily Mail via Facebook. (The site has notoriously bad security on its online photo albums. Know someone who knows someone who knows someone? You can see their pics, no problem.) We now understand why Wikipedia cofounder Jimmy Wales likes to pal around with Bono; great minds think below the belt. Can you think of a better caption? Leave it in the comments. The best one will become the post's new headline. Friday's winner: kgbeat, who turned Jason Calacanis's two-fingered salute into the answer to the question, "How many rounds of layoffs are planned at Mahalo?"
Burn Rate, Michael Wolff's tell-all book about the birth of the Internet business, was a clever read which used the then-nascent medium to best effect. The Web-startup founder posted the index of his book online, driving all the Web insiders to his site to see if they were mentioned — and then to the bookstore to see exactly how. Which makes me surprised to see how clueless he is about Facebook. A tipster points out that his profile reads like an ad for his new book on Rupert Murdoch — but you have to be one of his 438 friends to see it. Which sounds like a good predictor of his book sales.
In New York, the notion that the girl in marketing really wants to be a Broadway singer is taken for granted. In Silicon Valley, it's seen as a bit bizarre. But I'm charmed by Facebooker Randi Zuckerberg's career aspirations. Her singing-and-dancing sideline, first seen in "Valleyfreude," has waxed and waned with the demands of her day job. (Yes, her younger brother, Mark, is her employer.) But she's back with a paean to undecided voters, "Should I Red or Should I Blue?", which she produced (and sang) for Tina Brown's overstaffed, undertrafficked website, the Daily Beast.Something about this arrangement smacks of social climbing. But who's climbing whom? Randi Zuckerberg, one of Facebook's early employees, who helped the site grow to 100 million users? Or a has-been magazine editor, famous in Manhattan but nowhere else, grappling with how to adapt her outrageous spending habits to a far leaner medium, and leaned on her pal Barry Diller to fund and launch the site, rather than trying the entrepreneurial route? From a Left Coast vantage point, it looks like Brown is trying to attach herself to Zuckerberg's star, not the other way around. Zuckerberg, cleverly, registered her own website, shouldiredorshouldiblue.com. A wise hedge, should Brown's website go down in expensive flames.
Stewart Alsop, the goofy San Francisco-based venture capitalist, has this in common with Nouriel Roubini, the louche New York University professor known as "Dr. Doom" for his timely predictions of the current market collapse: Both are Facebook stalkers, aggressive in their requesting of friendship from attractive young women. But Alsop has one key difference: He's utterly shameless about it. Roubini was spurred into late-night Hitlerian name-calling by Gawker's reporting on his Facebook habits. We've sometimes felt the urge to hire a bodyguard for CNET video personality Natali Del Conte when she and Alsop attended the same party.But confronted by Mashable about his relationship collection, Alsop freely fessed up: "In his mid-50s, Alsop reaches out to young attractive women and asks if he can be their friend. Many say yes. Alsop says he's an old guy and it makes him feel as if he's got something going on. There's no downside for Alsop. Some may think it's weird, but it doesn't change anything for him." In case you had any doubts on how free-thinking the Bay Area is on such matters, Robin Wolaner, Alsop's "No. 1 girlfriend" and the CEO of social network TeeBeeDee, supports her man's Facebook habit. Even though, in the same Mashable article, she recommends against accepting friend requests from people you don't really know. Like, say, her 50something venture-capitalist boyfriend.
Welcome home, Mark Zuckerberg! A tipster reports Facebook's 24-year-old CEO has returned to the States, on a business-class flight from London to New York, from his trip around Europe. He wore his usual North Face jacket, our tipster reports. Business class, Mark? I thought times were tough all over.
It has taken Facebook more than a year to pick the 25 winners of its FBFund grants competition, who have received $25,000 prizes. And now those 25 can try for $250,000 more, according to Facebook's FAQ: "The top 25 applications [in round I] will receive $25k grant. After Round I the top 25 may resubmit to apply for one of five $250k grants awarded in Round II." So if you win both grants, you get $275K, right? Wrong!By Facebook's math, one $25,000 grant + one $250,000 grant = a total of $250,000. In announcing the Round I winners, Facebook's Catherine Lee pulled a $225,000 figure out of thin air: "Once round two closes in December, we will announce our five finalists, each of which will receive up to an additional $225,000 in funding." I'm sure Facebook flack Elliot Schrage has some highly entertaining explanation for this which he will deliver straightfaced to other reporters, who will then call us and howl with laughter. For now, we're content to just blame Sheryl Sandberg.
Add to the "email murder," "death by text message," and "MySpace suicide" this technology-enabled homicide: Wayne Forrester, a 34-year-old British man has confessed that while drunk and high on cocaine, he stabbed his wife Emma to death over an update she made to her Facebook profile. She had changed her status on the social network to "single" after her husband moved out. A new way to announce a breakup, but the oldest of stories. Technology does not change human nature; if anything, it amplifies it.
All you need to know is the New York Post — a good newspaper for breaking stories — did a "thumbsucker" article. It speculates on whether or not Mark Zuckerberg is doing more, or less, to launch a music service. It tells you nothing Jordan Golson didn't post a year ago. Nonetheless, you'll be reading all about Facebook's music service for the next 24 hours. We can't unspin every tech industry story on the Internet, but I'm starting to think we need a "Hot Air Alert."
Don't call it a "social network" — the product that will save Yahoo is an "enhanced profile." Which just happens to look exactly like someone's profile page on Facebook or MySpace — friends, updates, and all of that. CNET News editor-in-chief Dan Farber got the PowerPoint deck, as did AllThingsD's Kara Swisher. Is it something they teach you in journalism school — that writing about tech involves fawning over something simply because it is new and you got to see it first? I never got to take that class. (Screenshot via Webware)
How was Mark Zuckerberg's European vacation? Totally awesome! He met a lot of people who are using Facebook to talk to their cousins in Spanish, protest TV crews, and bring back a discontinued candy bar. If that's not making the world a better place, what is? Zuckerberg doesn't mention his major faux pas: Bringing up Facebook users' staging of protests against left-wing guerrillas in Colombia, an achievement he cited in his infamous SXSW keynote interview. As Eric Eldon recently pointed out on VentureBeat, Colombia has right-wing guerrillas, too, with close ties to the U.S.-backed government. They're not as popular in Germany as they are in the U.S. Nor, for that matter is Facebook.
A cameraman caught CNN legal analyst Jeffrey Toobin checking Facebook in the middle of Wednesday's presidential debate. Come on, admit it: You were doing it, too. (Why is GOP media consultant Alex Castellanos's name scrolling through the frame? Yeah, we couldn't figure that out, either, but we're told it's Toobin on screen, not Castellanos.)
