Facebook's vaunted ad-targeting system, the buy-your-own ad tool meant to menace Google's $20 billion-a-year monster money machine, has become a joke. What only Internet-industry insiders seem to realize: It allows such minutely detailed targeting that people are now using it as a timewasting trick to amuse their friends — or total strangers. Underemployed rich kid Sam Lessin — yes, the one whose investment-banker dad provided the stage set for Camp Cyprus's Internet-destroying seaside frolic — created an ad meant to target his girlfriend, Wall Street Journal reporter Jessica Vascellaro. Gizmodo, a gadget website, has had an intern hopeful targeting a Facebook ad at employees of Gawker Media, the publisher of both Gizmodo and Valleywag, for months. And now some fellow has started promoting his son's Twitter feed.The campaign isn't doing much for Johnny Nguyen of Crescent, Calif. Despite the ad, he only has eight followers on the microblogging site, which doesn't speak well for Facebook's efficacy as an advertising platform. But it does suggest a future for Facebook. Google is where people will go when they want to purchase customers. Facebook is where bored people will pay to entertain their friends, and lonely people will pay to feel like someone's listening to their Internet rants. Money can't buy you love, but it may get you a Facebook friend. Think of the money spent on 900 numbers by people who just want someone to talk to, and you can imagine the potential.

BarTab. Thankster. Daikon. Pongr. Newsbrane. Faithfeed. Koofers. Say the names of the apps which won Facebook's application-writing contest out loud, and you instantly understand what a joke the process must have been. What's really funny is how long it took Facebook's grants committee to arrive at this list of 25 winners, who will receive a second round of $25,000 grants from Facebook's FBFund and "mentoring" from Facebook employees. (Sadly, no therapy is included.)Facebook had first promised an announcement for September 22, then October 10. The results finally came today — only after Valleywag pointed out the ongoing delay. Facebook is now spinning the "amazing diversity" of its winners. Translation: They gave up and picked them at random. A suggestion to Facebook's grant-granters: If no one deserves a prize, it's totally okay not to give one.

A quartet of Valley veterans has started Cloudera. They're pitching it as "Red Hat for Hadoop." Hadoop is an open-source implementation of Google's MapReduce infrastructure software, supposedly useful for Internet-computing projects. Cloudera plans to offer technical support for Hadoop. And yet here I thought the whole point of cloud computing was that someone else ran Hadoop so you didn't have to. Whatever! I'm confident that the founders of Cloudera will make tons of money, if only for this reason: Its data guru, Jeff Hammerbacher, worked on credit derivatives at Bear Stearns before he left and joined Facebook. He joined the social network in time for its notional value to soar to $15 billion. Cloudera's business looks questionable, but I trust Hammerbacher's ability to convince someone else that he's built something so vast and complicated that they buy it before they figure out what it's really worth. (Photo by jakob)

Silicon Valley's bubble in Facebook-apps startup has been our own local version of the crisis in toxic mortgage securities. With venture capitalists growing leary of the concept, developers have been eagerly awaiting the outcome of Facebook's FBFund, a grants program for applications startups. Results were promised on September 22, then again last Friday; Facebook still hasn't made a decision on the lucky winners. Why? Because Facebook's applications platform has become, like everything else in the company, a scene of rabidly intense politicking.Here's an update for anyone who didn't get the memo: Facebook's applications "platform," a set of software tools for embedding timewasting entertainments within the social network's pages, is not a level playing field. Some applications are more equal than others. That's only become clearer since Facebook foolishly put Facebook's platform in the hands of its top flack, Washington-trained bloviator Elliot Schrage. Facebook's Great Apps program, meant to designate higher-quality applications, has become a shameful excuse for nepotism. Awarding money on the merits is hard enough. When you mix in the need to help out your COO's brother-in-law's pet startup, or your ex-president's latest venture, it complicates matters. Is Facebook going to come out with a list of apps to fund that it's truly proud of? Or will this look more like an appropriations bill after it's made its way through Congress, larded with earmarks?

The infamous Camp Cyprus 20 are trickling back home. And they feel fine. The twentysomethings of Camp Cyprus work at companies like Google, Facebook, and Blip.tv, all of which make a business of moving our lives online. They gathered at the Cyprus vacation home of Wall Street banker Bob Lessin, overlooking the wine-dark Mediterranean, at the invitation of his startup-founder son, Sam, for a vacation. And in this hyperconnected age, they must surely be aware that a lip-synching video they made of their trip was an Internet sensation, marking the end of an era. If they feel any shame for popping the Web 2.0 bubble, they are not blogging, Tumblring, Twittering, or FriendFeeding it. The only concession to embarrassment over the incident was making the video private — and of course, it promptly resurfaced on YouTube and elsewhere. Sam Lessin, in public, is a privacy freak; privacy is the sales pitch for his staggeringly unpopular blogging and file-sharing startup, Drop.io. But he invited a bunch of known oversharers — Facebookers Dave Morin and Meagan Marks, Google Maps marketer Brittany Bohnet, and the like — to his dad's vacation home, permitted the filming of the video, and starred in it himself. I doubt he cared very much that it became an Internet sensation. No, I suspect that this takedown had little to do with Web 2.0, and everything to do with Wall Street. Even before the mortgage bubble popped, launching the credit crisis, being showy with wealth just wasn't done in the circles Bob Lessin circulates in. Showing off your dad's sweet pad only seems like a good idea if you're a Harvard legacy in your early 20s. So is this the end of Web 2.0? Depends on what you mean by "Web 2.0." No one can quite agree. User-generated content? It's cheaper than the professionally generated kind; in recessionary times, it seems like it's here to stay. Likewise the fad for creating programmable interfaces for websites; getting coders to volunteer their time to make your product better sure sounds better than hiring them. No, the real test is whether this millennial generation will continue posting videos when they don't have splashy trips to celebrate. Will they continue updating friends with every change in their status, when the news isn't that they've gotten hired, launched a company, bought something expensive? When their buddies can't find work, when their startups run out of money, when they start leaving town en masse, what will they do? Promise to stay Facebook friends?

Facebook CEO Mark Zuckerberg signs autographs at an event for developers in France. Can you think of a better caption for this photo? Leave it in the comments. The best one will become the post's new headline. Yesterday's winner: Scalawag, for "On Sequoia's firing line." (Photo by mauriz)

A Harvard degree seems practically required at Facebook these days; founder Mark Zuckerberg never finished his, but COO Sheryl Sandberg and top flack Elliot Schrage have theirs. Newly hired general counsel Ted Ullyot, the veteran of several legal scandals while serving in the Bush Administration, has one, too. But we noticed something curious: Reports of his hire at Facebook had him graduating Harvard in 1989. Past employers, like Time Warner and Kirkland & Ellis say he graduated in 1990. I called up Harvard's news office and asked which one it was. It's complicated.Ullyot was a "member of the class of 1989," a Harvard employee told me, but he did not get his degree until 1990. He graduated magna cum laude, but the delay seems curious. Especially since Ullyot's dad, James Ullyot, is a prominent Harvard graduate himself, and is now president of the Harvard Alumni Association. Harvard, like all Ivy League colleges, strives to make room for influential graduates' children. Even more curious: Ullyot was two classes behind Sandberg, who graduated — on time, as best we can tell — in 1991. But Sandberg's husband, former Yahoo executive Dave Goldberg, was in the class of '89 with Ullyot. Could that be the connection that landed him the job? If so, just more proof that Harvard connections pay off.

What plots are the members of "Camp Cyprus," a group of young webheads, cooking up? Perhaps we'll read about them in a Wall Street Journal front-page A-hed, since reporter Jessica Vascellaro was on the scene, along with Wall Street-scion boyfriend Sam Lessin, the CEO of Drop.io. Can you think of a better caption? Leave it in the comments; the best one will become the new headline of the post. Yesterday's winner: TheChris2.0, for "McCain and Whitman unveil Social Security plan." (Photo by Sam Lessin)

You can never escape the media! Valleywag's favorite hot-tech-company couple, Facebooker Dave Morin and Googler Brittany Bohnet, weren't vacationing in Cyprus alone. A whole group, "Campcyprus," attended the get-together in the Mediterranean island's Turkish-controlled sector. And who was in the in crowd? Wall Street Journal reporter Jessica Vascellaro, who covers Facebook and Google, and her startup-founder boyfriend, Drop.io CEO Sam Lessin, the son of ultrawealthy investment banker Bob Lessin. Sam, who's normally obsessed with privacy, posted this photo of the couple. So cute!And now I know why I got an out-of-office message from her when I complained about her nicking not one but two of my recent stories on Facebook for a Journal article! But I would have been more impressed with Vascellaro's honesty if she had said that she was going to Cyprus with "sources" rather than, as she Twittered, "buddies." Catch Vascellaro's cameo in Bohnet's latest video: Cyprus Lip Dub - Don't Stop Believing from Brittany Bohnet on Vimeo. (Photo by Sam Lessin)

Want to know the ultimate putdown in Silicon Valley? Calling someone a "good manager." Organizational competence is a necessary commodity; risk-takers, entrepreneurs, "visionaries" are the ones who get the glory, the press, and the outsized financial returns. With that in mind, read this excerpt from an interview Facebook CEO Mark Zuckerberg conducted with the Frankfurter Allgemeiner Zeitung, Germany's leading business newspaper, as an exercise in damning with faint praise:

Click to viewHoly frack. Is there any couple more adorable than Facebook platform director Dave Morin and his lady love, evangelicious Google Maps marketer Brittany Bohnet? Their employers may be rivals for developers' affections, but this lip-sync video of "All My Life," created on a road-trip through Cyprus, has no competition for the remaining drips of sentiment in my sappy little heart. Will you two crazy kids quit your dead-end jobs and start a company devoted to, I don't know, being the winsomest thing in the world? I'd invest in preferred shares of teary-cheeked admiration, at a valuation of 15 billion awwwws.

Someone — someone at Holy Taco, it turns out — has created a fake Facebook page for Sarah Palin, and unlike most of the mock social-network profiles I've seen, the author actually got the details right. That must have taken more time than I can imagine having. It has to be all about job creation, indeed.

Fake Sarah Palin's page:

Forget Facebook's controversial redesign. Users of the social network have something new to complain about: third-rate Web search, provided by Microsoft. The two moves are connected; when ad-hating CEO Mark Zuckerberg forced through the revamp of Facebook's profile pages, he bumped Microsoft-sold banners off of them. To make Microsoft whole, Facebook agreed to a search-advertising deal. You know it must burn Facebook's proud engineers — those who haven't left — to partner with an organization that has done nothing but lose market share for years.

Let's just put it out there: At the exact moment that it's poised to dominate the world, Facebook has jumped the shark. With over 100 million users, even your dad — who's probably as old as Fonzy — is on the social network originally meant to get you laid in the dorms. Today's featured commenter, raincoaster, has a theory about what's wrong:

What was Facebook CEO Mark Zuckerberg doing in Germany, besides getting out of town while another college pal left his company? He was ostensibly guest-lecturing at the Technische Universität-Berlin, but we'll let your imagination run wild. Can you suggest a better caption for this photo? Do so in the comments. Monday's winner: johnyletter, for "I say we nuke the entire site from orbit." (Photo by cpthook)

At a conference for magazine publishers, Facebook COO Sheryl Sandberg all but admitted her company still has no idea how it's going to make money, besides letting Microsoft broker ads for it. "We need to find a new model and new metrics," she told attendees at the American Magazine Conference. It's a classic move from the White House veteran's political background: If you're not winning by existing rules, move the goalposts. (Photo by Doug Goodman/AdAge)

The great hope of the Valley, the startup everyone thought was the next Google, the company whose IPO might restart the stock-market gold rush for everyone, is not well. Why? Look to its founder. Mark Zuckerberg is mismanaging his creation's transition to greatness. In Facebook's own parlance, the company's plight is "complicated." It will take in $300 million to $350 million in revenue this year, thanks in part to a lucrative ad deal with Microsoft. But its $15 billion valuation is premised on a far brighter future — a future that may never materialize. The biggest symptom of Facebook's ailment is the flight of technical talent. In the Valley, success attracts smart people, who attract other smart people. Yes, they're after money, too, but having brilliant coworkers counts for a lot. These great minds bond and form, yes, a sort of social network of their own. When they leave, the network frays, weakening the company's ability to attract new talent.That's why, for days before it was announced, top executives at Facebook desperately hid technical lead Dustin Moskovitz's plans to leave. They dithered as Mark Zuckerberg tried to persuade his cofounder and college roommate to stay, and others, led by COO Sheryl Sandberg, concocted a plan to spin his departure. That spin has now been dutifully printed in the pages of the Wall Street Journal: Facebook's changes are the "type of evolution you see among young growing companies and specifically young growing companies in Silicon Valley," company flack Larry Yu told the paper. Sandberg, who closely directs the company's PR, would have us think that the uproar that has taken place at the social network since her arrival is a healthy evolution. It is not. The internal politicking she has introduced to the company is destructive, and has sent many of the company's best and brightest fleeing. The list of the departed includes data guru Jeff Hammerbacher, product VP Matt Cohler, platform director Ben Ling, and most recently, Justin Rosenstein, a top engineer who's leaving with Moskovitz. Operations VP Jonathan Heiliger may be next. The defections all hurt. But most of the blame lies with Zuckerberg himself. Zuckerberg has always styled himself as the company's "founder," relegating the likes of Moskovitz and Chris Hughes, now Barack Obama's Web campaign director, to "cofounder" status. Never mind that this distinction doesn't exist in English; those who start a company are all equally founders. Zuckerberg clearly considers himself first among equals; he once referred to Moskovitz as "disposable" and a "soldier." The former Harvard roommates patched over those insults, and Zuckerberg said he will rely on Moskovitz's counsel even after his departure. If Moskovitz really thought he could guide Facebook's evolution, he would have stayed at the company, right? Zuckerberg has a history of churning through confidants. Napster cofounder Sean Parker helped establish Facebook in Silicon Valley as its president, only to be disappeared from the company. Former COO Owen Van Natta was in favor, then out. Sandberg had his ear for a while, but may be losing it. Lately, I hear he favors Christopher Cox, the twentysomething recent Stanford grad he recently tapped as the company's director of product. We'll see how long he stays by Zuckerberg's side. This fickleness may be predictable from a 24-year-old. But it's fundamentally bad for the company. Yahoo thrived, in its early days, on the partnership between CEO Tim Koogle and founders Jerry Yang and Dave Filo. Google's triumvirate of its cofounders and CEO Eric Schmidt improved on that management form; the troika lends the company some stability by making sure decisions at the top are never unilateral. Zuckerberg's insistence on the "founder" title suggests that he always planned to rule the company alone. It's a bad plan. His instincts on what kind of website will attract a 100 million users have been spot-on. But he has no business sense. At one point during the Facebook redesign process, he suggested getting rid of advertising altogether, having grown disillusioned with both old-style banner ads and the company's experiments with targeting ads to users' behavior. Will Zuck ever find an equal partner, a sounding board who can help him turn Facebook into the large, ongoing concern he envisions? Dustin Moskovitz may not have been the right person. Nor, it seems, is Sheryl Sandberg. Yet to staunch the bleeding of Facebook's technical talent, Zuckerberg will have to find someone to ground him — someone for whom he has enduring respect, who can moderate his worst impulses. Without it, there will be one word describing what's going to happen to Facebook: "founder."

Having completed his vision quest in India, Zuckerberg is now moving on to the requisite Eurotrip. Shown here guest-lecturing at the Technische Universität-Berlin, he's also expected to speak at an invite-only function in Munich. These trips might not seem peculiar, given Facebook's international expansion. But there is one odd pattern we've noticed.Every time Zuckerberg skips town, bad things happen at Facebook. Is it because he doesn't want to be seen as the bad guy as his former comrades in arms leave the company? We're not saying Facebook employees should worry every time they see the boss surfing Expedia. But we are wondering if this isn't a trend. Tip to the Z-Man: don't go overboard at Oktoberfest. (Photo by cpthook)

Will the last tech executive to leave Facebook please turn off the lights at the datacenter? We hear Jonathan Heiliger, Facebook's operations VP charged with running the social network's expansive server network, has been interviewing for other jobs. He just completed a year at the company, which is usually when employees' stock-and-options packages begin to vest. Odd: We thought Heiliger might be happier at the company with the appointment of Marc Andreessen to Facebook's board.Heiliger previously worked for Andreessen at Opsware. One would think the chrome-domed entrepreneur, now chairman of Ning, would prove a powerful ally in the fierce political battles that have roiled Facebook since the appointment of Sheryl Sandberg, a Beltway insider turned Internet executive, as COO. Nothing's certain, and Heiliger may well stay. But for him to be so unhappy as to openly entertain job offers? The social network's executive suite seems to be coming unplugged.

When he announced his cofounder and college roommate Dustin Moskovitz's departure from Facebook, CEO Mark Zuckerberg didn't say what he would be up to. But in a separate email leaked to Valleywag, Moskovitz hints at his plan: With fellow engineer Justin Rosenstein, who's also leaving the company, he hopes to create tools like the ones he built at Facebook to run its internal operations, and market them to all sorts of companies. Here's his note to colleagues: