The revolving door at Facebook has been swinging less of late. Two top designers, Katie Geminder and Eston Bond, left in August and September. But the economic crisis seems to have scared the rest of the social network's staff into their seats, wondering when the ax will fall. There have been no layoffs, but we keep hearing tips from inside there's a hiring freeze on. In fact, there's not: Facebook's unofficial second-in-command, COO Sheryl Sandberg, asked CEO Mark Zuckerberg to institute a freeze, and got turned down cold.And yet Facebook will end the year with 750 to 800 employees, Zuckerberg has said — a far cry from the 1,000 employees he projected at the beginning of the year, when Facebook had only 450 employees. Call it what you like, but those are 200 jobs that have gone missing. One would think that Facebook, more than ever, would have the pick of the litter. But its potential employees can do math. Facebook's hiring managers do not have the hot hand they played earlier this year. The turmoil within Facebook has made an impression on potential hires. As have Facebook's financials. Facebook raised $240 million from Microsoft in a deal that valued the entire company at $15 billion. And the company is making real revenues, though they're small by comparison to MySpace; the most solid projection for 2008 is $265 million, down considerably from the $300 million to $350 million Zuckerberg once thought it could make this year. All the while, it is spending heavily on servers; Facebook's pages, which must chart a user's social connections to determine what news from friends to display, are more computationally intensive than, say, a trivially simple Web search engine like Google. That means, in essence, more money spent on servers per user. What that means: Facebook will have to make more money on advertising per user just to stay even with Google's cost structure, let alone exceed it. It's far from that point. Most importantly, it's hard for outsiders to see the upside in Facebook shares. Most assume Facebook will issue them options, and wonder how those will appreciate enough to make them rich. In fact, Facebook has been switching to grants of restricted stock — a maneuver Google and Microsoft, too, has used when a lofty share price made options less attractive. Add skittish candidates and skittish managers, and you get a very tough hiring process; Facebook executives might actually like to hire more people, especially in engineering, but they're having a hard time finding people who meet their requirements and are willing to take the job. Zuckerberg doesn't have to institute a hiring freeze; his lofty opinion of his own company is putting enough of a chill in recruiting to keep costs down.

Since Facebook doesn't quite know how to make money, our commenter of the day, marcsiry, has a better business model:

Facebook's COO is mounting yet another PR offensive. But not on behalf of her current employer, though it could use some good press. No, Sheryl Sandberg is defending former boss Larry Summers against charges of sexism. Summers, who was Treasury Secretary under Clinton, is being talked up for the same role in Barack Obama's Cabinet. A controversial speech Summers gave as president of Harvard University — speculating that innate differences might have to do with women's lack of progress in math and science — could ruin his chances. Hence Sandberg's timely defense.But the defense is timely for Sandberg as well. Sandberg served as Summers's chief of staff before she moved to Silicon Valley and joined Google, setting her up for her current job at Facebook. Summers and Sandberg had a close professional relationship; he even escorted her as his guest to a White House dinner in 2000. At Google and Facebook both, colleagues roll their eyes as they recount how often she brings up her Washington experience and brags about how working in tech is a cakewalk compared to D.C. But Sandberg's tenure at Facebook has been controversial. She's been acting as if she's the company's No. 2 executive, despite CEO Mark Zuckerberg's reassurances that her role is limited and she's not a CEO-in-waiting. Several key tech and product executives have left since she's arrived — and, crucially, she has not made visible progress in improving the company's ad-sales operations. At least one prominent investor has been talking about "reining her in." So why not head back to D.C.? If Summers gets the Treasury job, he'll surely call on Sandberg for advice, and perhaps more. Will she be able to resist the call to public service? Her husband, Dave Goldberg, is an entrepreneur-in-residence at Benchmark Capital — a placeholder job he could easily leave. Her children are young enough that she could move back east without disrupting their schooling. It might be a now-or-never opportunity. It must be on her mind — and on the agenda at Facebook's next board meeting. Sandberg leaving Facebook for the government gives everyone a graceful out from a bad situation. Zuckerberg could help give her a nudge; his cofounder, Chris Hughes, was the director of Obama's Web campaign. Perhaps he could put in a good word for Sandberg? If Summers gets the Treasury job, the only question is whether, having made millions at Google, she really wants to work as hard as she tells everyone she used to.

Facebook CEO Mark Zuckerberg has learned to make safer prognostications. At this year's Web 2.0 Summit, he observed that the amount of information people share on Facebook seems to double every year — a claim he might be able to back up with data from his social network. Zuckerberg's Second Law will surely go over better than his first — the assertion, made as he launched new Facebook ad formats, that "once every hundred years, media changes." Zuck, how about this law? Once a year, a CEO has to come up with something impressive to say at conferences. (Photo by Brian Solis/Bub.blicio.us)

On stage at the Web 2.0 Summit conference, Facebook CEO Mark Zuckerberg sported sneakers instead of his once-trademark Adidas slides. Come to think of it, when's the last time anyone spotted him wearing mandals? It's just another sign that Facebook isn't the same company it was a year ago. Got a better caption? Leave it in the comments. The best one will become the post's new headline. Yesterday's winner: m0nty.au, for "Help me, Anderson Cooper, you're our only hope!" (Photo by Brian Solis/Bub.blicio.us)

BoomTown reporter Kara Swisher rappelled from a skylight at Jerry Yang's secret hideout to score this draft copy of an ad, in which a bunch of tech bigwigs come out in favor of gay marriage — or at least in opposition to Proposition 8, a California state ballot initiative which would ban it. No Valley company in its right mind would be seen opposing gay marriage, so why bother?Right: Because it's an awesome branding opportunity. The draft is a self-parody of corner office drama, full of Honorary Co-Chairs, Leaders, and Former CEOs. But the real story is: Who's missing? Sergey Brin and Eric Schmidt are here, but not Larry Page. Twitter's Ev Williams is here, but not Digg's Kevin Rose. Federated Media: Present. TechCrunch: Absent. Mark Zuckerberg is not here, but Sheryl Sandberg pulled a John Hancock: She's right up top, where Owen can't miss her. Oh, look, she's trying to make nice! She's going to be sorry.

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.

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.

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.

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.

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."

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.

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)

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:

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)

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)

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:

The great Facebook cashout now has a date: November 1. Former and current employees recently received an email from Facebook's stock administrator updating them on plans to let employees sell some of their shares, even though the company is still private. Details of the plan are expected in mid-October; one ex-employee characterized it as a "buyback." That suggests that the company itself is going to buy shares from employees, and then sell them to an outside buyer. The limits previously outlined by CEO Mark Zuckerberg in an email to employees — 20 percent of an employee's vested shares, or $900,000, whichever is less — remain unchanged. The plan has an advantage over letting employees make ad hoc sales to wealthy investors, in that Facebook gets to choose who it has a shareholder. One thing's not clear: How will Facebook force employees, especially ex-employees, to stick with the plan?Facebook's corporate charter has a relatively unusual provision for employee stock sales. The company has a right of first refusal over employees' shares, meaning that it has the right to match any price offered by a buyer; most companies have tighter restrictions. Employees have been told that sales outside the program will have "career-limiting effects"; promotions, raises, and new stock-option grants may be taken away from those who sell anyway. But Facebook has no such hold on ex-employees. And the offers in the market are tempting. Facebook's program will let shareholders sell at $8.90 a share, which represents a company valuation of $4 billion; some buyers are offering $11 a share. If too many transactions go through at the higher price, Facebook may have to revalue its shares, which will have untoward tax implications for the company and other employees. It's not clear what Facebook can do, short of rewriting its corporate bylaws. But the company program does have one thing going for it: It will be formal, organized, and predictable. For geeks who'd rather optimize code than their own financial returns, letting their managers handle their money may seem easier.