In its short, dazzling life Facebook has managed to charm analysts and commentators into a pie-eyed swoon, but with success come growing pains. Sixty-six million members are great; widgets are fun and whimsical, but sooner or later the company’s got to grow up and start making money.
Facebook has lured away a top executive from Google to serve as its COO, reporting directly to 23-year-old CEO Mark Zuckerberg. Sheryl Sandberg will oversee the meat-and-potatoes matters of managing sales, business development, public policy, privacy and communications, and taking Facebook’s operations global.
The strategy is similar to a president-elect, possessed of admirable vision but marginal experience, filling his cabinet with political heavyweights to assuage the doubts that he is too green to hold such an important office.
Zuckerberg is a Harvard dropout who has proved, yet again, that you don’t need a diploma to build something that millions of people love and make a pile of money doing it.
Sandberg graduated from Harvard with summa cum laude honors as the top economics student in her class, and returned to Harvard’s business school to take an MBA with the highest distinction. She served as chief of staff for the U.S. Treasury Department during the Clinton administration before embarking on a six-year stint at Google, where she most recently held the position of vice president of global online sales and operations.
It’s no secret that if Facebook is to become anything approaching the black swan that Wall Street hopes, Zuckerberg is going to need some help. The geeky, taciturn head of a company thrust (reluctantly, it sometimes seems) into the public eye seems very much at home in the quicksilver world Silicon Valley, but turning a flashy startup into a cash machine like Google will require adult supervision, and credit Zuckerberg for knowing it.
One could interpret the hiring of Sandberg as Zuckerberg lining up the firepower he will need to take the company public, eventually. On 60 Minutes earlier this year, Zuckerberg told Lesley Stahl that it wouldn’t happen this year. If and when Facebook makes an IPO, it will be an exciting event on both coasts, to be sure, but in the meantime, investors will need some important questions answered.
In October, when [Microsoft bought into Facebook](/bus-news/article.php/3707121) with a 1.6 percent equity stake, valuing the company at $15 billion, the figure exceeded most generous estimates; to some, it seemed staggering. After all, Facebook has offered very little evidence that it can turn a profit.
Investors will note Google’s buyer’s remorse about its [$900 million deal](/ec-news/article.php/3625121) to serve ads on MySpace. Social networks weren’t monetizing as strongly as he’d hoped, he told analysts on Google’s most recent [earnings call](/bus-news/article.php/3725296). What will Sandberg bring from her experience at Google to show that Facebook will become the advertising cash cow that MySpace has not yet become?
Then there’s the matter of corporate tone. Facebook’s delayed responses to users’ privacy concerns have at times struck a note of haughty indifference. (“Calm down. Breathe. We hear you.” –Zuckerberg to Facebook members voicing privacy concerns over the news feeds feature.) With a restricted-access communications department, Facebook has established a pattern of stonewalling, and then finally relenting, when members of the community protest the way that a new feature is added, such as the [news feeds](/ec-news/article.php/3631081) or the [Beacon advertising program](/bus-news/article.php/3714951). As a result of this slowness to grasp the intensity of members’ ire, Facebook has made privacy a much larger issue than it needs to be.
All this is to say that Zuckerberg has built something that simply became much bigger than he was able to manage. There’s no shame in that. Neither Sergey nor Larry holds the top spot at the colossus they built. Poaching a top executive from a company like Google to serve as the company’s No. 2 sends a clear message to investors that Facebook is lacing up the gloves, and getting ready to step into the ring.
