Social networks have a lifecycle: They start with a small core of early adopters, swell as mainstream users get pulled in by their friends, and then see growth taper off as people get turned off by spam. That's why Friendster is forgotten and why MySpace is looking increasingly stagnant. The price for reaching an audience advertisers care about seems to be a site users can't stand. Facebook, however, isn't following the fashionable trend.
Mark Zuckerberg's social network has lost much of its swagger over the past year. He once thought nothing of poaching Google's best and brightest; then Google started poaching back. After Facebook's flacks learned that Google had scheduled its holiday press party on December 8, the same day as Facebook's planned media fest, they rescheduled for December 10, rather than fight for reporters' affections. Embarrassing — especially considering that Facebook's top PR guy, Elliot Schrage, came from Google himself.
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.
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?
Ted Ullyot, the neoconservative lawyer who served as Alberto Gonzales's former chief of staff, is not Facebook's first general counsel, as had been reported. Facebook cleared the way for Ullyot by sending former top lawyer Rudy Gadre packing in July. Gadre left "to spend more time with his family." Gadre is spending more time with his family by working for a Seattle startup called Evri. Here's one theory: Facebook's politically minded COO, Sheryl Sandberg, may have had Ullyot lined up for the job, but waited to finalize the hire until the Justice Department released its report on Gonzales's firings of U.S. attorneys general for political reasons. Notably, Ullyot's name does not appear in the report. A tipster tells us his "high-level insider" friend at Facebook isn't happy about the swap anyway, given Ullyot's controversial political background. Naturally, he blames Sheryl Sandberg:
PALO ALTO — (Ed.'s note: Please welcome Fake Sheryl Sandberg, Valleywag's newest contributor.) I left Google for this. What was I thinking? Sure, Larry and Sergey were adolescents who built themselves a candy-colored playground. But Zuck makes them look like old men. Mr. Adidas rolled into the office around 10 this morning — early for him — and asked, "So, are we throwing a party?" "What for?" I asked. "Sheryl, didn't you see my status update?" You know, I used to give status updates to Larry Summers when I was his chief of staff. In Washington. The other Washington.Anyway, Zuck starts gushing about how great it is Facebook now has 100 million users. I'm thinking, "Yeah, great, we're buying unlimited photo storage for 100 million freeloaders. Have you ever done the bandwidth bill on that, kid?" But he won't shut up. I close my eyes, breathe, put on my happy face, and reply, "Yes, Mark, that's an amazing milestone. We really should celebrate it appropriately. What do you think of Joe putting on a wine-and-cheese reception this evening, like he used to do for me at Google?" Zuckerberg's face darkens. "No!" he shouts like a toddler. "We're doing a toga party!" My smile stays pasted on. I calculate the risks. "Of course, Mark! This is your company. I understand how important the culture is." I get on the phone to Joe Desimone and tell him — surprise! — we're throwing a party. He can cater for 500 on no notice, right? Mark leads his children's crusade out to the park. I stay behind to rework the Q3 spreadsheets. After he's done cheering them with a megaphone about how they're changing the world, they head straight to the cafeteria building. There's a keg of beer there. No, there are three kegs. No, five. I can't dodge them anymore, so I walk in and survey the roomful of kids in bedsheets that came from God knows where. They're all 23. They're all dating each other. They're all hopped up on beer and Red Bull that our shareholders paid for. Suddenly, I feel claustrophobic. I can't face these brats. I glide to the bathroom, lock the door, and do the deep-breathing exercises my yoga master Kellison taught me. I steel myself and walk back out. Next thing I know, that joker Dave Morin is wrapping me in a toga. At last, I laugh, while making mental notes about which of these overrated twentysomethings I'm going to fire, in which order.
It seemed like such a simple proposition. Facebook COO Sheryl Sandberg wanted Ben Ling to lie for her, and get rich doing it. Ling is — was — the director of Facebook's applications platform, which had garnered the social network much of its buzz over the past year. But he'd been supplanted by Elliot Schrage, Sandberg's PR guy, as head of the platform, and had gotten a job offer to return to Google. For the search engine, Ling's return was an invaluable PR victory, after a string of defections — including Sandberg herself. It was likewise a blow to Facebook's image; the company has lost a string of technical leaders since Sandberg started her reign of terror.So Sandberg asked Ling to lie. The fib she demanded: That he was taking a two-month vacation, not returning to Google. In exchange, she'd let him vest his shares in Facebook — a small fortune for less than a year's work. Ling, it seems, declined. His integrity was worth more than whatever Sandberg had to offer. Technically, Facebook doesn't owe Ling anything. His shares wouldn't vest until he reached his one-year anniversary. But the reality is that Sandberg, by promoting Schrage above Ling, effectively squeezed him out. And Silicon Valley companies often let departing employees keep some of their shares, even if they've been at a company under one year, to keep good relations (and sometimes, buy silence). Facebook has routinely accelerated departing executives' vesting, a maneuver which lets them keep more shares than the calendar would say they've earned. Sandberg's high-pressure tactic was a foolish overreach. She was trying to manage perceptions, and combat the idea that her version of Facebook is an inhospitable place for brilliant technical talent like Ling. Instead, she's created an even worse perception — no, rather, a reality. Joining Facebook, always a chancy venture, is more dangerous than ever. Those who take a job there now bear the risk that the manipulations of a power-grasping executive will make all their work worthless. (Poor Mike Schroepfer, who just joined the company as VP of engineering; did he have any idea what he was getting himself into?) There's another perception that now exists, as a result of Sandberg's actions: That the COO herself is a glib liar, who expects those around her to glibly lie, too. Less than a month on the job, she had underlings fibbing to Fortune for a puff-piece profile. It seems obvious in retrospect that the paeans that executives like Matt Cohler and Adam D'Angelo offered on the way out must have been fictional, too, bought by Sandberg with Facebook shares. Sandberg's explanation, tossed off with Clintonian brio: "There is no specific underlying story behind the few execs leaving our company." The key word in that sentence is "underlying," minus the "under." Silicon Valley's corps of engineers have little tolerance for dishonesty. The implicit bargain they strike with the MBAs who turn their work into money: Keep the lies over on your side. Lie to investors, partners, reporters; just don't lie to us. There's no room for lies in the world of code; software works, or it doesn't. That may be a Pollyannaish belief, but it's a common one in the idealism-choked cubicle farms which sprawl along 101. Sandberg, with her clumsy cajoling, has broken the pact. She tried to turn one of the geeks into a smiling fake, just like her. He didn't bite. One would think that with Sandberg's political training, she'd at least bring the talents of a skilled prevaricator to the Valley. Instead, the Ling affair has revealed her as the worst of both worlds: a clumsy liar.
The departure of star Facebook director Ben Ling has been roiling Facebook since word first spread at the social network's Palo Alto headquarters yesterday. One inevitable question some Facebookers are asking: What does this mean for the price of our stock? If Facebook were publicly traded, it's unlikely one employee's exit would cause a blip. But private tech companies like Facebooks are the ultimate growth plays, and momentum matters. If Facebook becomes known as a place top talent flees instead of gathers, it could tank Facebook's perceived value. What will be telling: Who leaves next, and how fast. One likely candidate: Chamath Palihapitiya.Palihapitiya, like Ling, has not fared well under the reign of COO Sheryl Sandberg and her right-hand man, Elliot Schrage. Schrage, as a reward for the puff pieces Sandberg's continued to garner from a mostly pliant press corps, has gotten handed most of Facebook's marketing functions. Palihapitiya has been left with a vague "growth" portfolio. How frustrating this must be for Palihapitiya, who once complained on film about white-male privilege. His employer at the time, the Mayfield Fund, hastened to clarify that his comments were about the world at large, not meritocratic Silicon Valley. But Elliot Schrage, with his two Harvard degrees, is a creature of New York and Washington, D.C., not the Valley. And he has blocked Palihapitiya's rise at Facebook, despite the latter's vastly more impressive tech résumé. Will Palihapitya rest and vest his Facebook shares in silence? Or will he leave, like Ling?
Today at its F8 developers' conference, Facebook will announce a plan to give favored widgets more abilities to promote themselves on the site. The first two apps to get "preferred" status will be Causes and iLike. What does being a "preferred" widgetmaker mean? A source tells us that in the short term, Facebook will simply promote preferred apps in users' News Feeds more often, increasing their chances of spreading from friend to friend. "Basically, it is a subsidy program for their favorite darlings," says our source. Causes is an app backed by former Facebook president Sean Parker; iLike is a startup backed by Marc Bodnick of Elevation Partners, who is also a private Facebook investor and the brother-in-law of Facebook COO Sheryl Sandberg. Our source also tells us that after top tier preferred apps, there will be a middle tier of "certified/approved/vetted" applications as well.
COO Sheryl Sandberg and PR chief-turned-platform politician Eliot Schrage, Facebook's no-fun adults, are fully in charge of Facebook. The latest evidence? Facebook's second annual F8 developers' conference has another "hackathon." But unlike last year's all-night session, it hardly deserves the name. It starts at 3 p.m. and ends at 11 p.m., presumably so Schrage can go home and get a good night's sleep before calling reporters on the East Coast to tell them of Facebook's fabulous new platform achievements. Developers are still raging about the notion that Schrage, a PR guy, is in charge of Facebook's development platform. At a recent party in San Francisco, Ben Ling, the technical guy behind the platform, was spotted rolling his eyes when Schrage's name came up.
Can a PR guy run an operating system? Silicon Valley's gut reaction: No way. And yet that's what Facebook COO Sheryl Sandberg has done in appointing Elliot Schrage, her handpicked flack, to run Facebook's platform. The platform, when it launched a year ago, was hailed as the world's next Windows; by opening up its friends lists and other features to outside developers, Facebook would surely become the next Microsoft, ran the standard line of punditry, in an age when the pundits were in love with Facebook. That, more than anything, surely stirred Microsoft to invest $240 million in the company. But in one very short year — or a very long one, rather — Facebook's platform has gone from selling point to PR headache.
CARLSBAD, CA — I'll be unabashed about it: Part of the fun of a conference like D6 are the casual mogul sightings. Look! Barry Diller in a schlumpy brown sweater! Say, isn't that Jeff Bezos chatting up a Googler? But my favorite happenstances are the reunions of frenemies. Take, for example, this chance encounter between Marcy Simon, the former girlfriend of Google CEO Eric Schmidt, and Elliot Schrage, the head of Facebook PR. (Sandwiched awkwardly in the middle is Google VP Susan Wojcicki.) Simon and Schrage's back story, and more pictures from the hotel lobby at D6, after the jump.
Most of Facebook's adult supervision gave the Facebook Prom a skip, we hear. But not recently hired Google execs Elliot Schrage, now Facebook's top flack, and Sheryl Sandberg, the formidable new COO who's revising Facebook's internal social graph day by day. We heard Schrage and Sandberg were tight at Google, but close enough for this "me-and-my-bitches" pose captured at the Facebook Prom event held two weeks ago? (Camille Hart, Sandberg's assistant, is on the left; she also followed Sandberg to Facebook.) Suggest a caption in the comments, and the best will become the new headline. Yesterday's winner: abmw, for "They never have enough restrooms in these Apple Stores."
Facebook has shut off access to Google's new Friend Connect, citing privacy issues, saying that the service "redistributes data" in ways that users don't "expect or understand," according to a blog post by Facebook developer Charlie Cheever. Google Friend Connect collected and displayed information available through Facebook's tools for third-party web developers to use on their own sites. Funny, Facebook hasn't had a problem with tracking users on third-party sites in the past, but then Facebook just launched a similarly named tool, Facebook Connect.
Despite her protestations of innocence, it's pretty obvious that Facebook COO Sheryl Sandberg had a hand in getting top Google flack Elliot Schrage to follow her to her new employer. She's not alone. One Facebook insider recently observed that for every Googler hired at Facebook, they pull another four former colleagues with them. The place is getting "overrun," says one close observer of the company.
We hear that Rachel Whetstone, Google's European communications director, will replace Elliot Schrage as the company's top flack after Schrage left for Facebook. Her background may make her a perfect fit, in more ways than Google would like you to know. Unlike Schrage, Whetstone has some experience with rough-and-tumble politics, having served as chief of staff to British Conservative party leader Michael Howard. She also may be better suited to dealing with CEO Eric Schmidt's periodic outings with mistresses: She herself had an affair with Viscount Astor, a top Tory official, which scuppered her political career and led to her joining Google.
Looking at the departure of top Google flack Elliot Schrage for Facebook and concluding that the search engine is suffering a "brain drain" is the laziest journalism on the subject I could imagine. The BBC's take on the subject is predictable, citing the same names — Ben Ling, Ethan Beard, even chef Josef Desimone — everyone else does. The most telling thing is actually a Google spokesbot's programmed response: "We have a deep management pool at Google." The problem at Google is not that its brains are going out the drain. It's that the drain is plugged up, and not nearly enough are leaving.
That was fast. Not only has BoomTown confirmed our earlier report that Elliot Schrage, Google's top flack, had interviewed at Facebook; he's been hired, too, according to an internal memo sent by CEO Mark Zuckerberg from India. Which is odd: At a meeting earlier today, asked about the Valleywag item on Schrage, COO Sheryl Sandberg feigned ignorance about Schrage's interviewing for the job, but talked up what a great fit he'd be with her, given their shared Harvard, D.C., and Google backgrounds. First Sandberg threatens to shoot Valleywag, and now she's agreeing with us? At least one member of the Google PR team concurs with Sandberg on this much: Better that he go to Facebook than stay at Google.