A tipster reports overhearing two Facebook employees bragging about the Jack Spade computer bags bought for them by their employers. Facebook has some 700 employees; the Spade bags retail at the Apple Store for $99.95. If you figure Facebook got them for about half that price, it still shelled out $35,000 unnecessarily. Is this the kind of spending CFO Gideon Yu is trying to persuade Middle Eastern investors to underwrite?
We've always been impressed by Facebook CFO Gideon Yu's ability to snooker investors around the world. The list of people he's taken for a ride include Microsoft CEO Steve Ballmer and Hong Kong telecom mogul Li Ka-Shing. Just last Friday, he returned from a trip to Dubai, where he tried to shake loose some petrodollars from the Middle Eastern emirate's sovereign wealth funds. Some people seem to think Yu is still in Dubai. Which would be quite a feat, considering he's been spotted in Facebook's Palo Alto headquarters multiple times this week. Perhaps he's using CNN's new hologram technology?
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:
Technologists are instinctively averse to debt. The cycles are too swift and mistakes too punishing, the conventional wisdom says, to subject a startup to the burden of debt; cash is better spent on growth opportunities than interest. But Facebook has never followed the usual script for a startup, and its CFO, Gideon Yu, is no herd-follower, either. No wonder that the news that Facebook is leasing $100 million worth of servers, after raising a $360 million round of venture capital from Microsoft and Li Ka-Shing, is causing such a ruckus — and some misconceptions. Here are the instant myths that have arisen:
Having cleared his name of obstruction-of-justice charges, former Credit Suisse tech investment banker Frank Quattrone is launching his own boutique firm, Qatalyst Partners. Several big Valley names volunteered quotes for the press release. It's not surprising that Google CEO Eric Schmidt, who's made his own moral missteps, would be forgiving of Quattrone. But Gideon Yu, Facebook's CFO, makes a more curious appearance. He gave a statement applauding Quattrone's partner Jonathan Turner, not Quattrone himself. But still, it amounts to an endorsement. Does Yu really think Quattrone did nothing wrong? Or, as a minister's son, is he just expressing the highest form of the Valley's belief in the power of redemption?
Remember Charlie Ayers, Google's first executive chef, who retired in 2005 after making millions of dollars on the Google IPO? All those cooks who passed on that job now have a second chance, according to Inside Facebook. After years of catering takeout lunches, the social network is hiring its own chef. With Facebook poaching so many Google employees who are used to chef-cooked meals, it's no surprise that they'd hire someone who knows how to poach eggs. But check out this curious line in the job description: "Be accountable for the financial aspects of the F&B department ensuring a profitable operation." Is penny-pinching CFO Gideon Yu insisting that employees pay for their meals? The full job description:
Yesterday, Accel Partners VC Jim Breyer, who sits on Facebook's board with Peter Thiel and CEO Mark Zuckerberg, made an offhand comment about Facebook's unfinished financing round. Microsoft has already put in $240 million, and Facebook's board has authorized sleepless CFO Gideon Yu to go raise another $260 million. Here's what Breyer said to Silicon Alley Insider: "$50 million, $100 million, $200 million." He said it with a shrug, but we think his insouciance was feigned. That's because Facebook already has a firm commitment in hand for that $50 million Breyer mentioned. The board is still deciding whether to take that money.
A company is only worth what somebody is willing to pay for it. So after Microsoft paid $240 million for 1.6 percent of Facebook, the company's value on paper became $15 billion. Funny thing is, Facebook hasn't yet found another investor to agree to that number. The night Facebook signed its Microsoft deal, we reported a rumor that CFO Gideon Yu was close to bringing in another $500 million from private equity or hedge funds. Not true: the board had only authorized raising another $260 million. But even that hasn't come through yet.
We picked up Dan Lyons's rumor as Fake Steve Jobs that Facebook has cajoled hedge funds into investing another $500 million, and noted that CFO Gideon Yu must never sleep. And Forbes, where Lyons has a day job, also called the deal complete. Not so, people familiar with the matter told the Wall Street Journal. The new investment will only be as much as another $260 million, making the total raised in this round, including Microsoft's money, $500 million. An announcement could come soon, but nothing's been signed yet. We know some VCs wanted in on this deal but hear it got too rich for them. (Photo by spcbrass)
Facebook CFO Gideon Yu never, ever sleeps. He's helping the social network raise another $500 million, on top of Microsoft's $240 million, from two hedge funds, at the same rich $15 billion valuation. Word is that some venture-capital firms were interested in buying into Facebook so they could get some of the buzz, but were priced out of the financing round. I wonder if Sequoia Capital, shut out of earlier Facebook rounds, was still trying this time. [The Secret Diary of Steve Jobs]