Why Facebook is foundering

Owen Thomas · 10/07/08 02:00PM

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."

Jonathan Heiliger, top Facebook exec, may leave

Owen Thomas · 10/06/08 01:14PM

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.

Leave Sheryl Sandberg alone!

Owen Thomas · 08/19/08 04:00PM

The best thing Valleywag ever did for Facebook COO Sheryl Sandberg was to call her a liar. That's just not done in the genteel office parks of Silicon Valley. It garnered the embattled executive a much-needed wave of sympathy within her company, on which she's now planning to capitalize.Valleywag's coverage last week of Sandberg's spinning in response to the departure of a key employee was deemed, in some quarters, a "character attack." Yet Sandberg's character is the very issue here. Her response is very telling: First, she wrangled a long followup story from her frequent dinner guest Kara Swisher that called our story sexist, over-the-top — and factually correct. Swisher's report is damning for Sandberg. It acknowledges that Facebook executive Matt Cohler, who left to join Benchmark Capital, was unhappy with Sandberg's leadership. It reports that Jonathan Heiliger, the company's infrastructure chief, has also been unhappy with Sandberg — Swisher errs only in saying that the two have patched things up. Swisher's new report also means that the version of Ben Ling's departure fed to her by the company last week was false. Facebook executives have acknowledged all these facts. But characteristically, Sandberg has steered the discussion away from the real problem — the bad decisions she's made, the poor judgment she's demonstrated — and toward massaging reality. She is, even now, planning a new PR campaign to buff her image. Did it ever occur to Sandberg to figure out why she rubs so many of Facebook's technical leaders the wrong way? Could it have anything to do with her meddling in matters that CEO Mark Zuckerberg has said aren't her job? Facebook has real problems in Sandberg's area of responsibility. Billing, customer service, and other mundane-but-critical aspects of the social network's advertising operations are chaotic, and require fixing. Sandberg's moves to shore up her image suggest the real reason for her unpopularity within Facebook: Her overwhelming concern for style over substance. How ironic that that pointing that out has sent Sandberg spinning.

How Facebook servers survive 50,000 new users a day

Nicholas Carlson · 06/24/08 10:40AM

In the clip embedded below,'s Dan Farber asks Facebook's VP of technical operations Jonathan Heiliger how Facebook manages to keep up with adding 50,000 new users per day. Heilliger responds: "We're adding a lot of infrastructure and we're adding a lot of servers." That much we understood. But then Farber probes further, asking Heilliger "what's the basic architecture for delivering information at low latency?" And Heilliger answered, losing us for good:

Meet the guy spending Facebook's $200 million

Owen Thomas · 02/06/08 05:20PM

Facebook, CEO Mark Zuckerberg recently told employees, will spend $200 million on capital expenditures this year. But fear not! That oversized budget, funded by Microsoft's $240 million investment, will not rest in the hands of a 23-year-old college dropout. No, even better! It's up to a 31-year-old graduate of Palo Alto High School to spend Ballmer's bucks. Despite his lack of higher education, Jonathan Heiliger has a lengthy resume and more experience than most racking up servers in datacenters. But the scale of his current project is daunting.

Facebook hires veteran of overvalued startups

Owen Thomas · 10/03/07 06:37PM

How leaky is Facebook? So leaky that new hires sometimes out themselves right on the company's own website, as tech expert Jonathan Heiliger has done. Heiliger, you see, revealed his new employer by joining the company's private group for Facebook employees, a move that's visible on the site. Heiliger, who, back in the '90s, used to be a 20something rock-star Internet executive like new boss Mark Zuckerberg, will be the company's vice president of technical operations, charged with, oh, say, making sure the site doesn't crash, spew private data, or leak code. By my count, that makes Heiliger the fourth vice president with "operations" in his title. But I think Heiliger, a veteran of bubble-era companies like GlobalCenter and LoudCloud, will spend more time regaling Zuck with war stories about what it was like to run a ridiculously overvalued Internet company. And he'll thereby get to relive his fading youth. What a job!