Yu, Zuckerberg and the Facebook fallout
Why do we care about Facebook?
- People you know and respect use it. That includes you.
- People you know and respect who scoff at it still know what Facebook is.
- Facebook, like Google, is popular enough to have become a verb as well as a noun.
- If the public ever got a crack at buying shares in it, lots of people would get rich.
That’s why mass clucking ensued among the technology press when the word came out Tuesday that Chief Financial Officer Gideon Yu is splitting. The Wall Street Journal, so far as we can tell, broke the news. It said:
The departure of the 37-year-old Mr. Yu and the ensuing search for a replacement are likely to renew speculation that Facebook is stepping up plans for a public offering, despite the rocky economy. The company, which has turned down several acquisition offers in the past, has said it is hoping to go public in the next few years.
But some employees and investors, who have poured roughly $455 million into the company, according to VC Experts.com Inc., are eager for Facebook to start planning an offering and have raised questions about whether it has enough money to sustain its growth. Many others have said the company is over-valued, which — in addition to the economic downturn — hampered its efforts to fund an employee-buyback program last year.
One person familiar with the matter said Facebook’s financials are strong and the company expects revenue in 2009 to increase at least 70% from last year. (The New York Times has details on that too.)
The Journal also referred to the now famous $240 million that Microsoft invested in Facebook, giving the service a perceived value of $15 billion (see No. 4 in our list above). The problem is, the WSJ reported, Yu’s job “has grown more difficult, as Facebook has struggled to raise additional money at lower valuations.” If Facebook revenue is supposed to grow 70 percent — a giant leap — history would suggest, and nearly insist, that last year’s revenue total would have been only enough to buy a pack of Smarties.
That would make Yu’s job more difficult indeed. It must be hard to tell all your potential investors that Microsoft was going overboard on that whole $15 billion valuation thing.
Still: Don’t assume that it’s all about Yu. Kara Swisher at her Boomtown blog (like the Journal, also owned by Rupert Murdoch and his News Corp) hints at strained family relations:
In a back-to-the-future move, former Netscape CFO Peter Currie will be the key adviser to Facebook about financial matters, until a new search for a CFO is found, sources said. … But others sources at the company said Yu and Facebook CEO and Founder Mark Zuckerberg had had intensifying differences in recent weeks, over a range of issues.
One last note: The NYT story quoted Facebook spokesman (and non-family relation) Larry Yu as saying the site has no immediate plans to go public. Swisher at Boomtown said that Facebook was prepping for an eventual IPO. It sounds like the old, cold comfort behind the idea that if you wait long enough for something to happen, it will.
Keep an eye on:
- An Economist magazine theme park in London? That’s how you know it’s April Fool’s Day. What we want to know is who wrote up the brilliant description that went out in the press release Tuesday night? Oh yeah, they don’t use bylines. Also, check the theme park map. (The Economist)
- The New York Times might have a ton of problems, but its prominence in the media world and its air of rarified intellectualism make beating up on the family that runs the paper irresistible for many people. Mark Bowden at Vanity Fair earlier this week went to town on Chairman Arthur Sulzberger Jr in a way that would leave most people gasping for breath from the sucker punch. There is limited defense of Sulzberger online this week, but at least there’s Jack Shafer at Slate. He doesn’t quite exculpate the Sulzbergers (I wouldn’t want people saying some of these things about me), but he puts the insults in perspective. (Slate)
- So what if the real estate market is in the tank? Zillow.com, which anxious homeowners use to check to see how much equity they have lost in their homes, is letting people do that by putting its technology on newspaper websites. Is this what they mean by misery loving company? (Editor & Publisher)
(Photo: Facebook Founder Mark Zuckerberg; Reuters)