

Facebook Should Fire Sheryl Sandberg - padobson
http://pdobson.com/post/30179453916/facebook-should-fire-sheryl-sandberg

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tptacek
So, by quoting a 2-year old book on Facebook and displaying one stock graph,
the author of this post arrives at the following concluding graf:

 _Sandberg should start an ad agency on the East Coast. Miami is nice. That’s
a job she’s qualified to do. Her rampant lack of business creativity should
have no place in centers of innovation._

I found this piece superficial and, by the end, a little bit creepy.

Blaming the top management at Facebook for building a business on advertising
is a little like blaming scientists for gravity. Who's bidding more for
Facebook's functionality? The end users, who appear to be willing to pay
$0.00, or the advertisers, who in the aggregate are demonstrably willing to
pay billions?

~~~
pdog
Yeah, I found the tone of the article to be vaguely sexist. It depicts
Sandberg as "charming" a hapless Zuckerberg, then suggests that Sandberg
should move to Miami (because it's "nice") and start an ad agency because
"that’s a job she’s qualified to do."

~~~
padobson
I'll have to apologize if I came off as sexist. I'm not even completely anti-
Sandberg. I had hoped this bit would cover that:

 _At Google she had excelled at selling online advertisements and growing
Google into a cash gushing behemoth._

Any sniping I do at her in the rest of the piece, if you could call it that,
couldn't offset praise as high as this.

The point of the article is not that Sandberg herself screwed up. I'd say
she's responsible for almost every dollar of revenue Facebook has earned. The
point of the article was that Zuckerberg and Facebook screwed up by hiring
her, and the should rectify it by firing her and apologizing with a big
severance package.

~~~
lancewiggs
It does come across as sexist, sorry, but also as an ad hominem attack.

The point you are making about advertising at Facebook can be made without
pointing the finger at one person. It would be a lot clearer, and the gaps in
logic more obvious.

Even if one person is at fault (I'm not arguing that), in business, as in all
things, it's generally better to focus on fixing the problem rather than
giving up on the person. If we fired people every time they made a mistake
then we'd all be unrmployed.

------
diego
This post is extremely misinformed. The reason both Facebook and Twitter
decided to go with ads instead of selling access to the platform is that they
ran the numbers.

By the time they picked their business models they had already taken in
hundreds of millions in funding. The dollar size of the developer market is
tiny compared to the ad market, so they could never justify their valuations
by selling to developers. The middle ground the author proposes just doesn't
make any sense.

app.net has only taken $5M in funding, so if they manage to make a couple of
million a year that could be considered a success.

Can Facebook or Twitter make hundreds of millions of dollars a year by selling
access to the API? Even if they did, could they do it without competing with
their customers? Very doubtful.

~~~
padobson
You make a good point. There's a lot of things that are unanswerable about
what-ifs in the early days of Facebook. The biggest what-if I'm wondering
about is this: what if Facebook focused on becoming the first large social
media company to offer its API as its core money-maker?

Zynga, presently, is worth ~2.5B. How many Zynga-like companies would there be
if Facebook was focused on creating the best possible experience for their
developers? The moving-target, locked-down API they peddle instead is a poor
alternative motivated entirely by their focus on the advertising business
model.

It's a big what-if, and the premise of my article is really that they should
have found out before they settled on advertising. It was a mistake to hire
Sandberg when they did, because once they made her the COO the company had no
other monetization options then advertising.

~~~
tptacek
Imagine if Google found someone more creative to figure out _their_ business
model, which is also advertising. Think of what could have been!

Maybe they could have focused on developers. Then, they'd definitely have
better APIs; maybe developers could easily build products that leveraged
Google's search index! Great APIs, and also tens of billions fewer dollars.

~~~
padobson
Google could absolutely use more creativity in their executives. The graveyard
of failed Google products is vast, and its only because they indeed did choose
the best business model in advertising for their search service that they have
been able to survive and thrive through so many failures.

And giving credit were credit is definitely due, Sheryl Sandberg played an
extremely important role in making that business what it is today. Her
mistake, and Facebook's mistake, was thinking that it could be repeated - that
somehow the data that Facebook was leveraging was as valuable to advertisers
and as unobtrusive to users as the data that Google was leveraging. This is
not going to turn out to be the case - you will simply never see Facebook
doing $30B per year in advertising revenue like Google does. Their traffic
numbers are already similar, there is no reason to believe Facebook will be
able to 10x their revenue when their traffic is already peaking.

------
zzzeek
I get a weird recursive sense reading this. If you build a social network and
then establish your business model as charging developers to build apps on top
of that network, what's the business model those developers use to justify the
cost? Are _they_ going to sell ads? If the value of the service to the end-
users is "all the third party apps", and those third party apps are all ad-
driven, how does the underyling social network prefer that model, getting paid
by developers who get paid by ads, over just selling ads and creating a small
number of "apps" (like photo sharing) itself?

~~~
padobson
This is why I get so amped up about this entire discussion. One of the things
that's so great about an API-centered business model is that there are a ton
of creative decisions that have to be made in order to monetize it.

Do you sell per request? Per user? Do you charge a monthly fee and throttle
the developers feed? Do you make some parts of the API, like user names and
network names, freely available, while other parts are more expensive, like
the edges of the social graph or individual interests?

These questions are so much fun. Finding the answers to them would be even
more fun, and ultimately profitable, even if the answer to the question ends
up being, "None of them work, let's go to advertising."

When Facebook jumped headfirst into advertising by hiring Sheryl Sandberg in
2008, they made it impossible to ask these questions.

~~~
Evbn
Why do you single out and blame Sheryl Sandberg for this? Everyone making
money on the consumer web agrees with her. If you aren't a selling hardware or
consumables, you sell ads.

~~~
padobson
The point of the article is not that she's incompetent or bad at her job. The
point of the article is that once Facebook hired her to help them come up with
a business model, ads were a foregone conclusion. She led the charge on the
monetization problem. There was never any serious consideration of real,
creative alternatives.

I don't think she's done a bad job at Facebook. She's actually done a great
job at selling ads - that's something she's been doing very well for 11 years
now.

But a company like Facebook doesn't come along often, and when you're the COO
of Facebook you owe it to your employees, your investors, your industry, and
the world to attempt to create entirely new ways of doing things. There was no
real creativity in the Facebook monetization solution - which sucks because up
to that point Facebook was one of the most creative technology companies.

But blaming Sandberg for selling advertising is like blaming Elton John for
selling music. It's what she does. Sandberg didn't make any real mistakes -
she did the job she was hired to do. Facebook made the mistakes by letting her
decide how to monetize.

------
brown9-2
1\. _And with that, an entire industry was born. But two years later, Sandberg
promptly killed it._

What did Sandberg actually kill here? Isn't the "operating system" referred to
in the quote the overall Facebook platform, which still exists?

2\. Is app.net really a success just because the kickstarter was funded?
That's a bit hyperactive. Let's hold off judgment until a year or two and see
if their revenues are larger than their costs.

3\. The article author makes the naive assumption that a falling stock price
can be interpreted as a business failure without actually looking at or
mentioning Facebook's actual financials.

~~~
padobson
1\. I thought that the Dalton Caldwell quote I used explained that:

 _If you are building an advertising/media business, it would then follow that
you need to own all of the screen real-estate that users see. The next logical
step would be to kill all 3rd-party clients, and lock down the data in the
global firehose in order to control the “content”. - Dalton Caldwell_

Sorry if it was unclear.

2\. I don't think app.net is a success yet. I'm not sure it can be. I don't
think users want to pay for access to Twitter or Facebook, but I do think
there is a place for charging developers for access to a social API.

3\. I guess I figured Facebook's first earnings report as a public company
would be common knowledge on a site like Hacker News. Here's an article that
breaks Facebook down post-IPO:
[http://www.msnbc.msn.com/id/48770049/ns/business-
us_business...](http://www.msnbc.msn.com/id/48770049/ns/business-
us_business/#.UDlBXBQR9Hc) From the article:

 _In its first earnings report as a public company, Facebook says revenue grew
32 percent to $1.18 billion in the second quarter, slightly above analyst
expectations. It had a net loss of 8 cents per share, mainly due to stock
compensation expenses following its IPO. Adjusted earnings of 12 cents per
share matched Wall Street's expectations. Investors weren't impressed, though,
and its stock fell in trading._

For a company with growth and expectations like Facebook - something that's
supposed to be as formidable or more so than Google - this couldn't be seen as
anything but a disappointment.

------
MattRogish
"However, I’m convinced Mark Zuckerberg already had it figured out, but he
stopped short and hired an advertising incumbent to deal with the problem
while he went off to an ashram in India."

I think this puts wayy too much responsibility on Sandberg's shoulders. It's
not like Zuckerberg was on a sabbatical for a year and came back to see
everything changed. If he disagreed with Sandberg then he was in every
position to make a different decision. He didn't. If there is "blame" to be
assigned (I'm not convinced there is), it sits squarely on Zuckerberg's
shoulders.

------
lukeschlather
>“So why were photos and events so good?” he asked. “It was because despite
all their shortcomings they had one thing no one else had. And that was
integration with the social graph.”

You know, it's funny. The social graph is helpful, it means I can restrict who
can see my photos. On the other hand, most of the photos I choose to share I'd
be happy to have on the public Internet. I mainly keep them on Facebook so I
don't have to pay for bandwidth or manage anything.

Honestly, though, if someone could provide the UI Facebook provided a few
years ago (clean, uncluttered, with a good tagging mechanism) I would pay for
it. I would have paid Facebook $5-10 a month if they had quit iterating a few
years ago and focused on reliability and having a very clear privacy model
that doesn't get broken by data model changes.

They should really adopt the Github model, with privacy being something you
pay for. They might have to grandfather in some data, but they could stand to
make a ton of money this way and restore customer trust.

~~~
Evbn
You mean like dotMac? $100 pet year, much better than facebook photos, mildly
popular, and crushed by free ad-supported, like every other piece of consumer
software that isn't controlled by a platform monopoly gatekeeper.

~~~
lukeschlather
Dotmac's problem is that it was an extension of the Apple platform, and not
seriously optimized for when you are using a non-Apple machine.

Also, I'm talking about a freemium model. I wasn't aware dotmac had a free
tier. I thought it was a premium product that's one of the things built into
the large profit margins Apple takes on devices.

------
xianshou
Companies face entirely disparate problems at different scales. Let's
charitably give App.net a valuation of $20M, and take FB's valuation as the
approximately $42B the market says it's worth. This isn't even apples to
oranges - it's 1 apple to 2100 oranges.

------
state
I think you make a good point about the conflict between user and customer
that Facebook struggles with, but I doubt think it boils down to Sandberg. I
think you can probably expand further on that conflict in terms of choices
they make about their product.

------
joshu
Can we fire the author?

