Is being a CEO always this hard?
When most companies hire a COO, it doesn’t make the front section of the Wall Street Journal, but then again, Facebook doesn’t exactly qualify as "most companies." Not with its $15 billion valuation and growing bevy of investors, the most notable being Microsoft which paid more than a billion dollars for what other investors paid low six figures, and love to hate CEO. That CEO now has company at top, as they announced Tuesday that former Googler and six-year veteran of Microsoft’s Moby Dick, Sheryl Sandberg, will join Facebook as COO towards the end of this month. According to the press release issued by Facebook, Sandberg "will be responsible for helping Facebook scale its operations and expand its presence globally. Sandberg will manage sales, marketing, business development, human resources, public policy, privacy and communications and will report directly to Facebook’s CEO Mark Zuckerberg." What you probably didn’t know is that prior to Google she was Chief of Staff to the U.S. Treasury Secretary under President Bill Clinton. Perhaps, it’s all our loss that she isn’t still at the Treasury, but her move to Facebook is significant, because in many ways, she represents the first major gamble and an admission that the company must mature.
Despite its ever-increasing revenues, which topped $150 million in 2007, the Wall Street Journal reports in its coverage of Sandberg joining that despite rather significant revenues, the company still spends more than it makes. The article seems to take pleasure in also pointing out a conversation that CEO Zuckerberg had with his mentor Silicon Valley investor Roger McNamee saying, "Is being a CEO always this hard?" When asked by the Journal about it, "Zuckerberg says he doesn’t recall the specific conversation with Mr. McNamee, but acknowledges the CEO job ‘is hard — I do sometimes whine to Roger about it.’ And so he should. He has gone far further than all but a few executives in taking a company from conception to multi-billion dollar valuation, finding himself in rare territory of other legendary tech entrepreneurs including Larry Page and Sergey Brin, Jerry Yang of Yahoo, Marc Andreessen of Netscape, and on the path to becoming a Steve Jobs or even a Bill Gates. How could that be a lot of pressure? In many ways, you lose either way. Leave or sell early, and people will question the decision; stay and try to grow the business, and you risk constant comparison, even more second-guessing, and not just failing but having people almost root against you. At that level of play, it must be easy for every decision to seem larger than life and the decision that could make or break the business.
Sandberg’s hiring not only signifies a maturation occurring at Facebook; it also represents the companies understanding that, in many ways, they need help – help if they want to grow the business and maintain both their current momentum and valuation. While it might seem easy to suggest that bringing her on board has more to do with having a parental figure, that assumption would prove disastrously incorrect and biased, albeit good fodder. Similarly, having her join the team certainly revolves around her operational expertise, but if the company just wanted stellar operational talent, they could have picked up someone from GE or any number of large blue-chip firms. The hiring of Sandberg is about one thing, that essential mix of operations savvy and industry specific knowledge, which together means moving up the learning curve. Being technically correct, the company wants to move down the learning curve; they want her experience to allow them to make fewer mistakes and accomplish more in a shorter period of time. They’ve done the heavy lifting of innovating which allowed them to capture such immense market share. While not easy, others have made great strides in figuring out monetization, and they can’t afford to take the time to figure it out themselves.
Those who have used Facebook’s self-service platform understand that they need help. It has incredible potential – perhaps unsurpassed targeting options – but it falls behind the competition in its consistency, user-friendliness, and most importantly scale. And, if you want to build a competitive self-service platform, why not leverage the expertise of someone who has intimate knowledge of how the world’s biggest did it. In many respects they’ve done the hardest part – building up a user base large enough to support an incredible diversity of advertisers. Now, they must capitalize on it. They know that the ultimate road to riches will be figuring out how to monetize the power of referrals, but figuring that out means going down a path no one has before. The intermediate step means positioning themselves as not only a viable, but must have alternative when spending money online. It’s about becoming a legitimate competitor to Google and standing out in their own right, and they do that by moving the entrepreneur out of the day to day. As they move into this new era, we could be witnessing the beginning a giant taking shape. If they transition correctly, they will build not just a system for monetizing their traffic but becoming the source for the monetization of social media across all such sites. And, that if anything is what I imagine Sandberg saw and can help Facebook replicate. Don’t just build AdWords when you can build AdSense.
