Photo: Flickr/Dan Farber
When Facebook filed its S1 to go public last Spring, CEO Mark Zuckerberg wrote 16 portentous words to potential shareholders: “Simply put: we don’t build services to make money; we make money to build better services.” Then he went and wore a hoodie to meetings with analysts from Wall Street during Facebook’s road show.
By all accounts of those meetings, Zuckerberg talked very little about exciting future opportunities for Facebook. He reportedly seemed uninterested.
The ironic thing is that this kind of anti-business posturing would have been totally fine if Facebook’s business were actually cooking at the time.
But it was not.
In fact, it still is not.
Facebook has one meaningful business, display advertising, and it has, for the last several quarters grown at a progressively slower rate. That kind of deceleration is a disaster for a company trying to sell its stock at a rich price-to-earnings ratio like Facebook was on IPO day.
So, after its IPO, Facebook’s stock got hammered – dropping as low as $17.55 after pricing at $38.
Sources chatty with Facebook employees say that crash has imploded morale at Facebook.
These sources say the place, which grew from a couple hundred employees to more than 3,000 in a few short years, is showing internal cracks that were covered up by quarter after quarter of exponential valuation growth on secondary markets.
We’ve also heard from Facebook employees that Zuckerberg himself – still in no danger of losing his billions – has begun to use the company’s stock price as something he can use to measure himself against his peers.
And so, there has been a change.
Suddenly it seems like all top Facebook execs can do is talk about exciting future opportunities for the company.
COO Sheryl Sandberg went on CNBC this morning and, basically, explained all the ways the company could start making a lot of money in the next few quarters. She talked about search, selling data, and e-commerce. (Transcript.)
This interview followed a very similar communication out of Zuckerberg at TechCrunch Disrupt a few weeks ago.
That’s when he dealt out juicy morsels to analysts, such as: “We do on the order of a billion queries a day, and we’re basically not even trying.”
If you can get over the painful whiplash, it is a remarkable – and much needed – change in tone for the company.
So, give Facebook credit for finally figuring out the easy part: making exciting promises.
Now Zuckerberg and Sandberg actually have to deliver.
Here’s Sandberg on CNBC: