The wheels are coming off the bus at
Facebook. There is one sure sign, one incontrovertible indicator at technology companies that need cash and have no business plan, of maximum identity crisis, even on-the-verge-of-meltdown turmoil:
the departure of the CFO.
Gideon Yu, Facebook’s CFO since summer 2007, left the building yesterday.
Before that, another CFO left Facebook less than two years ago—which indicates that Facebook’s ubiquity and sheer fabulousness are masking either growing pains or long-term turmoil.
The CFO in a company that depends on higher and higher valuations to keep its investors happy is the second most important person in the enterprise and often the paramount figure. Getting rid of your CFO is only a smidgen different from getting rid of your CEO.
The CEO gets rid of the CFO only with tremendous court intrigue and palace coup fashion (it can just as easily happen the other way, with the CFO offing the CEO).
(Facebook CEO Mark Zuckerberg, AP Image)
What it necessarily means is that either: a) the financing strategy of the company has failed, valuations are down, sources are drying up, and the CFO is taking the hit; b) the CFO and CEO are locked in combat about the direction of the company and the board was forced to choose, creating political waves and repercussions for months to come; c) the CFO turned out to be a total lame-brain, which would indicate that the company itself has no idea what it’s doing if it hired such a total lame-brain; d) the company is looking for a fancier dude for when it goes public.
Most commentators have focused on this last point, but forget it. When Yu was hired less than two years ago, going public would have been a move the board would have obviously foreseen—Yu passed the going-public qualification test then.
This is bigger. Facebook can’t get money at its 2007 $15 billion valuation from Microsoft. Its advertising strategy is serving up a paltry return. And everyday it becomes wildly more popular—with every new friend costing it more money. Oh, and it has
an odd bugger for a CEO, a cult-leader sort. And Twitter is the new flavor.
So what’s a Facebook meltdown look like?
Slower technology investment
so users get irritable; a complicated financing package of new money involving “strategic” partners that is meant to look like a good valuation, but in fact hobbles the company with its complications, so investors get irritated; grandiose new ideas about how to sell advertising, which irritate advertisers.
Facebook, like so many technology companies before it, has taken a central place in the culture. But that accomplishment is so often a fate—you rise only to combust.
The worm turns.
More of Newser founder Michael Wolff's articles and commentary can be found at VanityFair.com, where he writes a regular column. He can be emailed at michael@newser.com
