Last Updated: April 12, 2008: 1:04 PM EDT
Email | Print    Type Size  -  +

Meet Facebook's new number two

Sheryl Sandberg has held high-profile jobs at the World Bank, the Treasury Department and Google. Her latest challenge? Making Facebook as profitable as it is popular.

By Jessi Hempel, writer

Sandberg's forward-thinking strategies made her a big success at Google.

PALO ALTO, Calif.(Fortune) -- This is only day 13 on the job for Sheryl Sandberg, so forgive her if she doesn't have everything figured out just yet. She pulls her legs up beneath her into a white Eames chair.

"This feels like Google when I started," she says of her new employer. It's a Wednesday afternoon in downtown Palo Alto and she has agreed to her first interview since she turned in her security badge at the Googleplex last month, packed six years of belongings into her car, and drove over to meet her colleagues at Facebook. As Facebook's chief operating officer, she is now number two to 23-year-old founder Mark Zuckerberg.

Sandberg, 38, is in charge of helping the Valley's most popular startup grow up. Over the past four years, Zuckerberg has built the social-networking site he started in his Harvard dorm room into a 550-person business that sprawls across seven buildings in downtown Palo Alto. A Microsoft investment has valued the company at $15 billion. The number of visitors to the site jumped 300% to 100 million in February, up from 24.8 million in February 2007.

More than one Valley luminary has held Zuckerberg's name up alongside that of Steve Jobs (proving that the only thing more plentiful than business plans there is hype). Engineers from Google (GOOG, Fortune 500) and Yahoo (YHOO, Fortune 500) are defecting to the company for a bit of that startup fairy dust. Facebook even recently hired Google's top chef.

But for all the success, the company has hit a critical point. Even though Facebook is seen as the embodiment of Web 2.0, it has the quintessential Web 1.0 problem: No one has figured out how to make real money off it. Facebook pulled in revenues of just $150 million in 2007. In short, Zuckerberg et. al have yet to hammer out a business model. Oh, that.

Facebook is betting that, if anyone can figure out how to turn social networking into cash, it's Sandberg. As vice president of global online sales and operations at Google, she built the operations to support Google's international strategy, and she ran its lucrative AdWords program. She managed the division that handled sales for nearly all of Google's online advertisers.

In growing a business unit from just a few employees to thousands, she learned a great deal about how to nurture companies as they develop. That will be important in her new roll at Facebook, where she's in charge of expanding operations, revenue and international reach. She's also responsible for sales, business development, public policy and communication. "It feels like a great thing that is starting to happen but really at the very, very beginning," she says.

No one is more jazzed that she's joining the company than Zuckerberg. Since their first meeting at a December Christmas party, he estimates they've spent more than 100 hours together, mostly over lengthy dinners at Sandberg's Atherton home.

"Sheryl has a lot of experience, probably the best and most relevant experience of anyone we could find, to help us scale our business," says Zuckerberg. But that's only part of the reason he's excited. In creating Facebook, Zuckerberg has social ambitions. He thinks helping people connect to other people on the Web will make the world a better place. As he puts it, "her values aligned very well with my own."

Sandberg has made a career out of helping exceptional individuals realize their aspirations. It started with her favorite college professor, Larry Summers, who taught her public economics at Harvard. Not that it was obvious at first.

"She sat in right field with a few friends with whom she always seemed to be having a terrific time," Summers remembers. "So I was a little surprised when she had the best midterm and then she also had the best final." Summers would become her mentor, serving first as her thesis adviser and then upon her graduation in 1991, hiring her to work with him at the World Bank.

This wasn't what Sandberg had originally intended. She figured she'd go to law school and ended up foregoing Harvard Law, which had accepted her. But Sandberg's career path has always taken unexpected turns.

"I want to do things that matter," she explains over a lunch at the University Caf in Palo Alto. At the World Bank, Sandberg assisted Summers and also traveled to India for a project to curb the spread of leprosy. After getting her MBA in 1995 (yes, Harvard again) she spent a year at McKinsey before becoming Summer's chief of staff at the Treasury Department during the Clinton administration. There, she gained a reputation for her intellect, organizational abilities and her skills in managing personal relationships.

"She was one of the people who kept [the Treasury] together," said Lee Sachs, who served as Assistant Secretary of the Treasury for Financial Markets at the time. Summers concurs: "She never let an event go without a resolution. It made my job easier, and it also made me perform better."

As the Clinton administration drew to a close, Sandberg was courted by a number of investment banks but chose instead to go to Google, which was then a valley startup with fewer than 300 people. There she took charge of AdWords, which lets Web publishers place text ads on their Web sites and managed four employees. Early on, she thought about how to lay the foundation for a massive global business.

"I don't think there is a business in the world that was getting users at that pace," remembers Adam Freed, whom Sandberg hired to launch AdWords internationally. Sandberg created divisions and hired people to manage them when her staff was still tiny, Freed recalls: "We were a ten-person team and we were thinking, 'why are you going to hire that?' And she said, 'trust me, you need to think not about now, but where are we going to be in five steps and ten steps?' "

Google's David Fischer, who worked with her from the start and recently moved into the position she vacated at the company, calls this quality her ability to look around corners. "While the rest of us are planning three quarters ahead, she was thinking about how we jump ahead a number of years," he says

In keeping with her focus on social issues, Sandberg also drove Google's billion-dollar philanthropy endeavor, She started the Google grants program to provide free search to nonprofits, and she helped develop plans for and was instrumental in hiring Larry Brilliant to run the company's philanthropic arm.

Sandberg will bring all of these experiences to bear in her new roll at Facebook. It's now up to her to add a dash of corporate structure without destroying the creative chaos that allows the company to innovate quickly. "One of the things I'm certainly focused on is tying things together," she says. "That's not just making a one-off decision, but seeing how it fits into a bigger picture."

First up, she'll tackle international growth. She's also focused on hiring. Facebook needs to find a couple more senior managers. The company is searching for a general counsel and a vice president in charge of policy and communications to round out the leadership team. And Sandberg will help her team come up with a process for identifying and recruiting talented people at every level of the organization.

Sandberg also hopes Facebook will figure out new advertising models for social networks. The company's launch last Fall of Beacon, a tool that lets users share their purchases with friends, was a spectacular failure. Beacon was highly anticipated by marketers, who hoped it would be to social networking what Google's AdWords tool was to search - a way to quickly and efficiently make money off the technology. But many users objected that Beacon revealed personal information, such as what videos they'd rented or gifts they'd bought, without asking.

Six months later, Zuckerberg admits the company messed up. "We made mistakes in communicating about it," he says. "We made mistakes in the user interface. We made mistakes in responding to it after it was out there. But the intent of what we were doing is still good."

Within 30 days, Zuckerberg apologized to users for launching a product that didn't adequately address their privacy concerns and adjusted Beacon to give users more control over what pops up on their profiles. He also now distinguishes Beacon from Facebook's ad strategy, which relaunched at the same time. Beacon, he explains, is part of the platform and just another way for users to use Facebook. The ad service is a different division of the company entirely.

Whatever you call it, though, the bottom line remains stark: Facebook has not yet found a way for using personal connections to advertise. Sandberg acknowledges that there won't be one silver-bullet technology that will make Facebook as profitable as it is popular.

"You can think about it more in terms of form, which is usually banners, pictures, things like that, or you can think about it how I think about it, which is, it's awareness building. If that's what we mean by brand advertising, I'm very hopeful that we play a significant role in pushing the envelope," she says. "How we get there, I don't think we know yet. In terms of what brand really is we could be enormously important in the market and that's a long-term goal I have."

But on day 13, that seems a very long way off. Sandberg's immediate challenge is to meet her employees, and she has spent the better part of the first two weeks checking in with them. Enthusiasm about her arrival emanates. Outside the glass-walled conference room, her head of human resources, a 2004 Stanford grad named Christopher Cox, ripsticks across the floor. (It's kind of like a skateboard, but cooler.) Earlier he stopped in to say how excited he was that Sandberg had arrived. "It was like Sheryl came and kicked everybody in the ass and said this is going to be hard," he said. "And then gave everybody a hug." To top of page

Company Price Change % Change
Ford Motor Co 8.29 0.05 0.61%
Advanced Micro Devic... 54.59 0.70 1.30%
Cisco Systems Inc 47.49 -2.44 -4.89%
General Electric Co 13.00 -0.16 -1.22%
Kraft Heinz Co 27.84 -2.20 -7.32%
Data as of 2:44pm ET
Index Last Change % Change
Dow 32,627.97 -234.33 -0.71%
Nasdaq 13,215.24 99.07 0.76%
S&P 500 3,913.10 -2.36 -0.06%
Treasuries 1.73 0.00 0.12%
Data as of 6:29am ET

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.