November 06, 2008, 8:52 PM — Facebook isn't starved for money and it doesn't obsess about the US$15 billion valuation that a Microsoft investment gave it last year, CEO Mark Zuckerberg said Thursday.
Facebook's ad business is humming along nicely, generating a healthy cash stream both from direct sales to big brand marketers and from smaller advertisers that buy space on the site using its self-service tools, Zuckerberg said at the Web 2.0 Summit in San Francisco.
Generating "hundreds of millions of dollars" in annual revenue has allowed the company to focus on growing its worldwide user base this year to about 125 million members and to not have to make revenue generation its top priority, he said.
Industry pundits have suggested recently that, given its fast growth, Facebook may be approaching a cash crunch that could affect its operations and force it to seek more funding, but Zuckerberg dispelled those ideas.
Likewise, the staggering $15 billion valuation doesn't weigh around the necks of staff, nor does it dictate the company's business strategy, according to Zuckerberg. "We don't feel any pressure to live up to the valuation," he said.
By the same token, Microsoft's $240 million investment is just one piece of the companies' collaboration, which also includes partnerships for online ads and search technology, so Zuckerberg isn't worried about Steve Ballmer regretting what he paid for the Facebook stake. "They have been a really good partner for us," he said.
These days Facebook, which now has more than 700 employees, is especially interested in recruiting talented technical staff, such as engineers and product managers, and growing its direct sales force, in particular internationally, he said.
Asked by conference chairman John Battelle to comment on criticism that Facebook is too much of a walled garden, Zuckerberg said the company's goal is to continue opening itself up, but that it is a gradual process.
It started in earnest last year with the launch of the Facebook application development platform, which lets external developers create applications for the site, and continues with Facebook Connect, the company's nascent data portability initiative to let members export their Facebook data to other sites.
Questioned about whether Facebook is purposefully not participating in Google-sponsored efforts like the OpenSocial set of APIs (application programming interfaces) for building social-networking applications, Zuckerberg said there isn't an intentionally adversarial attitude toward the search giant.
Rather, Facebook is weighing its options and evaluating OpenSocial, which it considers inferior to its own Facebook platform, he said. It remains to be seen which effort will become an industry standard, he said. Facebook this year open-sourced a big portion of its platform.
In addition to Facebook's non-participation in Open Social -- in which MySpace and Yahoo are players -- Facebook starred in a public spat with Google this year when it blocked Google's own data portability system.
There are many privacy and security issues that need to be worked out as well before wide-ranging interoperability can be accomplished, and Facebook wants to make sure it doesn't compromise its members' ability to control their profile information, Zuckerberg said. "A lot of these problems will be solved over time, but I don't trivialize them," he said.
No matter what happens in the short term, Zuckerberg said he's confident that in the long run, both in Facebook and in the Web ecosystem in general, there will be a high degree of openness and interoperability among Web sites.
"As time goes on, we'll see this very natural fanning out and decentralization of things," he said.
Although early in his career he got a reputation for being cagey and circumspect in public appearances, Zuckerberg appeared much more candid and confident on stage, even when Battelle needled him with some questions.
Asked about decisions at some companies to shut off access to Facebook from the office, Zuckerberg said he has noticed, anecdotally, a relaxing of those policies as companies realize the benefits that Facebook can provide in employee collaboration and communication.
Facebook isn't interested in providing a version of its site for enterprises, he said, but he thinks some vendors will be very successful in this space because social networking can boost business operations.