economics

December 15, 2010

Facebook’s Initial Crew Moving On

Filed under: Uncategorized — ktetaichinh @ 6:48 pm
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http://www.nytimes.com/2010/11/03/technology/03facebook.html?_r=1
SAN FRANCISCO — Facebook, the most successful start-up of the last decade, is only six years old, and an initial public offering is still a way off.
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Jim Wilson/The New York Times

Dave Morin decided to leave Facebook this year to build a company called Path.
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Jim Wilson/The New York Times

Netanel Jacobsson, who left Facebook last year, has started PlayHopper, a social gaming company.

But a number of Facebook’s early employees are giving up their stable jobs, free food and laundry service to build their own businesses. Many of them are leaving as wealthy, either on paper or after cashing in their ownership stakes to do what they say they like best: start companies.

Dustin Moskovitz, 26, who co-founded Facebook with his Harvard roommate Mark Zuckerberg, left his job on Facebook’s technical staff to create Asana, which makes software that helps workers collaborate.

Another Facebook co-founder, Chris Hughes, also 26, has started Jumo, a social network for “people who want to change the world.”

Dave Morin, formerly the senior platform manager, is building Path, a still-secretive venture, while Adam D’Angelo, who was Facebook’s chief technology officer, and Charlie Cheever, another senior manager, set off in 2008 and 2009 respectively to start Quora, a question-and-answer site. More than half a dozen start-ups can trace their origins to Facebook alumni.

The departures follow a familiar pattern among other Silicon Valley successes like Yahoo, eBay and Google. After amassing fortunes, early employees start walking out the door.

PayPal’s have gone off to start YouTube, Slide and Yelp, and staked Facebook. They are known as the PayPal Mafia. Google’s former employees are called Xooglers. Mr. Morin, who left Facebook this year, offered this suggestion: Facebook Society. “We’re social,” he explained.

But the Facebook Society is slightly different from the earlier alumni associations. The other serial entrepreneurs usually cashed out before resigning.

These ex-Facebookers are leaving before any I.P.O. of the company’s shares. They can do that because Facebook shares are surprisingly liquid. The rise of exchanges like Second Market and SharesPost over the last couple of years have allowed shareholders in private companies to sell their stakes more easily than before. These markets function much like a stock exchanges for publicly traded companies, although the pool of buyers and sellers is much smaller. Facebook’s overall value is around $30 billion on the exchanges.

Last year, Facebook helped current and former employees to cash out some of their shares to a Russian Internet company. Digital Sky Technologies, now known as Mail.ru, agreed to buy up to $100 million in stock to increase its existing stake in Facebook.

Many of Facebook’s alumni are wealthy from stock options they earned while working there. The Facebook expatriates are not saying who among them is rich on paper only and who has actually cashed in some holdings. But Mr. Moskovitz owns around 6 percent of Facebook, according to the book “The Facebook Effect,” and would therefore be worth about $1.8 billion.

By no means is Mr. Zuckerberg watching a mass exodus. The number of people leaving has been relatively small. Larry Yu, a Facebook spokesman, said that the company’s early employees tended to be entrepreneurs at heart, and it was therefore not surprising that they had left to start their own companies. “We don’t view attrition as a particularly prominent issue for us at this time,” he said.

Former Facebookers describe the company as a fabulous training ground. Mr. Zuckerberg hammered home the lesson of focusing on the long term by declining to accept ads on the site during its infancy or to be acquired by other companies.

Fellow colleagues expounded on entrepreneurship. Netanel Jacobsson, who was Facebook’s director for international business development before leaving last year, said the company’s start-up culture inevitably changed as a few hundred employees grew to around 1,700 today. “Eventually, I felt it became too big and too corporate, and that’s when I decided to leave,” Mr. Jacobsson said.

After taking time off to decide what to do, he began advising a social gaming company. He liked the industry so much that he created a social gaming company of his own, PlayHopper, which is to introduce its first product this year.

The company, which is financed from Mr. Jacobsson’s pocket, has a dozen or so employees scattered across the globe. “I’m back to what I really like and what I’m really passionate about — the growth stage of a company, and watching it take off,” Mr. Jacobsson said.

Getting the business off the ground at his age — 40 — is more complex than for other of Facebook’s spawn, who tend to be much younger, he said. For one thing, he has a wife and three children. “It’s almost a suicide mission,” Mr. Jacobsson said.

Mr. Morin, 30, said that he had always harbored entrepreneurial ambitions, even before joining Facebook in 2006. “My dream was always to start a company,” Mr. Morin said. After helping to build two central pieces of Facebook’s service, Connect and Platform, he saw an opportunity in the growing use of smartphones and decided to capitalize on the trend before it was too late.

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