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Summary:

Staying at a tech startup for more than four years — the default stock option vesting schedule — is a rare thing. But it seems notable that at 6-year-old Facebook many early and influential employees have moved on, and many of them recently.

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Staying at a tech startup for more than four years — the default stock option vesting schedule — is a rare thing, but it seems notable that at 6-year-old Facebook, many early and influential employees have moved on, several of them recently. Facebook is an unusual employer, having been incredibly successful while steering clear of the public markets longer than expected. Employees who leave are often emboldened by their work on such an influential and widely used product, and want to start their own companies. Others are burned out. Still others feel stifled by the company’s management structure.

A source who is an early Facebook employee (in the low double digits) estimates that about half of the people who joined prior to that employee’s hire date have left the company. Multiple company insiders said that Kevin Colleran, the company’s first ad sales person, is now the longest-tenured Facebooker after Mark Zuckerberg, with others like Chris Hughes, Dustin Moskovitz and Adam D’Angelo having since founded their own startups (Jumo, Asana and Quora, respectively)

Other recent departures include Aaron Sittig, the company’s first designer, who is credited with creating the concept of tagging Facebook friends in photos. About a month ago came the exit of Chris Putnam, the creator of Facebook Video who joined the company after hacking the site with a worm to make user profiles look like they were on MySpace. And just last week Ruchi Sanghvi, the company’s first female engineer who wrote the blog post announcing the then-radical Facebook news feed back in 2006 (and in doing so became the target of subsequent user outrage), left as well.

Ezra Callahan, who joined in 2004 as the company’s first product manager, left in July. Yishan Wong, who joined in 2005 and was director of engineering, left in March and is now running a startup co-working space. Kate Losse, who joined in 2005 and was product manager for internationalization and localization, is also said to have left, along with many others, on a frequently updated Quora page devoted to the subject. Many of these people are currently traveling and relaxing.

Many Facebook employees started at the company just out of college and have grown up together. Putnam, for instance, a 4-year veteran of the company, is only 24 (he left college to join). Others are getting engaged and married (sometimes to each other) and starting to have kids. They’re far removed from the early days of Facebook Proms and a company-sponsored Tahoe party cabin.

One frustration of early employees is that they’ve had limited upward mobility as Facebook has matured. With the exception of VP of Product Chris Cox, Mark Zuckerberg’s management team consists of outside hires, a good number of them from Google. It should also be noted that two years ago, around the time COO Sheryl Sandberg joined, there was another string of high-level departures, including Owen Van Natta, Matt Cohler, Katie Geminder and Jeff Hammerbacher, but that was more of a changing of the executive guard.

Another factor in the recent exodus could be the fact that Facebook offered employees the ability to cash out up to $1 million worth of stock options with the help of investor Digital Sky Technologies, in part to alleviate pressure toward an IPO. However, insiders said that a million dollars or less is not the kind of thing a young person could retire on, especially compared to what he or she might be able to receive after an IPO, so the buyout was more of a bonus than a reason to leave. I guess we can’t blame the Russians after all.

Oftentimes, it’s the opposite of burnout that’s driving people away: Early employees simply feel like they’re on top of the world, realize it’s a good time to start a company, and are receiving avid investor interest in their new projects. Some leave to found startups that are related to Facebook, but aren’t priorities internally. For instance, Dave Morin’s new startup Path is said to be be built on top of the Facebook Platform, which he managed at Facebook. Whatever Path ends up doing (it’s currently in stealth), Morin will ostensibly have a leg up on the competition in terms of knowing Facebook’s game plan and functionality. (On the other hand, starting a project outside of Facebook’s core competency isn’t necessarily a safe bet; since the time Quora was founded by ex-Facebookers D’Angelo and Charlie Cheever, Facebook launched the remarkably similar Facebook Questions.)

One place early employees do not seem to be flooding to is the competition. There are examples of Facebook employees leaving to work at Google and Twitter (for instance product manager Josh Elman), but they are rare.

Facebook has chosen a distinctive method of regenerating the young startup mojo that it may be losing in this early employee exodus: buying young startups. The company has acquired some eight small companies, most of them in the last six months, and actively promoted their founders: FriendFeed founder Bret Taylor is now CTO and Parakey founder Blake Ross is now director of product. Using cash to buy their companies may cost Facebook more than the average hire, but it refreshes the company’s stable of 4-year stock option vesting cycles, along with delivering a fresh dose of entrepreneurial chutzpah.

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  1. Fascinating insight into the workings of the company behind the site. Interesting to see that the choices out of the company are usually either, go it alone or burn out.

    Facebook clearly seems to have a methodology and the lack of people going to the competition (at least at top level) is quite revealing about their views, or perhaps inside knowledge of the competition.

  2. The people responsible for getting a startup off the ground don’t necessarily have the skills to turn a small business into a large one. That goes for leadership, too. Speaking as someone who works for a company that almost exclusively promotes inside, hiring upper management from the outside is the only way to grow rapidly with any sort of stability. Promoting within creates managers without mentors, directors without blueprints and lots of wheel reinvention.

  3. there’s a market for their stock so they no longer have to stay around waiting for the liquidation event. They can buy their options then sell on the open market. The problem for Facebook is that those transactions can effect the price of their common stock, so they have to deal with that.

  4. I’m not anti-Semitic at all. However, when I take a look at the above published list of names of now and former high-profile Facebook employees, the thing that strikes me is that FB seems to clearly prefer employees with a Jewish heritage.

    As I said: Nothing against hiring Jewish talents. What irritates me is that FB seems so biased and imbalanced in regard to the ethnicity, religion and (elitist) background of their hires that it almost appears as anti-Non-Semitic (which of course is against the law, too) or anti-non-elitist.

    Considering that FB aims to be a community for ALL the people in the world, how does their own hiring policy match with this aim? How wise is this in regard to business and ethics? How credible is a company where one social stratum is totally over-represented in staff in regard to its prevalence in the job market, let alone in the world?

    I hence ask Facebook to release statistics about how well their employees represent Facebook’s potential user-base and the world population in general. What’s the percentage of Afro-Americans in the Facebook staff? What’s the percentage of Muslims, Christians, Buddhists, Jews etc. employed by Facebook? What’s the percentage of employees that come from a wealthy background (read: whose parents earn more than 150’000 USD per year)? What’s the percentage of Asians, Africans, Europeans working at Facebook?

    There is a natural tendency that birds of a feather flock together. A company like Facebook should be aware of this fact and actively promote diversity by adjusting its hiring policy.

    I think this article suffers from the same bias. Or is it a coincidence that the last word is “chutzpah” (which means “courage” in Yiddish)?

    So let me ask all of you: Where is your courage to think out of the box? To promote equal chances, fairness, diversity?

    1. I agree with this post. The same goes for Google as well. The founders, CEO, board, top management team – all seem to be jewish. Strange?

      1. That’s just not correct. On http://www.google.com/corporate/execs.html only 3 out of 16 members of Operating Committee are clearly Jewish. If you discount Larry and Sergey, since they are not hires (it’s not like they could choose their own ethnicity), then only one of the hired execs (Jonathan Rosenberg) has definite Jewish heritage. For example:

        Eric Schmidt (CEO) – German.
        Nikesh Arora (President) – Indian.
        David C. Drummond (SVP) – African-American.
        Urs Hölzle (SVP) – Swiss.
        Omid Kordestani – Persian.
        Patrick Pichette – French-Canadian.
        Alan Eustace, Shona L. Brown, Rachel Whetstone, Bill Coughran – Anglo-Saxon.

  5. What about these names makes lends you to believe they are Jewish??
    Ezra Callahan
    Ruchi Sanghvi
    Bret Taylor
    Yishan Wong
    Adam D’Angelo
    Chris Cox

    BTW, chutzpah means spunk, audacity not courage.

  6. Paramendra Bhagat Tuesday, August 17, 2010

    A very interesting read.

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