She’s the best of COOs. He, apparently, was the worst.
If any two people embody the differing fortunes of Silicon Valley bellwethers Facebook and Yahoo, who each reported earnings this week, their chief operating officers (one recently sent packing) perhaps come closest. Each second-in-command led the advertising business for the company. And both recently made news regarding their compensation, though for very different reasons.
At Facebook, Sheryl Sandberg apparently joined the billionaires club last week, according to Bloomberg. Seeking an “expert” to weigh her contributions to the company, Bloomberg sought out David Kirkpatrick, author of The Facebook Effect. “Did she do a billion dollars-worth of work? I don’t know. She had the good fortune to land in the right place where her talents could really be applauded.” I’m going to acknowledge the veiled sexism of that remark and leave it to Alex Leo, who made Forbes 30 under 30 in media for 2012, to handle it: “A question that never gets asked of *male* billionaires. #ThisIsCrap,” she tweeted, among others. OK, now back to Kirkpatrick’s question. No, David, she helped do more than $100 billion worth of work.
Facebook just reported another blowout quarter. Mobile ads, which were zero at Facebook’s IPO in May of 2012, are closing in on $1.5 billion. More than 25 million small businesses have advertised on Facebook and nearly every major brand advertiser has as well. Sandberg came to Facebook in 2008 after having spent several years at Google. There she ran the AdWords group, far and away the most important revenue engine at the company.
When Sandberg first started at the search giant, the business was tiny but it began to grow quickly with the success of Google. By the time she left, AdWords was a multi-billion-dollar business. In 2007, Facebook booked just $153 million in revenue and it had fewer than 100 million users. Microsoft invested $240 million in October of that year at a then-astounding $15 billion valuation. Though Facebook would raise more capital in the ensuing months, there was a ton of work to be done to turn that capital into the profit-making machine Facebook has become. The bulk of that work would be done starting the very next year — by Sandberg.
Today, the company is worth more than $140 billion — nearly 10 times what it was before she joined. Revenues for the year that just ended were $7.9 billion, almost 50 times what they were in 2007. To take away any credit from CEO Mark Zuckerberg for his product vision would be a huge error in judgment. So, similarly, would denying Sandberg her due for overseeing the business side of Facebook through a period where the company gained more than $100 billion in value and grew its business so rapidly.
Of course Sandberg was in the right place at the right time. She took the job in part because of advice then Google CEO gave her before she went to work for the search giant: “If you’re offered a seat on a rocket ship, get on, don’t ask what seat.” Everyone knew Facebook was the next rocket ship. But not everyone was being offered a seat next to the guy at the controls. You don’t get to be co-pilot of the biggest rocket in Silicon Valley because you have the “good fortune to land in the right place.” You get that chance because either (a) you helped start the company or (b) you’re the hottest commodity in Silicon Valley. Sandberg was the hottest commodity in Silicon Valley. A half decade later, she’s even hotter.
The same can’t be said over at Yahoo, where COO Henrique de Castro was shown the door by Marissa Mayer. For his 15-month tenure, de Castro will apparently pocket upwards of $100 million, about 1/1000th the value Sandberg helped build up US-101 at Facebook. In that time, he failed to achieve any sort of turnaround in Yahoo's ad business and so Mayer, who made him her first big hire, felt she had little choice but to dump him. Mayer has managed some remarkable things in her time at Yahoo, convincing talented people in Silicon Valley its an exciting place to be, acquiring a number of interesting companies, making it seem relevant again.
But the core of Yahoo’s business, like Facebook’s, is selling advertising and the person in charge of that effort was de Castro. Unlike Facebook, which has booked five straight stellar quarters during the de Castro era, Yahoo has yet to figure out how to arrest the decline of its business. It keeps talking about new advertising products, tweaks to its formulas, progress in mobile. But while its revenues keep slipping, Facebook and Sandberg just keep delivering.
This isn’t an accident. Sandberg is at her best with agencies and big brand advertisers, and as a result the company has successfully transitioned its business with “internet speed” making Facebook is more valuable than ever. Obviously, this isn’t the work of any one person, but in a business world where we tend to credit (and blame) leaders for what happens at the businesses they run, its more than fair to recognize that Facebook was a fast-growing startup with an immature business when Sandberg arrived.
She was hired precisely because she could turn it into an advertising juggernaut and she did just that, bringing $1 billion in annual profits before the IPO. When the whole of Facebook needed to then turn on a dime to deal with mobile, Sandberg did her part to revamp the ad business with it, all the while keeping the company from spinning apart, losing key personnel, suffering from the morale of a falling share price. Surely, there’s an argument to be made that no one has truly earned a billion dollars in 5 years. Except when you’ve created as much value as Sheryl Sandberg has — the argument here is that she’s earned at least 1% of the upside that’s occurred on her match — you make a better case than almost anyone.