Facebook Reaps Recruits at High Levels

So much for cutting back during the downturn.

As Facebook ramps up hiring from about 1,000 employees today to as many as 1,200 by the end of the year, the social networking giant is recruiting technical and business leaders from some of the best known firms in Silicon Valley to help accelerate its financial performance.

Among the new hires at Facebook are Arturo Bejar, who will soon join as a director of engineering from Yahoo! (YHOO), and David Recordon, an open-source software expert from blogging software maker Six Apart, BusinessWeek.com has learned.

Bejar led Yahoo's security team, and Recordon was one of the developers of the OpenID authentication software, according to Facebook. Other new hires include former Genentech Chief Financial Officer David Ebersman, now doing the same job at Facebook, and Greg Badros, a senior engineer from Google (GOOG) and now an engineering director at Facebook.

The new technical and managerial talent is part of a 40%-to-50% expansion of Facebook staff that was reported by Bloomberg News on Aug. 24. Facebook CEO Mark Zuckerberg told Bloomberg that the recession presents an opportunity for the Web's largest social network—and one of techdom's hottest young companies—to scoop up talented engineers and managers. "No one else has been hiring," Zuckerberg told Bloomberg. "It's been a great environment for us because the economy has helped out."

Digital Sky's Money Enabled Hiring Zuckerberg's statement represents a slight shift in hiring plans. Last fall, after the financial crisis exploded, Facebook executives said they would use the downturn to gain ground on the competition. But as the crisis deepened and online advertising declined steeply, the company appeared to slow enlistment. Last November, Facebook was considering a hiring freeze for all employees except engineers, say sources familiar with its plans.

Now, armed with $200 million in fresh financing raised in late May from Russian investor Digital Sky Technologies, Facebook is again pushing the pedal on hiring.

Facebook spokesman Larry Yu confirmed reports of the company's hiring blitz, but added that Zuckerberg's comments weren't meant as a bold proclamation. "The point Mark was making is that we've made a conscious effort to not double [in staff size], which can happen with many companies as they grow," says Yu. By contrast, Google nearly doubled its staff for many years during its peak growth years.

Facebook has more than 250 million members, and has expanded its audience at an impressive clip. But the expense of serving those users heightened pressure on the company to increase revenues and turn a profit.

Late last year, Zuckerberg and his board lowered the company's 2008 revenue target to a range between $250 million and $300 million, down from the $300 million to $350 million in sales it had expected before the financial crisis hit, say sources familiar with the company's finances.

Higher Tech Can Save Facebook Money Although Facebook does not have to release financial information because it is a private company, executives have been touting the site's financial performance over the last six months. In April, Chief Operating Officer Sheryl Sandberg said 2009 sales would likely increase by 70% from 2008. The company expects to achieve free-cash-flow profitability in 2010, she added. In July, board member Marc Andreessen said the revenue for 2009 should reach $500 million.

Zuckerberg, however, is also trying to contain Facebook's costs by reengineering its technology infrastructure, which should cut the costs of storing and serving billions of photos.

Facebook ended 2008 with about 800 employees, double its 2007 yearend head count. Its 1,000 employees now means the company is already halfway toward its goal of 50% expansion in 2009.

So as Facebook uses the recession to upgrade its talent, it remains to be seen if the company can produce a payoff from the investment.

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