The Social

Chase announced Monday a partnership with Facebook to power the finance company's inaugural "Community Giving" campaign, which will allocate a total of $5 million to small, local nonprofits voted on by Facebook members.

The campaign takes the form of--you guessed it--a Facebook Platform application, in which members can choose their favorite of more than 500,000 nonprofits. Naturally, then, they're encouraged to use the hallowed "social graph" to encourage their friends to do so as well.

The winner gets $1 million in a grand-prize announcement slated for February 1; five runners-up get $100,000 apiece, and then the entire top 100 receives $25,000 apiece. There's an advisory board consisting of celebrities and Chase execs, as well as Facebook vice president of communications Elliot Schrage.

The publicity effort for Community Giving, which reached out to celebrity Twitter users in both the entertainment and nonprofit space in addition to the mainstream press to spread the word, says it's been an early success: over 12,000 Facebook members signed on in the first day.

That's not quite as many as the hundreds of thousands who rallied to support a prospective Stephen Colbert presidential campaign in the matter of a week, or the tens of thousands who opted to follow actor Neil Patrick Harris in his first 24 hours on Twitter, but for something that's a legitimate charity effort rather than a goofy viral meme, it's respectable.

Facebook has traditionally been hands-off about partnerships on its application platform, but nonprofit and public interest-related projects have been the exception: the social network forged several media-outlet deals during the 2008 presidential election, partnered with nonprofits to create virtual gifts for its "Facebook for Good" campaign, and synced up with the Huffington Post for a "social news" experiment.

It was less than two years ago that Facebook founder Mark Zuckerberg said that corporate philanthropy wasn't an immediate goal for the social network because, at the time, it simply didn't have the profits.

LOS ANGELES--Twitter didn't rake in $100 million because it was about to run out of money, investor and board member Bijan Sabet of Spark Capital said in a panel at the 140 Conference on Tuesday morning.

There was still money left over, Sabet explained, from what the company had raised from Benchmark Capital and Institutional Venture Partners in February, which followed Twitter's Series C round in the spring of 2008. Twitter, according to Sabet, raised the money from Insight Venture Partners and T. Rowe Price last month because it wanted to grow up: hire new people, launch new products, strike partnerships, and the like. Contrary to Twitter's reputation for "fail whale" errors, Sabet insisted that the money wasn't needed for an emergency server shopping spree or anything. (Some may disagree.)

"The expectation when you raise a lot of money, it's a statement that you want to build a company, an independent company," Sabet said when moderator Robert Scoble asked him what he thought of the fact that Twitter has not yet put forth a long-term business model. "We didn't need the money...it was a very purposeful kind of commitment to try to make a company."

A billion-dollar valuation is pretty nice to have, too.

A correction was made at 2:13 p.m. PT: a source with knowledge of the deal confirmed that Twitter's April 2008 and February 2009 rounds of funding are considered to be separate rounds.

Hot on the heels of its appointment of a chief technology officer last week, News Corp.'s MySpace on Monday announced that Mark Rosenbaum has been hired as its chief financial officer.

Although the appointment marks the first time that the social network has had a CFO, it is Rosenbaum's second stint at News Corp. He headed up financial operations at Gemstar-TV Guide International, when it was owned by the Rupert Murdoch-helmed conglomerate. More recently, Rosenbaum served as a consultant to MGM.

Mark Rosenbaum's MySpace profile picture.

(Credit: MySpace)

In his new position, Rosenbaum report directly to Owen Van Natta, the former Facebook executive who became MySpace's CEO in April, after the departure of co-founder Chris DeWolfe.

Less than two months after Van Natta's hiring, MySpace announced a layoff of nearly 30 percent amid stagnant growth and what was increasingly a losing battle against Facebook in its quest for social-networking dominance. The company called its aim at financial efficiency a "return to start-up culture."

Hiring a chief financial officer is, as a result, a logical step.

"Having led companies at every stage of their development, Mark understands both start-up culture and mature businesses, and is well-suited to guide MySpace's financial organization through its next phase of growth," Van Natta said in a release announcing Rosenbaum's hire. "We're thrilled to add someone with his pedigree and experience to the team."

Another one from Facebook: The company announced Tuesday, just as it was about to take the stage in a "developer garage" event at the TechCrunch50 conference, that it has reached 300 million active users around the world.

Also: It's cash flow-positive.

"As of today, Facebook now serves 300 million people across the world. It's a large number, but the way we think about this is that we're just getting started on our goal of connecting everyone," a blog post from CEO Mark Zuckerberg read. "We're also succeeding at building Facebook in a sustainable way. Earlier this year, we said we expected to be cash flow-positive sometime in 2010, and I'm pleased to share that we achieved this milestone last quarter. This is important to us because it sets Facebook up to be a strong independent service for the long term."

So I guess that's code for "no IPO soon."

Facebook hit 250 million users precisely two months ago, and 200 million users just three months before that.

Zuckerberg's blog post also highlighted a new trend in his rhetoric about the company he founded in 2004 as an undergraduate at Harvard: They run a tight ship. Or at least that's what he says.

"The site we all use every day is built by a relatively small group of the smartest engineers and entrepreneurs who are solving substantial problems and each making a huge impact for the 300 million people using Facebook," he wrote. "In fact, the ratio of Facebook users to Facebook engineers makes it so that every engineer here is responsible for more than one million users. It's hard to have an impact like that anywhere else."

Zuckerberg said in an interview with Bloomberg last month that Facebook hoped to increase its work force by 50 percent by the end of the year, but stressed that "the thing I want to remind people of is we're way closer to the beginning than the end."

This post was expanded at 1:19 p.m. PT.

Was there an unexpected rush of Facebook employees looking to cash out their stock? Yes, says BusinessWeek's Sarah Lacy, who said that the $100 million buyback orchestrated by investor Digital Sky Technologies has been oversubscribed. Which means that a fair number of employees have been looking to cash out some stock even though it may be worth far more down the road when (and if) Facebook goes public. It's the sort of thing that would've left pre-IPO Googlers feeling awfully sheepish.

But what's more surprising, Lacy found, is that the high demand for Facebook cash-outs seems to run contrary to Silicon Valley's characteristic idealism.

"What has happened to the start-up work ethic in Silicon Valley?" she asked. "Time was, the region was teeming with believers--be it believers in a company or believers in the sometimes naive, lottery-ticket hope that options would make them billionaires. People who work at the most highly valued startup in Silicon Valley and rush to sell for a smaller valuation--just as an IPO is starting to look likely--aren't believers. They are mercenaries."

Not at all, I would argue.

Imagine, for a moment or two, that you are a character whom we will call Joe Facebook. You are a software engineer, so it's pretty safe to say that you're a dude (apologies to all the women in computer science out there). You're in your mid-20s, and you've been working for Zuckerberg & co. for a few years now, ever since you graduated from Harvard or Stanford or some other big-name institution with a hefty price tag. You grew up in a small town in the Northeast or Midwest, which is why instead of living in Facebook's hometown of Palo Alto, you've opted to get a taste of the cosmopolitan by living in San Francisco and making the commute in this sweet little Prius you bought last year. Your girlfriend, who's been remarkably tolerant of all those late nights of coding, said something recently about how it's a buyer's market and she's getting sick of her roommates. Maybe you'd like to pay off some of those student loans and stop living like a bike messenger.

This, of course, is a stereotype. But employees cashing out some of their stock after working long hours and living in one of the most expensive cities in the country shouldn't be that shocking.

Facebook's salaries, people in the industry tell me, tend to be a little bit lower than those at many of their Valley counterparts. That's understandable: it's one of the hottest companies to work for, and could have a huge IPO down the line, which would mean that a lower salary now would ideally pay off big-time later. But some of those early employees were probably expecting Facebook to have gone public by now. In this kind of economic climate, there's going to be some hand-wringing.

Facebook's revenues are projected to be about $500 million this year with its current, advertising-based model. But it's just barely started to alpha-test its new "credits" payment system, a potential cash cow that was once rumored to be debuting a year ago.

The Web 2.0 bubble didn't pop suddenly like its late-'90s counterpart. Rather, it's still deflating. This week, it was made official that MySpace had acquired iLike, a social music start-up that had $17 million in venture funding pumped into it during the digital media VC heyday. But revenues didn't roll in as promised, and iLike's final sale price was reportedly just $20 million--news that called into question the profitability of an entire (big) niche of Web start-ups, ad-supported streaming music. Facebook is obviously far beyond that stage, but these reality checks can make a massive, Google-style IPO seem even further away.

Then there are services like Sharespost, an exchange for private stock trades. The fact that these sites are drumming up interest is testament to the current uneasiness of many dot-com employees, especially young ones trying to establish some stability, and more particularly those who might not be privy to the big-picture plans getting painted in the executive boardroom. Given the dreary market for M&As and IPOs right now, their supposed personal wealth might as well be in Monopoly money.

And working at a tech start-up, with its casual dress code, oddball hours (think college-style all-nighters fueled by Red Bull and pizza), and young workforce, can seem like a limbo of adolescence--even if the old dot-com stereotypes of Foosball tables and free beer are kept to a minimum. As short-sighted and greedy as it may seem, swapping in some of that Facebook stock now (not anywhere near all of it, mind you) is an upward move for the quarter-life-crisis crowd. It's a down-payment on that cute Victorian in Noe Valley, the last of those student loans, the extra cash to start building up an investment portfolio while stock prices are low. It's growing up, Silicon Valley-style. Even in the bright and happy Candyland of innovation (literally), cash is still king.

Mercenaries? Hardly. More like average 20-somethings.

Clarification at 7:02 a.m. PST: This article originally noted Silicon Alley Insider's report that Dan Lyons has been banned from CNBC. A CNBC representative disputes that assertion.

Newsweek columnist Dan Lyons, whose anonymous "Fake Steve Jobs" satire blog took the tech world by storm in 2007 went on a blunt rant on cable network CNBC that questioned its journalistic tactics--but contrary to a blog report, CNBC says he has not been banned from appearing on the network.

Lyons was facing off against CNBC's Silicon Valley bureau chief, Jim Goldman, in a segment about the sudden news on Wednesday afternoon that Apple CEO Steve Jobs would be taking a medical leave of absence following conflicting rumors and reports about his health.

Here's what happened: Gizmodo, a well-established gadget blog owned by Gawker Media, had reported that Jobs' health was "declining rapidly" and that his medical state was the reason that he would not be giving his traditional keynote address at the Macworld Expo. Goldman quickly shot down the rumor, citing sources; Jobs underwent treatment for pancreatic cancer in the past, but Apple had repeatedly insisted that he was now healthy.

Days later, Jobs said he had been diagnosed with a "hormone imbalance," implying that it was the reason he stepped down from the Macworld appearance. Goldman had been wrong. Then, on Wednesday, Jobs announced that he was taking the aforementioned leave of absence and that Apple Chief Operating Officer Tim Cook would handle management in the interim.

"You can try to backpedal and say that what you reported was true," Lyons said to Goldman on CNBC, adding that the broadcast journalist had been "played" and "punked" by his sources at Apple, "but look, you should apologize to Gizmodo for having criticized them and apologize to your viewers for having gotten it so wrong."

He also took a direct dig at the credibility of CNBC, asking, "Why have a bureau out in Silicon Valley?"

Silicon Alley Insider later reported that Lyons had been banned from the cable network for life. CNBC spokesman Kevin Goldman told CNET News that this is not true and that Lyons has not been banned from the network.

Lyons, while an editor at Forbes, started the anonymous "Secret Diary of Steve Jobs" blog and continued writing it, even after he was outed as the author. He spun the blog off into a book, Options, and later left Forbes for Newsweek. Around the time he made his job switch, he stopped writing as "Fake Steve."

An additional correction was made at 8:40 a.m. PT. Dan Lyons used to be an editor at Forbes, not Fortune.

Could an initial public offering be on the way for the highly ambitious Glam Media? The Valley-based advertising and media company has hired a new chief financial officer, Stephen E. Recht, who was the CFO of photo-printing site Shutterfly when it went public in 2006.

Recht replaces Ernie Cicogna, a co-founder of Glam. Cicogna will remain with the company as executive vice president of Glam Partners and general manager of the Glam Publisher Network.

"(Glam) has perfected a unique media business model and established itself as the leader in vertical content networks online," Recht said in a release. "I'm looking forward to the opportunity to contribute to the company's continued upward trajectory."

That could mean a few things: on one hand, an initial public offering, but on the other hand, Glam could have recruited him simply because it needs to make more money. With an advertising recession looming and talk of dot-com doom spreading all over the Web, Glam could just be getting down to business. For obvious reasons, a financial crisis isn't the greatest time to go public; Glam is also rumored to have gone through a round of layoffs earlier this fall.

That said, Glam (and its colorful CEO, Samir Arora) is known for its audacity. The company first made its name as an ad network on fashion and celebrity gossip sites, before branching out into everything from eco-living to African-American lifestyle to the luxury market. It's raised an astonishing amount of venture capital, has stocked its executive ranks with veterans of both print publishing and Silicon Valley, and was at the center of a rumored billion-dollar buyout offer.

Depending on whom you talked to, that buyout offer was either a fake rumor started internally to drum up Glam's market value or a savvy pre-IPO move. And that's the bipolar perception of Glam in both the tech and advertising sectors: some think it's the future of the industry, whereas skeptics see it as a big, drawn-out case of pride before a fall.

But now it looks as if there's one ex-Shutterfly executive who's betting on the former.

LONDON-- Britain's normally gray capital was unusually sunny this week. So were the attitudes of Web developers gathered here for a conference while, across the pond, Wall Street was in full panic mode.

A bright-eyed pack of several hundred aspiring Web visionaries descended upon London's Excel conference center for the semi-annual Future of Web Apps (FOWA) conference. Eager developers trawled the show floor's booths for stickers that they promptly stamped onto their (overwhelmingly Apple-manufactured) laptops. One pack of young men strolled around in straw sombreros. Another trio passed some time in between lectures by tossing around a Frisbee with the Yahoo Developers Network logo on it.

There was only off-hand talk about the global economic crisis that was also unfolding, in part, just a few train stops away in London's financial district. But people walking these halls all share a fervent belief in the power of their own ideas: Innovation cannot and will not stop, financial crisis be damned.

"A lot of people have asked (whether) the recession will impact certain things. I think the answer is probably that a major recession will impact everyone in some way, but traditionally I think some of the best companies have been built in down economic times," Facebook founder and entrepreneurial icon Mark Zuckerberg said in his keynote address on Friday evening. "If what you're providing is value to the end users...that lasts."

This wasn't some cloistered retreat of idealists. While FOWA is a small conference compared to bigger confabs like the Web 2.0 Expo or Demo, it pulls in big tech sponsors: AOL, Microsoft, Facebook, MySpace, Adobe, Sun Microsystems, all of whom want to reach FOWA's audience of young Web developers. Last year, the tech world went wild over Web platforms--packages of code released to companies and developers so that they could build their own widgets and applications to run on social networks like Facebook and MySpace. Now the industry has seen the platform craze extend to mobile phone software, like the iPhone, and new development platforms for downloadable desktop software, like Adobe Air and Microsoft Silverlight.

If you looked at the conference's array of sponsor booths, you'd think the tech economy was booming like it was in 2006. AOL was handing out pamphlets about developing on properties like social network Bebo and widget-maker Goowy; Sun Microsystems advertised its "Startup Essentials" program with, somewhat incongruously, a mechanical surfboard. Perhaps the biggest piece of showmanship came from MySpace, which hawked its U.K. developer program with one of London's iconic double-decker buses parked on the show floor, covered in MySpace regalia and playing nightclub-worthy electronica from a set of D.J.-style turntables inside.

That's not to say reality wasn't an uninvited guest to the festivities.

None of the big companies on the FOWA show floor seemed to be looking to actually hire new developer talent. A representative at Microsoft's booth, speaking to me over the din of the Guitar Hero stations that the company had set up, said he doubted anyone was hiring and estimated that the market for developer talent in London had probably dropped by five or six percent. A representative at AOL's booth wasn't sure if the company was hiring or not, but said they were really only there to drum up interest in properties like Goowy and Truveo among the developer community.

Entrepreneur or employee?
But it's unlikely that developers were concerned by the lack of employment opportunities; a job at AOL or Microsoft, or even Google, isn't what today's Web kids want anyway. That's not surprising, considering most of them belong to a digital generation that has been characterized by entrepreneurial self-promotion.

Inspired by people like Zuckerberg and Digg founder Kevin Rose, who also spoke at FOWA, and encouraged by how inexpensive it is to build on the Web these days, they see the recent wave of Web innovation as self-propelled. If you can't found a company because the venture capitalists are getting picky, at least build an iPhone app. Who cares if Adobe's not hiring?

Kevin Rose: "A lot of the advice going out there to start-ups right now is to pare back a little bit and get into a mode that you can survive in."

(Credit: Caroline McCarthy/CNET News)

But then, there's that pesky "reality" thing again. Many of the developers, as well as designers and consultants also present at the show, spent the Web 2.0 boom swimming in lucrative freelance contracts, and a few admitted that they're now doing the unthinkable and searching for full-time employment. "From the freelance perspective, things are tough," said Suw Charman-Anderson, a London-based consultant who has been a freelancer for ten years. "If someone offered me a job, I'd have to think seriously about it...It's been a very quiet summer for me, and the (client) interest I'm getting now, I'm getting interest from India. Their economy seems to be a bit more robust."

A few companies with executives at FOWA were interested in hiring developer talent. Those companies tended to be independent but established companies that had either a stable revenue stream or a healthy cushion of venture capital to last through difficult times--and often, they are run by the very same people who subscribe to the idea that innovation can live through, and even thrive in financial disaster.

"Companies are seeing that they really need a Web presence and so many have embranced blogs for that," said David Recordon, head of open platforms at Six Apart. "I don't think that's something that businesses will neccessarily cut if money's becoming tight."

Digg's Rose proudly announced in his address to FOWA's attendees on Thursday morning that his company is hiring new engineering talent. But in an interview with CNET News later that day, Rose said everything is tougher now, from finding investors to easily affording company expenses.

"Start-ups that don't have traction and don't have that kind of hockey-stick-like growth on Alexa or Compete or whatever are going to have a really difficult time raising an additional round of funding," Rose said in the interview. "I think that a lot of the advice going out there to start-ups right now is to pare back a little bit and get into a mode that you can survive in." Frugality has always been crucial to Digg, said Rose, who had worked at several start-ups during the dot-com boom.

Survival of the fittest
Recordon and Rose, in their belief that sound business practices and useful services will survive, sum up the general of the freewheeling, free-thinking world of Web developers, where there's a heavy temptation to put a positive spin on the financial crisis. Their reasoning? Starting a business and making it last is always hard, and when a bull market flush with venture cash makes it easy, that's not a good thing. Many at FOWA argued that even in the best of times, the culture of Web 2.0 development should be a sort of Darwinism, albeit a very happy Darwinism covered in stickers with the logos of Bay Area geek brands like Flickr, Digg, and Laughing Squid.

"Starting a company is hard. Period. Exclamation point," said Michael Galpert, founder of a New York-based image-editing start-up called Aviary, in a talk about how to build a company outside Silicon Valley.

Mark Zuckerberg (right): "Some of the best companies have been built in down economic times."

(Credit: Caroline McCarthy/CNET News)

He's right. It's a risky industry. In a city like London or New York, especially, many of these bright young developers and engineers likely turned down then-lucrative jobs in the financial sector in order to pursue the more volatile path of entrepreneurship or freelancing. They are already living lifestyles that many of their peers would deem excruciatingly difficult.

"I don't believe in good work, I believe in excellent work at a start-up company," Mahalo founder Jason Calacanis said in a talk about "entrepreneurial insanity" on Friday. "Start-ups are like the Tour de France or the Olympics, but in any team sport if somebody's not pulling their weight, they pull the whole team down."

Conference host and consultant Simon Wardley reminded the audience at a talk about innovation that this industry is never easy and that uncertainty is a perpetual hallmark. When you come up with a novel idea, it won't be novel for long.

"By the time we have all the information necessary to make a perfect decision, that decision is generally worthless," Wardley said. "Opportunities need to be seized."

And entrepreneur-turned-investor Julie Meyer of Ariadne evoked a quotation from Sir John Templeton that says to "invest at the point of maximum pessimism." Encouraging entrepreneurs to get venture rounds completed and to use the cash wisely, Meyer said, "Entrepreneurs are always investing at the point of maximum pessimism. That's what they know how to do best."

This is where the Darwin effect comes into play, as some entrepreneurs readily compare the current financial crisis to the original dot-com bust in a good way--that it might have a positive effect on the industry by separating quality start-ups and ideas from a long, candy-colored, vowel-free parade of Web 2.0 silliness. Being part of the business had become almost too easy, a fact easily illustrated by the loads of goofy widgets that flooded Facebook's developer platform and soon generated a vocal backlash.

Google engineer Kevin Marks, who helped build the OpenSocial platform, pointed out that the lean years of 2001-2002 brought forth many of the start-ups that have proven to be both innovators and powerful market forces in the past half-decade. "If you look at when the dot-com bubble burst, a lot of the companies that are speaking (at the conference) today grew out of that," Marks said. "What you tend to get in the quieter times is people coming up with these things...Flickr is a great example."

But here's the problem with this crisis-be-damned idealism: it will not always play out as well as every optimistic developer hopes. Many of the ambitious young techies who are convinced that they have the wherewithal to make it through the financial crisis are going to be in for a nasty surprise. That VC pitch spree might come up fruitless. That social-advertising-based business model might not turn a profit.

"There is not and cannot be a simple method (to innovation)," Simon Wardley said in his talk. Nor is steering a company, or even a great idea, through the worst economic conditions since the Great Depression.

Click here for ongoing coverage from CNET News, 'Tough times for tech'

If you see an increase in the number of 20-somethings driving nice cars around Palo Alto any time soon, maybe this is why: VentureBeat reported Monday that Facebook is ready to let current employees unload a fifth of their stock options, at the company's internal valuation of $4 billion. It's slated to start this fall. For early employees of the company, which was founded in a Harvard dorm room, this could mean some legit cash.

Facebook's valuation was reported at $15 billion when Microsoft took a $240 million stake last year, but the company has backtracked on that number, referring to it as a "business deal" rather than a former paper valuation. Microsoft's stake was considered to be in "preferred stock," whereas the $4 billion valuation refers to common stock.

The company's actual valuation came under scrutiny in the last throes of the ConnectU vs. Facebook trial, in which plaintiff ConnectU's founders cried foul that their erstwhile rival hadn't disclosed its true worth during the legal process.

If VentureBeat's report is true, this could be a sign that another way for Facebook employees to cash in their stock--an initial public offering or a sale to a big tech or media company--isn't on the immediate horizon. It also might raise a few eyebrows: for a young corporation still abiding by a mantra of "growth over profits," employees selling stock could seem a little bit presumptuous.

Facebook representatives were not immediately available for comment.