Facebook Names Genentech Veteran as CFO

David Ebersman, at the biotech giant for 15 years, is likely to put Facebook on the path to an IPO, but first he'll need to get it to profitability

By Douglas MacMillan

In April, when Facebook announced the departure of Chief Financial Officer Gideon Yu, the social network said it would look for a replacement "with public company experience." Facebook found what it was seeking in David Ebersman, a 15-year veteran of biotech pioneer Genentech (DNA).

"David [Ebersman] worked at one of the most innovative and respected [companies] in the world, so he brings a lot to the table when it comes to our efforts to build a lasting, important company," Facebook spokesman Larry Yu says of the appointment, announced on June 29.

Ebersman's appointment keeps alive speculation over whether and how soon the world's biggest social network is headed for an initial public share sale. "We have no plans to go public," says spokesman Larry Yu. Facebook CEO Mark Zuckerberg was quoted in May saying an IPO remains "a few years out."

Ebersman, 38, served as Genentech's CFO for the four years leading up to its $46.8 billion sale to drug giant Roche Holding (ROG) in May. In Facebook's press release, CEO Mark Zuckerberg noted that under Ebersman, Genentech's revenue tripled. Zuckerberg envisions high growth for his company as well, saying sales will rise 70% this year. (eMarketer has projected that Facebook's revenue will grow 20% this year, to $300 million.)

facebook's third cfo in three years

Growth aside, Ebersman is making a big cultural jump—from a well-established company with more than 10,000 employees to an upstart with around 1,000. Facebook is "less developed and less organized, and every change you want to make at a company like that breaks with the experience of what got them there," says Charles Geoly, a managing director at executive search firm Russell Reynolds. He adds that Ebersman was perceived as a strong candidate in the search market. Facebook, based in Palo Alto, Calif., said in May that it had retained recruiting firm Spencer Stuart to handle the CFO search.

The new finance chief also goes to work for a boss who's a decade his junior and has overseen the departure of several key executives of late, including co-founders Dustin Moskovitz and Chris Hughes, CTO Adam D'Angelo, and COO Owen Van Natta. Ebersman will be Facebook's third CFO in three years. "I suspect that it was not an easy search to fill," says a senior consultant in the executive search industry, who asked not to be identified. In a live interview with BusinessWeek editor Stephen Adler, Facebook COO Sheryl Sandberg admitted that she herself had to think long and hard about "going to work for a CEO who is quite young." Asked about Zuckerberg’s management style, spokesman Yu says: "Mark thinks for the long term, and that effects the decisions he makes and how he looks at the company both from the product and from the business point of view."

the balance sheet is the greater concern

While the new CFO is older than several of the company's top executives, Ebersman knows something about being the young gun. Says former co-worker Larry Lasky, a founding scientist at Genentech who left in 2002: "[Ebersman] was very young when he took over as CFO—I think people were a little bit skeptical. It was a big risk, but he did a great job."

Of course, Facebook's balance sheet may have been a greater concern for Ebersman and other CFO candidates. While the company has charted an ambitious course for worldwide expansion, surpassing the 200-million-member mark in April, analysts have raised concern about its ability to sell enough ads to those users to support its growth.

Ebersman will have some leeway. Facebook received a $200 million investment from Russia's Digital Sky Technologies in May, valuing the Web site at $10 billion. But that valuation is a drop from one-and-a-half years earlier, when Microsoft's (MSFT) $240 million investment pegged Facebook's worth at $15 billion.

The market for IPOs dropped off considerably during the recession, but two recent successful public offerings may be a good sign for Facebook: OpenTable (OPEN) and SolarWinds (SWI) are trading at 5% and 12% above their initial closes, respectively.

Douglas MacMillan is a staff writer for BusinessWeek in New York.

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