Assessing the fate of the 'Facebook Way'

We didn’t always want to admit it, but in 2010 the world accepted that Facebook–the company that introduced us all to such mundane pursuits as photo tagging, virtual farmsteads, and the voyeuristic tracking of the lives of people we only half-knew in high school–has changed the world.

Yet Facebook has also begun to pioneer something different: a corporate structure and philosophy intimately tied to the mind of its young CEO, Mark Zuckerberg, and the company’s roots as a tiny cadre of coders in a college dorm. We’ll call this “the Facebook Way.” And in 2011 as Facebook continues to grow bigger (it kicked off the year with a $500 million investment from Goldman Sachs and Digital Sky Technologies, after all), we may get an answer to the question: Will the Facebook Way continue to work? Will this turn out to be one of the great business philosophies that other companies emulate, or will it prove to be a consequence of a still-young company’s own naivete?

Rooted in a belief that there is something almost magically advantageous about the earliest and most difficult days of a company’s history, Facebook has fought to maintain the feel of a small start-up, combating the potential for corporate sprawl and carefully constructing an environment that embraces minimalism to the point of forced scarcity. The Facebook way has meant that the company has staved off thus far what many predicted would be an inevitable transformation into a corporate behemoth–out with the beer pong, in with the suits.

“It really doesn’t feel like it’s a large organization at all,” said Facebook product manager Justin Shaffer, who joined the company when it acquired a start-up he founded, Hot Potato. “It really runs like a start-up. From the outside, looking in, I couldn’t full appreciate it until I got here.”

In November, when a Reuters report detailed a Google “hiring spree” of 2,076 job openings, Facebook representatives were quick to point out in conversation that this was a higher count than the total number of employees at Facebook. And the company, according to a chat late last year with Chief Technology Officer Bret Taylor–who joined Facebook when it acquired his company FriendFeed, which he’d left Google to found–plans to keep its engineers in Silicon Valley rather than opening an extensive network of satellite offices because Facebook likes to house its coding resources in one place. An engineering center in Seattle that Facebook opened in the middle of last year is dedicated to operations other than central product development, Taylor explained.

Plus, as has been famously documented over the past few months, CEO Mark Zuckerberg’s strategy for hand-picking ace developers and product managers hasn’t been turning to the ranks of a Google or Microsoft, but rather to purchase small start-ups specifically for the talent of a few engineers there. Many of the heads of those start-ups had previously bailed on big companies, making their return to a big company seem puzzling at first. None of these companies–Hot Potato, FriendFeed, Drop.io, Divvyshot–had experienced rocketing success, but none of them were old enough to pronounce dead in the water. Unlike Google, which has been known to turn acquisitions into products (Writely became Google Docs, GrandCentral became Google Voice, Android became…Android) these purchases were for the people behind them, not the products. All of them have since been shut down, with the exception of the larger FriendFeed, which Bret Taylor said had just enough loyal users to make it worth keeping around (though with development halted).

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