That's why, for days before it was announced, top executives at Facebook desperately hid technical lead Dustin Moskovitz's plans to leave. They dithered as Mark Zuckerberg tried to persuade his cofounder and college roommate to stay, and others, led by COO Sheryl Sandberg, concocted a plan to spin his departure. That spin has now been dutifully printed in the pages of the Wall Street Journal: Facebook's changes are the "type of evolution you see among young growing companies and specifically young growing companies in Silicon Valley," company flack Larry Yu told the paper.

Sandberg, who closely directs the company's PR, would have us think that the uproar that has taken place at the social network since her arrival is a healthy evolution. It is not. The internal politicking she has introduced to the company is destructive, and has sent many of the company's best and brightest fleeing. The list of the departed includes data guru Jeff Hammerbacher, product VP Matt Cohler, platform director Ben Ling, and most recently, Justin Rosenstein, a top engineer who's leaving with Moskovitz. Operations VP Jonathan Heiliger may be next. The defections all hurt. But most of the blame lies with Zuckerberg himself.

Zuckerberg has always styled himself as the company's "founder," relegating the likes of Moskovitz and Chris Hughes, now Barack Obama's Web campaign director, to "cofounder" status. Never mind that this distinction doesn't exist in English; those who start a company are all equally founders.

Zuckerberg clearly considers himself first among equals; he once referred to Moskovitz as "disposable" and a "soldier." The former Harvard roommates patched over those insults, and Zuckerberg said he will rely on Moskovitz's counsel even after his departure.

If Moskovitz really thought he could guide Facebook's evolution, he would have stayed at the company, right? Zuckerberg has a history of churning through confidants. Napster cofounder Sean Parker helped establish Facebook in Silicon Valley as its president, only to be disappeared from the company. Former COO Owen Van Natta was in favor, then out. Sandberg had his ear for a while, but may be losing it. Lately, I hear he favors Christopher Cox, the twentysomething recent Stanford grad he recently tapped as the company's director of product. We'll see how long he stays by Zuckerberg's side.

This fickleness may be predictable from a 24-year-old. But it's fundamentally bad for the company. Yahoo thrived, in its early days, on the partnership between CEO Tim Koogle and founders Jerry Yang and Dave Filo. Google's triumvirate of its cofounders and CEO Eric Schmidt improved on that management form; the troika lends the company some stability by making sure decisions at the top are never unilateral.

Zuckerberg's insistence on the "founder" title suggests that he always planned to rule the company alone. It's a bad plan. His instincts on what kind of website will attract a 100 million users have been spot-on. But he has no business sense. At one point during the Facebook redesign process, he suggested getting rid of advertising altogether, having grown disillusioned with both old-style banner ads and the company's experiments with targeting ads to users' behavior.

Will Zuck ever find an equal partner, a sounding board who can help him turn Facebook into the large, ongoing concern he envisions? Dustin Moskovitz may not have been the right person. Nor, it seems, is Sheryl Sandberg.

Yet to staunch the bleeding of Facebook's technical talent, Zuckerberg will have to find someone to ground him — someone for whom he has enduring respect, who can moderate his worst impulses. Without it, there will be one word describing what's going to happen to Facebook: "founder."

Heiliger previously worked for Andreessen at Opsware. One would think the chrome-domed entrepreneur, now chairman of Ning, would prove a powerful ally in the fierce political battles that have roiled Facebook since the appointment of Sheryl Sandberg, a Beltway insider turned Internet executive, as COO. Nothing's certain, and Heiliger may well stay. But for him to be so unhappy as to openly entertain job offers? The social network's executive suite seems to be coming unplugged.

Larry and Sergey yanked a promised Boeing 757 from their private fleet, operated by a company called "H211 LLC," just weeks before the originally scheduled reentry date of the Jules Verne ATV-1 space freighter, forcing Nasa and the European Space Agency to scramble to find an old DC-8 to be able to observe the freighter's burn up in the Earth's atmosphere as planned.

What prompted the Google execs to pull the 757, and jeopardize a mission of the American and European space agencies?

Days before the announcement that the 757 was no longer available for the mission, the promised jet was instead used as a limo for San Francisco mayor Gavin Newsom's wedding. But it should have been ready for action after the unremarkable flights to and from Montana.

In the end, the Googlers did deliver one Gulfstream V party plane to watch the Verne burn. But one hopes it was a spare, not the same one used to chauffeur Larry, Sergey and their wives to the Google Maps satellite launch in September, right around the time of the originally scheduled reentry date. Was that the event which forced the rescheduling of the Verne mission? And if so, should Nasa be relying on billionaires' personal jets, and their whims, to complete complex, dangerous and time-critical missions?

Safka's example — a search for the popular tween star Miley Cyrus which yields TV listings for her Hannah Montana show — looks convincing, at first glance. Neither Yahoo nor Google show TV listings in the first page of search results. But Googling "Miley Cyrus TV listings" readily pulls up a page on TVGuide.com.

Ask.com's strategy relies on the notion that a small team of engineers and product managers can guess what users want, find the right databases to pull the information from, and assemble it more effectively than the dominant search engine's algorithms. It's a romantic notion of man vs. machine. But I seem to recall John Henry died at the end.

The previous evening, the Berliner Kurier reports, Wales dined with Celia von Bismarck, shown here, a dilettante magazine editor and think-tanker. (She hates "boring society ladies," according to Vanity Fair, so she and Wales must have self-loathing in common.) No mention of Wales's current fling, Andrea Weckerle, who's said to be on the outs with him after rumors circulated that he sent around racy photos of Weckerle without her knowledge.

At various times in our progress, people have come up to me to deliver a now familiar question: "did you ever imagine Facebook would be this big?" And I give a familiar answer: "well... yea, actually". Frankly, Mark and I knew even at the beginning this was something the world needed. We went into the college market as a stepping stone - identifying dense nests in the graph that would lead us to the rest of the world. We could see far enough in the future to know there would be an impact, we just didn't know exactly what it would be. Now I can look back on our progress and see the ways the world has changed, the ways we have changed it. We've altered the future in a score of ways, from making it easier to look up phone numbers and email addresses to making it more difficult for terrorists to isolate impressionistic youth in the middle east. At the same time we've built a competent and vibrant organization, driven by a passion to push the world more open.

In the process of helping to build a company, I found I had another passion: making companies themselves run better. It's easy to confuse this with a desire to manage, but even when I tried to do that I found myself drawn back to code for the solutions to my problems; I didn't want to construct efficiencies, I wanted to engineer them. Communication is the key to scale in any size organization and technology is the key to communication. I've seen us unblock ourselves time and again with new tools to increase transparency and passive information flow and many times it was the fruit of my own labors. While working on improving Facebook's tools, however, I came to a very difficult conclusion: doing this for all the companies of the world was not the same project as doing it for one of them. This idea is one that needs an organization that was built to do it, with every fiber of its DNA engineered in a way that producing an extensible enterprise platform becomes little more than the logical consequence of an organism executing its own nature. Further, the things we've scoped for Facebook's product team to do are the right things to be doing and I wouldn't have agreed with asking the company to divert significant resources to approach a project so different and so boundless in scope. Every time we introduce something new, we do it at an opportunity cost and this is too large a detour to take when we are already moving swiftly in the right direction.

And Facebook is moving in the right direction. When Facebook has a billion members (and 800 employees? maybe 900?) and someone leans over to ask me if I ever imagined it would get that big, my answer is going to be "you're damn right I did. how come it only has 20% of the market?". To know that this is Facebook's future and decide not be a part of it is the hardest thing I've ever had to do, but it's allowed me to have a broader perspective for the future. Like you, I've worried about the people leaving the company but it took becoming one of them to understand that this is just another part of the ecosystem (you should just take my word for it though). I'm not leaving the movement - I'm becoming a new part of it. The inevitable flux of the men and women behind these organizations is what moves the industry forward in the same direction in a way that cross-company collaboration alone never will. As the world moves to modular stacks and applications built up from a smorgasbord of platforms instead of single toolkits, then the companies that build the parts will need to act more and more like cooperative teams in a single larger organization. As Justin would undoubtedly say, I am simply viewing the industry from a different level of abstraction. These changes are difficult and sad, and that's certainly an understatement for me... but change brings new things and this particular change will bring a new ally to our mission - I think we can all be pretty pumped about that.

Whether I work here or not, I'll forever bleed Facebook blue. Facebook has been my passion and my purpose for the past 5 years. Our new project is not a replacement for what we build here, but instead both a complement and a compliment, and we have every intention of making it feel like a natural extension of Facebook's product and purpose. Similarly, my timing in leaving is not an indication that I have lost faith in our ability to succeed, but an affirmation in my confidence in the company's enduring success irrespective of changing faces.

Justin and I going to be around for at least another month and I am really looking forward to going deeper on this idea with everyone and how we can continue to work closely with Facebook. I'll always be really proud of the work we've done and grateful for the opportunity to work with such a uniquely remarkable team. We'll also be at the Q&A later to help continue the conversation right away.

Dustin

A couple of months ago, after three years as a Google product manager, I decided to leave for Facebook. I am writing this note to spread Good News to all the friends I haven't already overwhelmed with my enthusiasm: Facebook really is That company.
Which company? That one. That company that shows up once in a very long while — the Google of yesterday, the Microsoft of long ago. That company where large numbers of stunningly-brilliant people congregate and feed off each other's genius. That company that's doing with 60 engineers what teams of 600 can't pull off. That company that's on the cusp of Changing The World, that's still small enough where each employee has a huge impact on the organization, where you think about working now and again, and where you know you'll kick yourself in three years if you don't jump on the bandwagon now, even after someone had told you that it was rolling toward the promised land. That company where everyone seems to be having the time of their life.

I'm serious. I have drunk from the kool-aid, and it is delicious. Facebook is hiring ambitiously across the organization. If you're an engineer, UI designer, product manager, statistician, bizdev god, general entrepreneurial badass, whatever, and you would even consider considering Facebook as your new place for hat-hanging, please send me a Facebook message. We can have lunch, or I can give you a tour, or we can go kick it with Mark Zuckerberg — whatever it takes.

I have some bad news. Here's the heart of it: we are cutting 19 of our 133 editorial positions and suspending bonus payments at the start of next year. With the savings, we are increasing base pay and hiring 10 new people on the most commercially successful Gawker sites. But I know that's scant consolation for the colleagues we're losing and for those of you who have been enjoying the bonus windfalls from breakout stories.

You can guess the reason for these brutal measures: the recession. Sure, the company is currently profitable and advertising sales are up by about 30% on their level of a year ago. Our biggest clients are consumer electronics and entertainment companies that are relatively well insulated. And, yes, this is not the first time I've predicted doom: in July 2006, when we "battened down the hatches" and closed down Sploid and Screenhead; and in April this year, when we spun off Idolator, Gridskipper and Wonkette.

But now the credit crisis is clearly going to affect every sector of the economy. Advertising buys typically plunge after the Christmas shopping season, and 2009 is obviously going to be exceptionally difficult. We have to prepare for the worst, now, rather than when the worst comes upon us.

We never used to talk about the business side of the operation. Traffic was the only concern; my belief was that juicy news would draw the readers and the advertising would take care of itself. We were patient; even if it took four years for a site to develop the audience that finally registered with advertisers, we had the time. No longer.

Sites such as Consumerist, whose success has been measured more in traffic and recognition than in revenue, now need to cover their costs. I can't underline enough that this harsh commercial judgment is no reflection whatsoever on the editorial teams that are being cut.

Each of these sites performs a vital function. Consumerist provides an outlet for disgruntled consumers that exists nowhere else on the web; Valleywag has given puffed-up Silicon Valley the prick it's long needed; and Fleshbot manages to be classy and filthy at the same time. The site leads and writers on all of our sites have done exactly what we asked them to: work harder than the competition and grow the audience. It's my commercial judgment that's been at fault.

One reason we're eliminating these positions is to reinforce the teams on the sites with the most commercial appeal—Gizmodo, Kotaku, Lifehacker and Gawker—and the properties such as Jezebel, io9, Deadspin and Jalopnik which are poised to join them.

One new recruit we're confirming today is Gabriel Snyder from W Magazine in Los Angeles who, as managing editor of Gawker.com, will continue the site's evolution into a national news and entertainment site. We are also hiring new contributors at Jezebel, Deadspin, Kotaku and io9.

Even in the growing editorial teams we need to control costs. And that means a new look at traffic bonuses. We've been spending $50,000 a month on average on pageview bonuses. The scheme has made writers hustle for traffic even in teams so large that there was a risk they become lumbering. It's helped us hit a record 274m pageviews last month, up 69% on last September.

Pageview bonuses will continue this quarter. And we are committed to pageview incentives, and to measuring performance by a writer's individual pageviews, in the long term. But a first quarter spike in traffic — and the resulting bonus payments — could be dangerous if advertising markets are troubled next year. And we're assuming that the economy is so volatile that most of you would like a little bit more predictability about your own income.

That's why we're suspending the pageview bonus for the first quarter at least, but making up for some of the loss of income by raising pay. If you haven't recently agreed to a new rate, your monthly base amount will automatically be increased by 5% in January.

The news about the job and bonus cuts will be demoralizing. The golden age of the blog is over, people will say. Gawker Media is behaving like those big media companies that we mock so easily. I could come up with some bullshit line about how much worse it would have been to wait until we were forced to control costs; or how much more unpleasant life will be at the many internet ventures and newspapers that won't make it through the downturn. I could give you my optimistic spin about the glorious future that awaits us on the far side of this downturn.

But there is no escaping the fact that we're losing some excellent colleagues and the environment next year will be bleak. The one consolation is that there will be plenty of news for us to break — starting with this email, which you are free to leak.

Brian Ussery, who noted the change on his blog, is a professional search-engine optimization (SEO) consultant — he helps website owners raise their Google rank. Ussery thinks Google has "a renewed emphasis on rooting out paid links passing PageRank and/or low quality links." Years ago, site marketers realized that they could simply pay "relevant" sites — say, the site that comes up first for "Pacific Heights real estate" — to link to their own sites, boosting their own rank in Google results.

When Google employees said, "Have other relevant sites link to yours," they meant "build a site that people who run other relevant sites will consider worth linking to." What they didn't mean was "pay them to link to your crummy site." As Ussery implies, that's pretty much how everyone does business on the Internet now. Google's graph of all the Web's links, once an elegant directory of reputation, has been corrupted by payola.

What does Google want? Their guidelines should spell it out: Dear Webmasters, please stop spending your budget buying links. Instead, buy our ads.

Facebook's corporate charter has a relatively unusual provision for employee stock sales. The company has a right of first refusal over employees' shares, meaning that it has the right to match any price offered by a buyer; most companies have tighter restrictions.

Employees have been told that sales outside the program will have "career-limiting effects"; promotions, raises, and new stock-option grants may be taken away from those who sell anyway. But Facebook has no such hold on ex-employees.

And the offers in the market are tempting. Facebook's program will let shareholders sell at $8.90 a share, which represents a company valuation of $4 billion; some buyers are offering $11 a share. If too many transactions go through at the higher price, Facebook may have to revalue its shares, which will have untoward tax implications for the company and other employees.

It's not clear what Facebook can do, short of rewriting its corporate bylaws. But the company program does have one thing going for it: It will be formal, organized, and predictable. For geeks who'd rather optimize code than their own financial returns, letting their managers handle their money may seem easier.

There are many different reasons why customers have requested Windows Server; for example many customers want to run ASP.NET websites using Internet Information Server and use Microsoft SQL Server as their database. Amazon EC2 running Windows Server enables this scenario for building scalable websites. In addition, several customers would like to maintain a global single Windows-based desktop environment using Microsoft Remote Desktop, and Amazon EC2 is a scalable and dependable platform on which to do so.

What this means in English: Companies will soon have a choice of at least two ways to run Windows-powered servers without setting up and maintaining their own server farms. Analyst Mary Jo Foley explains what this means for Microsoft:

Microsoft will be fielding its hosted development environment in an increasingly crowded space. Google, Salesforce.com and Oracle are all bidding for pieces of developers’ hosted attentions. But for now, Amazon is the big dog.

I honestly can't tell: Is a hosted SQL Server better or worse than MySQL? Where's Ted Dziuba when I need him? "Didn't you hear?" Ted replied to my plea for technical analysis. "Chrome is the new OS."

Wall Street is currently in a bubble of panic. The Valley is currently in a bubble of denial. Neither zone approaches reality. Members of the National Bureau of Economic Research — the only official arbiter of such matters — can't even agree if we're in a recession yet. "It's really hard to say if we're in a recession, because different indicators point in different directions," said Jeffrey Frankel, a Harvard professor and a member of the NBER's recession-calling commitee.

That technical measure of recession ignores the reality on the ground: Home prices continue to slump, gas prices are pinching consumers' pocketbook, and advertisers are aggressively cutting back budgets, even online. Layoffs are grabbing headlines.

But does this really affect the Web startups which so enchant the blogosphere's imagination? Schadenfreude demands that these tiny companies shutter their doors — or if they don't have the decency to close up shop, they should act suitably chastened by the cold economic winds blowing. There's a lot of contradictory advice being handed out: Rely on angel investors! Don't rely on angel investors! My advice: Don't rely on journalists and bloggers for advice on how to run your business.

One might think Valleywag, which eagerly chronicles the mishaps of misconceived startups, would cheer on the notion of a lot of startups starving to death because of an economic downturn. Far from it! Better that they choke on their own vomit — that excess and lack of self-discipline kill them, rather than factors outside their control.

Serious entrepreneurs should be tightly controlling their spending. But that is as true now as it was a year ago, and a decade ago. Retaining pricey PR firms, throwing lavish parties, hiring executives from Fortune 500 companies at mid-six-figure salaries — that can wait until the company turns a profit. If your startup is dependent on a bubbly economic cycle, then it's not being run like a startup.

By all means, those who were never meant to be entrepreneurs in the first place, who lack any real ideas of their own, or any interest in making money rather than spending someone else's, should take this occasion to make a graceful exit from the scene. Six months ago, closing your startup would have seemed cowardly if not insane; now, everyone will nod at your wisdom.

That brings me to the opportunists — the likes of Marc Andreessen, who has been preaching the notion of a coming "nuclear winter" for some time, and Jason Calacanis, who recently wrote about a looming "startup depression."

Were I more impressed with their current startups, I'd nod alongside. But Andreessen's Ning is an unimpressive social-network builder; Mahalo, a gussied-up replica of Yahoo's 1994-era Web directory. Frustratingly for some observers, they have raised enough money that neither company will run out of funds for at least a year. (No one sincerely believes Calacanis when he says he has enough money to run the company for four years, do they?) If their flimsy business models remain unchallenged, their survival is all the more likely. So when Andreessen and Calacanis talk doom and gloom, what I'm really hearing is: "Please don't raise money for a better idea than mine — I can't take the competition."

What history tells us, actually, is that the best companies are started in times like this. The last wave of truly innovative Web 2.0 companies — Flickr, Del.icio.us, Last.fm, Facebook — started at a time when no one particularly believed in their potential.

Many people would benefit from a climate of fear: Venture capitalists, who might get larger pieces of startups; employers, who might hire talent more cheaply; and corporate dealmakers, like Jeremy Philips of News Corp., who might acquire companies less expensively.

But the biggest reason to ignore Philips' fearmongering, in particular? He's not taking his own advice. Rumor has it that, instead of food and guns, he is acquiring a piece of Manhattan real estate. And from what we hear, it is rather too glossy a place to serve as a warehouse for rations and ammo.

(Photo by Gawker Media)

In the last 3 months the flying bullshit has gotten so thick that all of us below senior management have started to be able to systematically disprove half of what management tells us. Even management themselves change things they had formerly declared as factual.

If you ask any of the top three managers what our strategy is for an open API vs. threats from Google etc they will all three give you a different answer. Wait a week [and] ask again and then they all give new different answers.

We miss our objectives on every feature add, interface change, hardware move and anything else management declares. LIAP is a non-scaling disaster.

Worst of all we have now missed every financial objective set by Bain Capital after investing $50M in us. Not once but twice we have missed revenue and bottom line goals. The debate about who's fault this is is lively enough that one can tickle each manager for trouble and they will throw each other under the LinkedIn bus. (By the way management got a minibus to ferry almost no one to work from San Francisco because Google does it, (CEO penis envy) but the staff joke that the bus is to throw people under in this culture where the PR is hot but the business is not)

Missing numbers is not a secret, management stood up at an off-site in Monterey and said "we are going to every group and telling them the facts that we missed our goals again and that Bain is really mad" This is really comforting to the staff when the next day the same guy is on CNBCs websit saying we are profitable (not even close).

The only thing we seem good at doing on time is spending too much money. Management told us this summer that Goldman Sachs was investing $25M more in us and the details would be forthcoming. (said it was a done deal) (scared to death that we would need this) well I just learned GS said NO! 2 months ago, management just hasn't bothered to tell us.

It's a shame because it was a good company that had endured enough before it became so full of false confidence that it passed on the window of opportunity that was there to sell for good money.

As an online ad network, Glam buys ad inventory from publishers and resells it — hopefully, at a markup. Some of those publishers are now becoming restive. We hear Lifetime, which signed with Glam less than a year ago, wants out of its deal. MyYearbook, the second-rate social network which provides much of the traffic count Glam touts to advertisers, is said to be disappointed with the revenues Glam has been providing.

And Global Grind, a hip-hop social network startup which only signed with Glam in June, may also be moving on. CEO Navarrow Wright tells me the company is already "seeing success" with its Glam partnership, but at the recent Mixx conference in New York, talk was that Global Grind was examining its options and thinking about breaking its Glam deal.

(Photo via San Francisco Chronicle)

Were Larry and Sergey aboard the Gulfstream? If so, someone ought to tell Google shareholders that the companies' cofounders were in close proximity to a flaming fireball. And someone ought to tell American taxpayers that Nasa is now scheduling its missions around the viewing requirements of loopy billionaires. (Illustration by the European Space Agency)

COO Anthony Previte, after threatening to fire everyone in operations, has still not been able to hire more engineers or systems administrators. And the design team has lost all respect for their manager, director of user experience Shawn Whitfield, who's made it clear that anyone who questions his authority will be let go.

But hey, the employees that stick around are going to get rich when FriendFinder Networks finally goes public, right? Not so much. Non-executive employees were each granted 10,000 options, regardless of seniority. And they come with a five-year vesting period — one year more than is typical.

After the departure of founder Andrew Conru, it's been nothing but petty politics among executives and upper management, according to our source, who added, "You never know who you can trust. That's the whole [Adult FriendFinder] attitude: Trust nobody." It sounds like Penthouse inherited a bad situation that's gotten even more toxic since it bought the company.

Levchin's Slide promotes the practice of sharing every precious and not-so-precious moment with the world at large, and that his company has massive amounts of Facebook user data at its disposal thanks to the popularity of the company's Facebook applications. Yes, the rich are different than you and I: They don't buy into the crap they sell us.

We're told Dudeck leaked Arrington not only the MySpace Music screenshots, but also tipped him to a story about MySpace friend-in-chief Tom Anderson's brush with the FBI as a hacker in the 1980s. The article served to burnish Anderson's rather questionable geek credentials.

MySpace has helped Arrington's business in other ways besides feeding him stories. The News Corp.-owned social network was a major sponsor of the recent TechCrunch50 conference.

Arrington has no issue bragging privately about his relationship with Dudeck. And Dudeck, our source says, has "no issues to sleeping with key influencers." Before Arrington, we hear, the rumor was Dudeck dated MySpace CEO Chris DeWolfe.

But don't believe us — let's go to the tape. Check out this clip of DeWolfe and Dudeck together at the Sundance Film Festival earlier this year, caught by Kara Swisher for AllThingsD. The way Dudeck leans in to DeWolfe to stay warm tells you more than any of our anonymous sources.

Kara's quippy response — "You don't have to love me" — reminds me of an anecdote my boss once related about Dudeck. The flirtatious MySpace flack accosted him at a conference last year and said, "We really need to work on our relationship." Sorry, Dani — Owen doesn't swing that way.

Artist and designer Glenn Kaino originally envisioned the site as a social network for jetset hipsters, and his cousin Scott Sassa signed on as CEO after a spell at venture-capital firm Kleiner Perkins. You might remember Sassa as the CEO who presided over Friendster's slide into irrelevancy, or as a Hollywood executive managing NBC's West Coast entertainment operations. Sassa likely was the one to hustle up the investors, as well as celebritard users like Rob Lowe, Lisa Ling and Cory Kennedy.

But in May, the site was drawing only half a million users a month according to Nielsen Online. (Sassa put the number at 2 million.) That's orders of magnitude smaller than similar sites like Six Apart's Vox or off-the-shelf social network Ning, either of which could have done more for Discovery with less money.

Our theory: Events on Wall Street did have something to do with Uber's shutdown. But not the way Uber would like you to think — that the site was a thriving concern kneecapped by some kind of mysterious liquidity crisis. No, the market meltdown merely provided the convenient excuse to close down a stinker of a company. Expect more cash clawbacks in the months to come — from startups that should never have gotten money, in good times or bad.

We millennials know there are two things we can do about weighty problems like the Sudan, Iraq and HIV/AIDS: Start a Facebook group, or mock those who do. I'm not about to start a Facebook group. Forthwith, a list of Facebook groups that never achieved their creator's ambitions to become "one million strong" — though I'm sure coach will give them a plastic trophy at the end of the season anyway.

Glam is a poorly run middleman operation which has been buying high and selling low, ad-industry players tell me. Glam has spent millions of dollars buying up sites' advertising inventory, to create the illusion of bulk, and hiring expensive salespeople, in the hopes of later reselling the ad banners at a profit.

Arora could argue he's cutting back in the anticipation of trouble in the advertising market to come. Or the company could be using layoffs to weed out salespeople, many of them recruited from the traditional media world, who aren't making their numbers. Glam, we hear, has been buying traffic at a $6 CPM, or cost per thousand pageviews. That is a rich price for traffic which is mostly low-end social-network content for which advertisers balk at paying, and it would not be surprising if some Glam salespeople found that challenging.

More worrisome, given the ongoing credit crunch: $20 million of Glam's last round was "revenue-based debt financing." The way Glam has been spending, if the revenue underpinning the debt is not materializing, Glam could face a hard time getting new financing.

Rose, whose stake in Digg was famously estimated by BusinessWeek as worth $60 million, may be a unique case. More driven entrepreneurs must be frustrated by Rose, the fun-loving rock climber, on-screen beer drinker, and legendary lothario. His company's rise has seemed effortlessly successful, driven more by the former TV host's fan following than Digg's innovations.

But Rose has gotten good business advice, chiefly from Digg CEO Jay Adelson, a longtime friend. Adelson feels he gave up too much control to investors at his previous company, Equinix; he strove to protect Rose from the same fate, an effort which Sarah Lacy chronicles in her recent book, Once You're Lucky, Twice You're Good. As a result, Rose still holds a substantial stake in Digg.

Rose is already believed to have taken $1 million in a previous financing. It's not clear how much he's taken in this round, if any — but it stretches credulity to think he hasn't cashed out to some extent.

Here's why: Normally, a company raising $28.7 million in a third round of financing, as Digg just did, would be giving up a substantial chunk to outside investors. But when the founder controls as much as Rose does, the math doesn't work. Former Digg engineer Owen Byrne, who complains that he hasn't had access to Digg's financials in some time, speculates that the round involved massive dilution — the reduction in value suffered by existing shareholders when new shares are issued.

But Byrne has this exactly wrong: Allowing the VCs to put in enough money to make the investment worth their time, at a high valuation, would require substantial dilution, which would disadvantage employees and early investors. Much simpler to transfer shares directly from one large shareholder — Rose — to another.

What's the effect? Already, employees at Facebook have been agitating to sell their shares, and the company is creating an internal market to let them do so. Rose, as another high-profile example, will put further pressure on startups' management to let their workers cash out. This seems dangerous: Digg, with its high traffic and Microsoft ad deal, has achieved some success — but it's hard to envision it lasting long as an independent concern. What will the boards of even less developed startups tell their founders, when they want to sell, too — that they're just not as cool as Kevin Rose?

Escapism. Microsoft Research is supposed to look far ahead to the forefront of computing — but I can't help thinking this push is influenced by Microsoft's current straits.

Microsoft has foundered in trying to cajole humans to follow its will; despite its best efforts, they prefer other websites to MSN. Cajoling them to switch search engines is a fruitless, expensive task. Consumers utterly confound Microsoft, which has geared itself to sell software in bulk to PC makers, retailers and larger corporations, and let them worry about making it appealing.

Change is hard. So why struggle with human beings, and the messy real world, when you can just play with robots instead? Mundie envisions robot receptionists — the voice-recognition hell of customer service, but inflicted on us in real life, in other words. "This will change the everyday way humans interact with computers," says Mundie. Yes: Computers are making humans easier to use.

Judging by Sandberg's panel appearence Monday, Facebook particularly wants to push its new Engagement Ads — the ones which allow users to comment on advertiser's banners. Yesterday, I sat down with a top executive from one of the major interactive agencies and asked him what he made of Facebook's showy efforts. Engagement Ads? "Eh, those aren't what I want," he said. Then he suggested three things Facebook needs to do right now to win Madison Avenue's money faster than a week's worth of sessions, panels and Ziggy Marley parties ever could.

Build a toll booth.
Everyone knows banner ads don't do it for big-budget advertisers anymore— not even ones that allow users to comment on them and share with their friends, like Facebook's new ads. Instead of creating gimmicky features that users don't want, Facebook needs to come up with ways for advertisers to be seen as providing new functionality on Facebook itself. By way of analogy, my source told me to imagine American Express sponsoring a normally congested toll road for a day. Drivers approaching the toll booths would see them empty and maybe billboard that read: "No toll today. Drive on through and see what it's like to be an American Express cardholder." That's the kind of branded experiences Facebook needs to create for users and advertisers, my source told me. Not gimmicky ones like asking users to design Mazda's new cars or come up with new Ben and Jerry's flavors. Facebook should encourage users to feel like a site improvement was brought to them by a brand. Maybe Facebook's Video application should have been sponsored by Sony's CyberShot line, for example. The challenge: Facebook's site developers work separately from the group which comes up with ad products, a divide Facebook needs to erase.

Facebook needs to stop imagining it will ever reach Google's size.
One reason Facebook hasn't come up with these kinds of advertising arrangements already is that they require lots of creativity, planning and customization. They're one-offs, and Mark Zuckerberg can't simply program a computer to sell them over and over. It's a terrifying reality for Facebook because its investors put money into it expecting it would become the next Google, which is an automated moneymaking machine. (Only 3,000 out of its 18,000 employees are required to run its advertising operations.) The sooner Facebook management and its investors realize that the company will not be the next Google — which, let's face it, lucked into a ridiculously simple way of making money — the sooner it can take advantage of its massive, desirable user base.

Zuckerberg and Sandberg need to hire Madison Avenue insiders.
My source says Madison Avenue avoids spending money on MySpace because no one in New York knows its ad salespeople. Facebook needs to put Madison Avenue insiders in positions where they have Mark Zuckerberg's ear. For example: Zuckerberg could have used someone with advertising experience to challenge him with the baby-name test before the company went forward with its Beacon ads. The baby-name test? "You know," he said, "The one where you take the name and think of all the terrible things it rhymes with and then decide if you still like it."

Hello everyone,

There has been a lot of concern and debate on campus about abuse of the guest privilege in the cafes.  We wanted to take the opportunity to review our guest policies and ask for your help in enforcing them.

1 - Every Google employee and intern in Mountain View is allowed two meals per month in our cafes for personal guests. 

We understand that there may be an occasional month when you have special visitors in town and you exceed two personal guests (4 family members visiting from Omaha?) but we trust you not to exceed more than an average of 2 personal guests per month. 

2 - After reviewing the number of guests on campus each day, we have decided to limit the privilege of bringing personal guests on campus to part- and full-time employees and interns only. 

We know that this will be disappointing to our temps, vendors and contractors, but we feel that it is a necessary step to alleviate the over-crowding and congestion on campus.

3 - Everyone is responsible for signing in guests (business or personal) at lobby reception and all guests are required to wear visitor badges visibly while on campus. 

This holds true for lunch and dinner.  Much of the abuse of the guest meal privilege in Mountain View is occurring at dinner time.  To help us maintain security, please refrain from bringing guests on campus on weekends and late evenings. 

4 - Prepared meals in containers are provided at dinner time for people who are working late on campus. 

We know that there has been a lack of clarity about this, but the intention of this meal service is not for people to grab meals "to go" on their way out the door, or to "stock up" on multiple meals.

5 - Anyone bringing a group of business guests to a cafe for lunch should bring them after 1 pm to avoid our peak lunch hour.

To help us to monitor and enforce these guest policies, we will be adding a simple step to the process of signing in guests on campus beginning later this year.  When visitors sign in at reception, they will be asked to identify themselves as a personal or business guest, and to indicate whether they are having a meal in one of our cafes.  If they are, the word "MEAL" will appear on their visitor badge. 

Our on-site meals are intended to foster community building among employees.  We want there to be enough room in our cafes for employees and teams to enjoy meals together.  Abuse of the guest privilege creates over-crowding and congestion, at great expense to the company.  This is an incredible perk that we benefit from each day.  Please do your part to use this privilege appropriately and honestly.

Many thanks,

Laszlo

(Photo by blmurch)

as we look ahead and to position us for success in 2009, we’re continuing the work already underway to get fit as an organization: actively looking for ways to make process and structural changes to our business that will allow us to work more efficiently, with more scale. we’ve enlisted the help of Bain & Co. to work with the leadership team on identifying ways to leverage our strengths, and to improve and accelerate our performance.

You know it's Jerry, because there aren't any capital letters. Yang doesn't say "layoffs" or "cuts," but it's pretty clear what he means by "getting fit as an organization." The full memo:

yahoos,

it's time for another update.

as a company, we've made some great progress this year. while it hasn't been easy, especially in light of the challenges we’ve faced (not to mention the current downturn in the macro economic environment), we've accomplished a tremendous amount and we’re all working hard to continue executing on the company’s strategic plan.

as we look ahead and to position us for success in 2009, we’re continuing the work already underway to get fit as an organization: actively looking for ways to make process and structural changes to our business that will allow us to work more efficiently, with more scale. we’ve enlisted the help of Bain & Co. to work with the leadership team on identifying ways to leverage our strengths, and to improve and accelerate our performance.
we all know and experience parts of yahoo! where we can do better and be more agile in a competitive marketplace. this is consistent with what you told us in the YEES survey conducted in may – we need to find easier ways to work within yahoo!, and more importantly, create an even better experience for our customers and users.

each one of us will play an important role in this process. in the coming weeks, we’ll be soliciting your input and feedback. i want to know how we can improve the way we work with each other, and the way others work with yahoo!.

i know that yahoo! can benefit greatly from more discipline among all departments and functions, across the company. longer term, getting fit now will enable us to be more successful moving forward.

thanks,

jerry

Make no mistake: Khosla intends to overturn oil-based transportation, and make a bundle while doing so. He is a skeptic of corn-based ethanol, but favors biofuels made from cheaply grown biomass like switchgrass. But he also thinks combustion engines can be improved to reach 100 miles per gallon — a "diesel Prius," he calls. Electric cars? Too burdened with heavy batteries, too costly to ever make up a large portion of our transport. Oh, but just in case he's wrong, he's got a couple of long-shot startups in his portfolio which could make them practical.

(Photo by James Duncan Davidson/O'Reilly Media)

The core issue isn't compensation, it's trust. This article at Infoworld explains the shift in perception many IT employees experience: As they become more senior, they become a threat rather than an asset. Something to be protected against, rather than being the protector.

Moreover, IT people often feel they're not being told the truth about the organization they serve. Are stock options about to tank? Is the scandal denied in the press actually true? Will the techies be blamed for project failures to save face? Is the CEO who demands weekend work busy packing his golden parachute?

It's a cliche, but it's true: IT people live in a logic-driven world. Privileged, encrypted, confidential information and access-restriction procedures are fine with them. Lies aren't. Computers don't do lies. Yet the same human boss who tells an admin how valuable he is to the company is often planning to cut him loose. Terry Childs went berzerk because he knew the cost-cutting managers piling more and more work on him were also looking for a way to chop his $126,000 salary from the payroll.

The solution isn't perks, it's candor. If management is playing a game of Advanced Strategery against the IT department, a foosball table, free lunches and drycleaning will only add to their sense of indignity. Yeah, they're kind of ungrateful that way. But if your admins feel pressured to continually re-justify their existence to managers they believe are brazen liars, why is it such a surprise that one of them will look for a way to turn the tables?

Brin told the crowd how tinkering with the G1 gives him pleasure: "It's just very exciting for me as a computer geek to have a phone I can play with and modify." Page mostly stood there with a silly grin on his face.

Contrast the willy-nilly performance with Apple CEO Steve Jobs's meticulously planned iPhone announcements. It serves as a convenient illustration of the differences between the Apple's mobile strategy and Google's. Apple's iPhone offers millions of consumers a simple, structured experience — just as Jobs's bullet-point keynotes focus on marketable sound bites. The G1 is an open, developer-friendly phone that — like Brin and Page's slapdash appearance — thousands of geeks will appreciate and few consumers will bother to decipher.

It's as if he thought that playing a game of buzzword bingo would masquerade as strategic thought. A television salesman by trade, Falco was plucked by Time Warner CEO Jeff Bewkes from NBC Universal to replace Jon Miller, in a universally derided move. A commonly held belief among insiders: Falco and Bewkes thought AOL would be sold off by now, with Falco moving on to some role at Time Warner's film and television properties. AOL has continued to embarrass. And so has Falco. The only question is which exit will come first.

A San Francisco Chronicle reporter attempting to survey the landscape had no luck getting called back:

A Microsoft spokesman declined to comment, Oracle and Sun Microsystems didn't return phone calls seeking comment, and a spokeswoman for SAP said executives were unavailable for comment.

Expect to hear a lot of Valley CFOs talking about the lack of "visibility" in the next round of quarterly earnings calls. That is to say, they're utterly in the dark as to what will happen with the economy. Just like the rest of us — but they get paid to profess their ignorance.

(Photo by wlscience)

No surprise there: Besides top flack Elliot Schrage, Facebook has hired at least three PR people from Google in recent months — Debbie Frost, Barry Schnitt, and Larry Yu.

Zuckerberg's preprocessed blog post predictably mentions "Facebook's mission," which Zuck tells us "is to give people the power to share and make the world more open and connected." That sounds exactly like the talking points Facebook COO Sheryl Sandberg — also an ex-Googler, trained in the delivery of political messages from her time in the Clinton White House.

For his investors, an uncontroversial Zuckerberg is a profitable Zuckerberg. If he's to stay CEO through an IPO and beyond, he'll have to practice putting shareholders and analysts to sleep with similar language. We sure will miss the clumsy honesty of Zuck's original post, though. Compare the old versus the new, below.

Mark Zuckerberg before the Googlers came — defensive, condescending and honest:

Calm down. Breathe. We hear you.

We've been getting a lot of feedback about Mini-Feed and News Feed. We think they are great products, but we know that many of you are not immediate fans, and have found them overwhelming and cluttered. Other people are concerned that non-friends can see too much about them. We are listening to all your suggestions about how to improve the product; it's brand new and still evolving.

We're not oblivious of the Facebook groups popping up about this (by the way, Ruchi is not the devil). And we agree, stalking isn't cool; but being able to know what's going on in your friends' lives is. This is information people used to dig for on a daily basis, nicely reorganized and summarized so people can learn about the people they care about. You don't miss the photo album about your friend's trip to Nepal. Maybe if your friends are all going to a party, you want to know so you can go too. Facebook is about real connections to actual friends, so th