What the Facebook IPO Means

It's electrifying here in Silicon Valley this week, even more so than usual. Normally, many of us are heads down, focused on our own companies, but right now, even in the land of "what's next?" all anyone can talk about is the Facebook IPO.

This week marks the dawn of a new era. Facebook going public -- with a billion users worldwide and $3.7 billion in revenue -- confirms that Facebook is doing to Google today what Google did to Microsoft nearly a decade ago. It's hard to believe that it's been eight years since the Google IPO.

What's changed since Google was the new, hot company that toppled Microsoft in consumers and investors' hearts?

For one, consumer behavior has changed. In the Google era, people learned to search for information, products, and businesses. But over the last five years, Facebook has altered online behavior. In the Facebook era, people now choose to share and discover rather than simply search for information.

A growing number of people worldwide now get their news as well as learn about products and services through what their friends are reading, liking, and buying -- all this, of course, is broadcast through the Facebook news feed, Twitter streams, and LinkedIn Today.

As a result, Facebook replaced Google as the most visited site in the U.S. in 2010, according toExperian Hitwise. Now, Facebook is even overtaking Google in the amount of traffic it drives to third-party sites, including Guardian UK. By establishing trusted graphs of friends and brands one likes or follows, social networking sites have transformed the way people are making important decisions such as what to read, what to buy, where to buy, and whom to hire.

Hence the $3.7 billion in revenue. And this is just the beginning.

The future is bright

Indeed, Facebook's best days are still ahead. There is strong near-term upside in the new ad formats they have created. New Facebook ad products like Sponsored Stories and Reach Generator, which broadcast Business Page "likes" and posts to wider audiences, are already showing great promise by driving conversion rates higher for marketers.

In the medium term, Facebook is well positioned to monetize on mobile, payments, and international growth. Over 55 percent of its 901 million users are active on Facebook Mobile, and this number just keeps growing as more people get smartphones. In its S-1, Facebook disclosed it already generates nearly 18 percent of its revenue from payments generated from the 30 percent "tax" it charges for transactions involving virtual or digital goods (think vegetables in Farmville -- the broccoli adds up!). On the international front, Facebook has had great user growth but only scratched the surface in terms of monetization.

Long term, the possibilities are endless. The convergence of Facebook and well-established online business models such as search, commerce, and ad networks could be very compelling for consumers, in addition to being lucrative for Facebook. For example, why couldn't search be social? If I search for "digital camera," why should I see the same organic and paid results as my 11-year old niece who would respond much better to a lower-end model that's pink? And why should she or I see the same results as my husband's friend who is a professional photographer and would clearly be interested in a very different kind of digital camera?

Facebook could also partner or compete head-on with traditional offline channels such as TV, digital dashboards in automobiles, and smart billboards enabled with near field communication that tailor their displays to whomever may be nearby.

In conclusion

Silicon Valley is roaring again. From LinkedIn, Zynga, and Yelp to Facebook and its rapidly expanding partner ecosystem, innovation is alive and well. A heartfelt congratulations to the team at Facebook on their IPO and, indeed, for changing the world. Stay focused and keep shipping.

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Ruchi Sanghvi, Facebook's First Female Engineer: 'It Was Difficult To Break Into The Boys' Club'

When Ruchi Sanghvi arrived for her first job interview at Facebook's headquarters, no one was there.

It was the fall of 2005 and when she reached thestartup's graffiti-covered offices in downtown Palo Alto at noon, they were empty. Two hours later, she was still waiting. At 3 p.m., someone finally arrived to interview her -- the engineers had been up all night coding and slept in, she learned later.

Sanghvi was undeterred. Impressed by the place, the people, and the product, which she had spent hours using as a student at Carnegie Mellon University, she became Facebook's first female engineer, one of the first 10 engineers hired by the company.

Sanghvi's five-year career at Facebook underscores the meritocratic nature of the startup world, where a bright, young engineer like Sanghvi, who was raised in the industrial town of Pune, India, and didn't regularly use a computer until her freshman year of college, could play a key role in shaping one of the world's most influential web companies.

Yet her experience also sheds light on the challenges female engineers faced then -- and still face -- in a male-dominated field. Sanghvi's story illustrates that despite all the talk of equality between the sexes, women often grapple with a unique set of difficulties when it comes to finding role models in the engineering field and making inroads into what she called "the boys' club."

During her tenure at Facebook, Sanghvi not only watched the company explode into a global network with a population greater than that of the United States, but also built the social network's most defining features. She launched News Feed, which radically changed the Facebook experience by putting friends' online activities front and center on the site; Platform, an update that allowed third-party developers and entrepreneurs to build apps on Facebook; and Connect, which made it possible for people to link their Facebook identities and friends to almost any site on the web.

The products she developed helped propel the site forward and also rewrote the rules of the web, eroding anonymity on the Internet and ushering in a new age where peoples' real names were attached to everything they did online. Sanghvi describes this connection between offline and online identities as the next big idea in tech, one that will reshape everything from e-commerce to health care.

"Facebook has woven itself into the fabric of our lives and the foundation of the Internet," Sanghvi said. "I think everything will be redefined because people are using their real identities on the Internet."

Sanghvi said she was used to being the odd woman out -- she was one of five female students out of 150 in a course in the Electrical Computer Engineering department -- and at Facebook, she again found herself on a team with only a handful of female engineers.

Though she looks back fondly on her time at Facebook and describes it as "one of the best companies to be working at right now," she said her male co-workers enjoyed a certain camaraderie that she could not match or fully penetrate.

"It was difficult to break into the boys' club," Sanghvi said. "I wish that females had a similar culture or support network."

Sanghvi said the male engineers on her team created a "brogramming page," presumably only for the Facebook "bros" who were programming. She recalls having to change her working style to adapt to the "aggressive" environment, a shift she said affected how she was perceived.

"Engineers are either aggressive or passive aggressive. You need to just dive straight into it, and sometimes there are social repercussions because of it," Sanghvi explained. "The impression that people had of me was that I was really harsh, hard-edged, brusque and to the point. All of that happened because I am a woman, and I was acting in that kind of environment."

Facebook declined to disclose what percentage of its current total staff and engineers are female. The company does not have any affirmative action programs or quotas in place to attract female engineers, though Facebook supports and funds interest groups, such as Facebook Women or Women Engineers, that its employees create.

"Increasing the number of women in the tech sector is hugely important to Facebook," a Facebook spokeswoman said. "We want our company to reflect the diverse global community that we serve."

Facebook COO Sheryl Sandberg has also been an outspoken advocate for increasing the number of female leaders.

"Men run the world," Sandberg said in a May 2011 commencement address delivered at Barnard College. "We need women at all levels, including the top, to change the dynamic, reshape the conversation, to make sure women's voices are heard and heeded, not overlooked and ignored."

To Sanghvi, increasing the number of women in tech requires not only HR initiatives, but also having more female role models in engineering, computer science and other technical fields.

"Kids in college often look for mentors and role models to model their careers after, and women don't have the equivalent of a Steve Jobs or Bill Gates," Sanghvi said. "I think it's a self-perpetuating loop."

She also noted that women must ultimately be proactive about choosing their fate, and shared what she said is the most important lesson she's learned thus far in her career: "If I don't ask for something, I'm not going to get it."

Even as she is candid about the challenges she faced at Facebook, Sanghvi, who left in 2010 to start her own company, Cove, praised the tech industry for consistently rewarding excellence and ability above all else.

"It may not be a meritocracy, but it is the closest thing to a meritocracy in the working world,” she said. “I think that itself is very powerful."

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