Category Archives: Facebook

Facebook Croons New Tune, But Song Remains the Same

Bruce Nussbaum, a former assistant managing editor at Business Week who now serves as a professor at Parsons School of Design, makes the argument that some of Facebook’s current privacy-related woes stem from its inability to remain attuned to cultural changes affecting its audience.

I’m not sure whether I buy the argument in its entirety, partly because Facebook long ago left behind its singular focus and dependence on college and high-school kids. Still, two brief sentences in Nussbaum’s blog post at Harvard Business Review are undeniably true:

At the moment, it (Facebook) has an audience that is at war with its advertisers. Not good.

No, it’s not good. But, as I argued early last year, Facebook was destined to be in conflict with its audience. The outcome was inevitable, resulting from Facebook’s inability or unwillingness to be transparent about the specifics of its business model and its exploitative relationship with its audience.

Facebook was neither forthcoming nor honest. Then, as now, Facebook continues to play a cynical game with those who use its service. It continues to lead them to believe they incur no downside for using a nominally free service. Then, as subscribers drop their guards, Facebook exacts a price, furtively dismantling privacy protections and trading on the sorts of sliced and diced demographic data that advertisers crave.

Now, as Facebook goes through another privacy overhaul, promising to make amends for what has become a pattern of deception and dishonesty, subscribers to the service ought to recall a hackneyed admonition about violated trust: Fool me once, shame on you. Fool me twice, shame on me. (George W. Bush emphasized a variation on this theme, you might remember.)

The truth is, Facebook can’t change. It’s too late. It’s caught in the bind I described in that blog post back in early 2009. Still, even though Facebook is ensnared in a trap of its own design, its audience doesn’t have to go along for the ride.

Calacanis Blasts Facebook

Those who know me realize that I have as much use for Facebook as I have for a hair dryer. I don’t like Facebook, don’t trust the people who run it, and will not patronize it. To my mind, Facebook is the webification of evil.

For a while there, I felt like a voice in the wilderness. When I first began my jeremiad against Facebook, few were willing to join the dissenting chorus. Everybody was too busy doing things on Facebook to pay notice to the critics who weren’t on it.

Perhaps the worm has turned. I think it’s an encouraging sign that somebody as influential as Jason Calacanis has taken pointed issue with Facebook Uber Alles, the company’s dishonest, jackbooted, unethical crusade to subjugate the Internet to its self-aggrandizing ends.

Anyway,, I encourage you to read Calacanis’ forceful, passionate repudiation of Facebook and its CEO, Mark Zuckerberg. It has the dual virtue of being entertaining and true.

Resisting Facebook’s f8

So, Facebook is opening its f8 developer conference today, and there’s some debate regarding how one should pronounce the event’s title.

Some say the pronunciation should be two syllables, as in the letter F and the number 8. Others, though, suggest that the pronunciation should be “fate,” as in the word denoting ” the development of events beyond a person’s control, regarded as determined by a supernatural power.”

Well, there are some big egos at Facebook, and I would imagine the reality-distortion fields in the company’s boardrooms and hallways have the power to scramble logical thinking and to engender delusions of grandeur. Facebook might actually believe that it is fated to conquer the world, or a least that portion of it that exists online.

Lately much debate has ensued about whether Facebook will render Twitter irrelevant. Like many others, I don’t see a close similarity between the two companies, the online services they offer, their subscriber demographics, or even their current business models. Given Facebook’s prodigious user base, however, there obviously is overlap between its subscribers and Twitter’s.

But the services themselves are very different. From my perspective, Twitter is about communication and information sharing. Facebook, though I haven’t been on it for a long time, seems to be about frivolity, triviality, a veritable online water cooler. It’s designed to be a place where people go for distractions, like television but more interactive.

That’s not surprising because Facebook’s real purposes is to serve as a giant consumer-analytics engine for advertisers. To the extent that it can cover the web, sucking information about what and where its subscribers do in their online existence, Facebook stands to make a lot of money.

But there’s not much to Facebook beyond that. It’s trying to transform its subscribers into an enormous database of likes and dislikes that can be segmented and sold to corporate marketers and advertisers. That’s always been Facebook’s game — as I’ve said here for a long time — and that’s why consumer and customer privacy just isn’t a priority for Facebook.

I’ve always enjoyed the delicious irony that Facebook originated at Harvard University. An institution renowned for erudition and scholarly achievement has produced a commercial entity that does its utmost to culturally impoverish the Internet, and to turn its subscribers into nothing more than data points for advertising campaigns.

Facebook is so malevolently vacuous that it reminds me of the corporate fascism depicted in RoboCop. Facebook is the online manifestation of Omni Consumer Products (OCP), the movie’s fictional, omnipresent megacorporation. Facebook probably would like nothing more than to have its subscribers function solely as consumers, focused only on their likes of dislikes of products and services that advertisers want them to buy.

Like the lecherous huckster in RoboCop who kept repeating the phrase” Ill buy that for a dollar!,” Facebook will try continually to dumb down and commercially condition online communication and interaction.

But I’m not buying what it’s selling, not for a dollar or for any other amount.

Google Doesn’t Seem Entirely Candid on China Affair

James Fallows conducted a telephone interview with David Drummond, Google’s chief legal officer, and posed a salient question that most of the business press has not bothered to ask.

Quoting from Fallows’ interview with Drummond:

I then asked Drummond about something that has always puzzled me. If the original occasion for the shift of policy was (as generally reported) a hacking episode, why did it lead to a change in the censorship policy? What’s the logical connection? He explained the reasoning in a way I hadn’t seen before.

The initial premise, that it all started from a hacking episode, is not quite right. We did have a hacking incident. Most hacking incidents that you see are freelancers — maybe government sponsored, maybe not. They are out there trying to steal intellectual property, make some money. Or they might just be hackers who want to damage something for whatever reason. That’s a fact of life that internet companies deal with all the time.

This attack, which was from China, was different. It was almost singularly focused on getting into Gmail accounts specifically of human rights activists, inside China or outside. They tried to do that through Google systems that thwarted them. On top of that, there were separate attacks, many of them, on individual Gmail users who were political activists inside and outside China. There were political aspects to these hacking attacks that were quite unusual.

That was distasteful to us. It seemed to us that this was all part of an overall system bent on suppressing expression, whether it was by controlling internet search results or trying to surveil activists. It is all part of the same repressive program, from our point of view. We felt that we were being part of that.

That was the direct connection with the hacking incident. It wasn’t in isolation. Since the Beijing Olympics, our experience in China has gotten worse. Although we have gained market share, it has become more and more difficult for us to operate there. Particularly when it comes to censorship. We have had to censor more. More and more pressure has been put on us. It has gotten appreciably worse — and not just for us, for other internet companies too.

So we increasingly came to feel that the original premise of our entry into China was being undermined. We thought when we went in that we could help to open the country and things could get better by our being there. Things seemed to be getting worse.

Does that answer make sense? I’m not sure that it does. For one thing, it seems to conflict with what we already know.

Let’s begin with what Drummond says about the nature of the hack attack. He says it was “almost singularly focused on getting into Gmail accounts, specifically of human rights activists.”

Really? I have read multiple reports, including one today, that the attack perpetrated on Google was part of a broader cyber onslaught, called Operation Aurora, aimed at 30 or more U.S.-based companies. Moreover, the objective of the sophisticated, systematic raid wasn’t to crack activists’ email accounts, but to purloin intellectual property from the companies targeted, which included Juniper Networks, Intel, and Adobe, among others.

As McAfee CTO George Kurtz explained, “social footprinting” was a notable feature of the attacks. The attackers took special care to identify employees with access to source code or other intellectual property, then posed as social acquaintances of those employees to enlist them as unwitting accomplices to the thefts.

Perhaps Drummond is right, but most reports suggest that the assailants primarily were after intellectual property, and only secondarily interested in cracking the Gmail accounts of human-rights activists.

What else is wrong with Drummond’s answer? He appears hopelessly naive or disingenuous when says the hacks seemed “part of an overall system bent on suppressing expression.” What did he think the Chinese government represented? Sweetness and light? Freedom and liberty? Fun and frolic?

I think Google knew the beast long before these attacks, and that it was wiling to make accommodations and compromises to continue doing business there. Something else changed from the time Google set up business in China, back in 2006, to now. For whatever reason, Google doesn’t want us to know the whole story.

Nonetheless, Drummond hints at the bigger picture. He says “our experience in China has gotten worse,” and “it has become more and more difficult for us to operate there.” He also says censorship is the main issue for Google, but again I question the party line.

In search, Google is a distant second to Baidu in China. But we should understand that Google is not alone among Western Internet companies that have found China to deliver less than it promised as a market destination. Yahoo, eBay, and Microsoft flamed out or underachieved, and China’s authorities slammed the door shut on Twitter, Facebook, and YouTube (now owned by Google).

Did these companies make missteps in their engagements with China? Absolutely. But it’s also true that the Chinese government has done them no favors, and that China, with its “indigenous innovation” policies, wants to create its own technology-sector powerhouses rather than play host to what it perceives as Western interlopers. And, yes, it’s also true that China’s rulers don’t embrace the freedom of expression that many of these companies and their services encourage.

In pursuing its industrial policies, China’s leadership has the support of China’s populace, which is, to a great degree, fiercely nationalistic. Chinese consumers will gravitate toward products and services provided by Chinese companies, not because the products or services are better — though that’s sometimes the case in that particular market — but because they’re Chinese.

Chinese distrust and fear of foreigners are powerful demagogic levers in the hands of China’s leaders. It’s a way for the leadership to make common cause with the masses, to divert focus to a perceived external threat, and to align to its own interests with those of the people. After all, Chinese companies that become market leaders, if only in China, will reflect glory upon the nation and the people.

So, in the context of China, Google confronted a market that was inordinately inhospitable to its charms, and Chinese agents that were trying to pilfer its crown jewels. Is it any wonder Google chose this moment, under these circumstances, as an occasion for introspection and a strategic change of tack?

As 90s Recede from View, VC Returns Turn Negative

We know that venture capital isn’t the business it was a decade ago. Statistics, contained in a story published in the San Jose Mercury News this past weekend, drive that point home.

As the dot-com boom of the late 90s recedes into the mists of time, we can see that the venture-capital industry has been sickly for the past decade. Quoting from the Mercury News piece:

Venture capital is a long-term investment — one reason why the 10-year return is most often cited in comparing the sector to stocks, real estate and other familiar benchmarks. As recently as June 20, the industry’s 10-year return was as high as 14.3 percent — but that was far below the 34 percent of just one year earlier.

Now the dazzling 83 percent return to investors during the last three months of 1999 — the industry’s best quarter ever — has rolled off the industry’s 10-year performance record. The next report, Ganesan predicted, will put the ten-year return well south of -5 percent.

The longterm inclusion of data from the dot-com boom, many say, served to camouflage what former venture partner Georges van Hoegarden characterizes as the “sub-prime” performance of the sector in recent years.

Just to be clear, with the late-90s surge now excluded from the frame of reference, the decade-spanning return on investment for the VC industry is now -(as in minus) 5 percent. Limited partners will take a long, hard look at that forlorn number and question whether they want to bet their money at the same table. In many cases, they’ll decide to go elsewhere.

Yes, the mainstay venture-capital firms — Sequoia Capital, Accel Partners, and Norwest Venture Partners among them — are managing to buck the trend. They’ll continue to produce results and find favor from limited partners. A lot of other venture-capital firms will go the way of the dinosaur, though, with the herd being thinned to an unprecedented degree.

Another trend is at work, too. The IPOs and acquisition-related exits of the future will come increasingly from non-IT sectors. Clean-tech companies figure to be at the forefront of the action. When the best that IT has to offer is a social-networking service as ethically conflicted and vapid as Facebook, you know the halcyon days are long gone.

The world is changing, and venture capital will have to change with it.

Facebook’s Latest Privacy Betrayal Shouldn’t Surprise Anyone

As the latest privacy-related Facebook controversy exploded in shards of anger, righteous indignation, and disappointment, I was reminded of the lyrics to an old Archers of Loaf song, “What Did You Expect?”.

The chorus is good, but near the end of the number, the following words are barely intelligible amid the din:

You aren’t listening
To what you’re saying
When you say the things you’re saying.

This is how I feel about the erstwhile Facebook apologists and backers who suddenly seem shocked — shocked, I tell you! — that the social networking site has betrayed them with its latest savaging of the putative privacy of its subscribers.

I never have been under any illusions about Facebook. It’s a business, backed by big-money investors, people who aren’t doing what they do for shits and giggles. They could care less that you have a place to share information and confidences with your friends. To them, you are a means to a lucrative end.

It’s not personal. It’s just business.

What I never understood, though, is why so many otherwise rational and sane people believed Facebook was about something more than generating pornographic wealth for its investors and principals. I also never understood why these same people didn’t demand at least a modicum of honesty from Facebook.

Jason Calacanis is a smart guy, but he gets it wrong when he says the following about Facebook:

The entire purpose of Facebook since inception has been to share your
information with a small group of people in your private network.
Everyone knows that and everyone expects that. In fact, Facebook’s
success is largely based on the face that people feel safe putting
their private information on Facebook.

Well, Jason, they never should have felt safe putting their private information on Facebook. The latest privacy fiasco just proves the point.

Facebook’s entire purpose is to make money, subscribers be damned. Well, perhaps it’s not that stark — Facebook needs its subscribers, like a vampire needs warm, bloody bodies on which to feast — but it’s close. Facebook will make money, or it will fail to make money, on the basis of how well it exploits the private information provided by its registered users.

And making money is paramount.

If it doesn’t make money, it won’t be in business for long. Therefore, it must make money. And, therefore, if we follow the logic, Facebook must trade on the private information of those who use its service.

Calacanis gets wise to this reality when he explains that Facebook is “trying to dupe hundreds of millions of users they’ve spent years attracting into exposing their data for Facebook’s personal gain.”

It’s all about the pageviews, Calacanis notes, which means it’s all about driving increased traffic to Facebook, which means boosting advertising revenue for Facebook, which means a greater probability of big-time return on investment (ROI) for Facebook’s backers.

Meanwhile, Gawkers talks about Facebook’s “great betrayal” of its users.

Facebook’s privacy pullback isn’t just outrageous; it’s a landmark turning point for the social network. Facebook has blundered before, but the latest changes are far more calculated. The company has, in short, turned evil.

Maybe Facebook is evil. If that’s true, it was a congenital condition, permanently stamped in its DNA. Maybe it was the Rosemary’s Baby of social-networking sites.

Look, I like wealth creation as much as the next guy. I have no ethical or moral objection to making money, as long as it’s done honestly, openly, transparently. Facebook never has been upfront about its business model, its relationship with its subscribers, its relationship with its advertisers and investors, or about practically anything else it does.

To understand Facebook, one needs to look at what it does, not what it says. It’s mastered the art of public relations and spin, which is why the Valley influencers and much of the mainstream business press have been so abjectly uncritical of the company.

Well, I’m not part of the mainstream, and I’ve never been deceived by Facebook’s misdirection. I was on to them early. I knew the only way they could make money would be by exploiting the privacy of their users. I didn’t want to be part of such a cynical enterprise. I certainly didn’t want to contribute to its success.

As a consumer, I like the idea of knowing what I’m getting for my time and my money. Vendors should be honest about the goods or services they’re providing, and about the duties, rights, and responsibilities of all parties to the transaction.

Until Facebook can be honest and transparent about what it is, about how it will make money, and about the nature of the relationships between it and its various stakeholders, you should avoid it like the plague.

Even a mugger looks you in the eye when he takes you down.

Depressing Thought of the Day: Facebook as Web’s Main River

At TechCrunch, MG Siegler makes the following observation:

Facebook wants every site on the web to be a tributary. And it wants to be the main river.

Really, has the web come to this? What a crushingly depressing thought. If all roads lead to Facebook, it’s time to get off the roads, build new ones, or explore some other frontier.

Obama’s Facebook Warning Didn’t Go Far Enough

President Obama gave students a warning about Facebook yesterday. It was wise counsel, but he should have provided a stronger admonition.

Let’s put aside for a moment whether what one posts on Facebook as a youth might come back to haunt him or her in later years. For the record, if your earlier Facebook post relates to an action that was criminal, egregious, or patently unethical, you can be sure it will come back to haunt you like Banquo’s ghost. People, and the times in which they live, won’t change so much that what’s glaringly wrongheaded will become socially acceptable within the span of a few short years.

In the big picture, that’s a secondary concern. A bigger worry — one that should trouble Facebook users more than whether what they post publicly on the site will eventually result in personal or professional grief — is whether Facebook can be trusted with anything that is stored on its servers.

Facebook is a business. Its investors have piled prodigious amounts of money into it in expectation of an obscenely profitable exit. Facebook, because of the way it is constructed as a business, can only achieve that result if it trades comprehensively on the personal, private information that its subscribers have entrusted to it.

Some will counter that privacy no longer exists in the Internet era. Regardless of whether that’s true, Facebook is a new type of Internet beast, designed expressly to make private information a public commodity.

Unlike instant messaging, email, even web search, Facebook’s sole business value turns on its capacity to trade on the personal, private data of its subscribers. I would go so far as to suggest that the full realization of its business model ultimately depends on how thoroughly it mines every last scrap of personal data that its subscribers supply.

The loss of privacy was an unintended consequence of preceding Internet technologies. In the particular social-networking sphere that Facebook inhabits, the stripping away of personal privacy is its raison d’etre.

Conjecture on Private-Company Valuations Just Doesn’t Matter

Venture capitalist Fred Wilson isn’t enamored of all the speculative writing on blogs about the estimated market valuations of private companies.

One problem, which Wilson cites, is that private companies don’t have valuations. They’re not public, their shares don’t trade on markets, they frequently don’t have business models or even revenues, and they’re often still growing into their corporate exoskeletons.

That means ascribing valuations to such companies is nothing more than a fantasy parlor game. There’s no way to be right or wrong in one’s opinion. Only the market, comprising buyers and sellers, can decide the valuation, and the market hasn’t been given the opportunity to deliver its verdict. That won’t stop pundits from engaging in hypothetical discussions and debates about whether Facebook is worth $10 billion or Twitter $1 billion.

Obviously these arguments have no practical utility. Until one of these companies goes public or is acquired, no known value can be attributed to any of them.

The whole hypothetical exercise seems to drive Wilson up the wall. As an investor in Twitter, he’s concerned that all the external conjecture about the company’s putative value might distract the firm’s employees from what they ought to be doing: building a business.

Says Wilson:

But I think all the focus on what a company is worth can be bad. These companies are private for a reason. Most of them aren’t mature enough to be public companies. They often don’t have full management teams and some don’t even have revenues. The focus inside these companies needs to be on building the company, the product, and the business. And endless discussions about what their company is worth can be terribly distracting.

I saw this in action back in the late 90s when a bunch of our portfolio companies went public before they were ready. The employees spent too much time focused on the stock price and too little time focused on the business. Many employees starting counting their net worth in stock that was not liquid and eventually was worth pennies on the dollar of what they thought it was worth.

I understand his concern. I can appreciate why he thinks all the idle talk about private-company valuations might be deleterious to his investment in Twitter.

At the end of the day, though, he and Twitter need to focus on what they can control. They shouldn’t worry about things they can’t control — and they can’t control what others will say about them. People will speculate on lots of things, including the imagined valuations of private companies. They’re going to do it, and Wilson needs to get over it.

What he and the folks who run Twitter can do is ensure that the company’s executives, managers, and other employees remain disciplined and focused. If they fail to maintain their focus and execute their plans, they’ll have only themselves to blame for any failure that results.

Protecting Yourself from Scams on Facebook

If you must use Facebook — and I personally advise against it every chance I get — you ought to be extremely careful about how much personal information you share with the social-networking site’s burgeoning masses of subscribers.

Depending on how much information you choose to disclose about yourself on Facebook, you could become the victim of fraud. As Facebook continues to grow, the scams will proliferate and get worse.

It is possible to use Facebook while limiting your exposure to extortion, fraud, and identity theft, but you cannot and should not rely on the site to take those precautions on your behalf.

The first step, as CNET News’ Dennis O’Reilly explains, is to edit your personal profile. You’ll want to eliminate any personal information that could be exploited for criminal purposes. You are wise to err on the side of caution, so if you’re unsure about a particular detail or revelation, delete it.

When that’s done, you’ll want to follow O’Reilly’s example and modify your Facebook account’s default privacy settings, which are intentionally lax to facilitate information sharing.

It isn’t Facebook’s fault that online criminals are gravitating to it as a venue for exploitation of the trusting and unwary.

Still, Facebook should give serious consideration to devising and implementing more stringent privacy settings for the patrons who have made it an increasingly attractive target for prospective advertisers and crooks alike.

Russian Investor Wants More of Facebook

Digital Sky Technologies (DST), Facebook’s Russian investor, wants to own more of the social-networking sensation.

From the Digits blog in the Wall Street Journal:

The firm (DST) just finished spending $100 million to purchase current and former Facebook employees’ shares of the company, on top of a $200 million direct investment into the social-networking site earlier this year. Now DST, known for its investments in social-networking sites in Russia, Poland and the Baltics, has approached a number of Facebook shareholders seeking to buy more shares, according to several people familiar with the conversations.

After wrapping up its official tender offer, which was closed this week, DST held about a 3.5% stake in Facebook. Two people familiar with the matter said DST has suggested it wants to spend at least $100 million more on Facebook shares.

The Russian investor seems to want to own more equity, and presumably more influence, in Facebook. We don’t know what long-term strategy DST has in mind, but it’s clear that it would like to possess more than a token interest in its American social-networking investment vehicle.

Unjustified Attack on Facebook “Mercenaries”

Sarah Lacy seems perplexed and indignant that current and former Facebook employees would sell their common stock to Russian investment group Digital Sky Technologies. The Russian investors planned the share buyback when they put down $200 million in exchange for preferred shares of Facebook earlier this year.

In aggregate, with preferred and common shares taken together, Digital Sky Technologies will own about 3.5 percent of Facebook. The terms of the stock buyback value Facebook at about $6.5 billion.

Let’s get back to Lacy’s criticisms, though. I don’t want to take any of what she said out of context, so allow me to excerpt directly from the BusinessWeek column in question. “The Mercenaries in Facebook’s Midst“:

And yet a flood of employees rushed to sell their stock for a price that values the company at just $6.5 billion, never mind that the buyers of those shares are the very ones who invested in Facebook at a $10 billion valuation the month before the tender offer was made. In May, Facebook said a Russian company called Digital Sky Technologies would buy at least $100 million of Facebook common stock from current or former employees.

I’m pretty certain that a few years from now, when Facebook does go public, I’ll be writing about the $100 million deal that gave Russian investors a chunk of Facebook on the cheap, and the boneheaded employees who gave up too soon.

I seriously question whether Facebook will IPO for anything close to $10 billion. Facebook still hasn’t figured out how to fully monetize its assets without alienating its subscribers. At the end of the day, let’s remember, Facebook is nothing without subscribers, those people willing to trade their personal, private information for the right to frequent and socialize on Facebook.

But Facebook must exploit them — that is, it must market and sell their personal, private data to advertisers and others, sometimes explicitly and sometimes not so explicitly — to make money for itself and its investors. Tricky, that. It’s a difficult dilemma. I wouldn’t want to be counting Facebook’s money before it’s been made.

But it’s Lacy’s next statement that’s truly provocative:

But in the meantime, I have a more immediate concern: What has happened to the startup work ethic in Silicon Valley? 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. What’s next? Giving up options altogether for a bigger paycheck? . . . .

. . . . Silicon Valley was founded on the belief that stock options were worth something—and that something was a big windfall at an exit, when the whole company watched that ticker crawl across the Nasdaq for the first time, calculated their paper net worth, and popped open the champagne. Does it always work out? Of course not. But that is why it’s considered high risk, high reward. How has this gotten so lost on people? Are we just so jaded that we can’t believe in promises anymore, even at a company like Facebook?

In the above excerpts, Lacy repeatedly invokes the words “belief,” “believe,” and “believer(s)” Those are words typically more associated with faith, religion, and even cults than with the hard-headed world of business. In business, trust and belief must be earned, by employee and employer alike. When one joins a company, one doesn’t usually consent to treat the founder as if he’s Jim Jones or L. Ron Hubbard.

It should be obvious: Businesses exist to make money. Their primary purpose, marketing palaver aside, is to make money. They are investment vehicles, not churches. Everybody who joins a company, which is a business, needs to enter it with his or her eyes wide open.

When one joins a company, one is making an investment — of time, of opportunity, of value. The employee isn’t the only one benefiting from the exchange. The employer benefits, too.

Everybody in that exchange is looking out, first and foremost, for number one. That’s just the way it is. Sometimes, in the spirit of enlightened self-interest, employers and employees strike arrangements that provide sustained mutual benefit. But those arrangements need to be predicated on logic, reason, and, yes, calculation, not on misplaced religious fanaticism.

Finally, have you noticed that Lacy’s observations in the above excerpt are rooted in nostalgia?

She’s talking in the past tense about a Silicon Valley that doesn’t exist anymore. Stock options in startup companies might have been worth something — even something potentially substantial — back in 1999 or 2000, but they’ve been worth less and less in fewer and fewer circumstances as the years have advanced. We’ve reached a point now where the economy has cratered, IPOs are as rare as unicorns, and the prospect of lucrative exits has diminished greatly.

People, the employees at Facebook and other companies, aren’t jaded, Sarah. They’re living in the real world, the way it is today. They can’t afford to live in Silicon Valley’s past. They have to do what’s right for them today, in a tough economy, in a world that bears scant resemblance to the halcyon days of weekly IPOs, bursting beer fridges, and champagne Fridays.

If you ask me, the Facebook employees who took the Russians’ money and sold a portion of their Facebook equity made rational, well-reasoned decisions. They looked at what was offered, considered their options, and chose to sell some shares for a certain gain rather than to keep them for a future payoff that might be better, might be worse, or might never come at all.

They’re employees at Faceboook, after all, insiders who presumably have some insight into what the company is doing and how it is doing.

I don’t begrudge them their choice. It doesn’t make them mercenaries. It makes them realists.