Facebook's Sheryl Sandberg has a talent for making friends

SAN FRANCISCO ? When Facebook filed for what is expected to be one of the biggest ever initial public stock offerings, the company identified just two executives it could not do without: founder Mark Zuckerberg and Chief Operating Officer Sheryl Sandberg.

Sandberg isn't as famous as her 27-year-old boss, but she's the one who turned the social networking service into one of the world's most richly valued businesses.

Now Sandberg's business acumen and political skills will be put to the test as she becomes the front person who guides Facebook from privately held firm to the publicly traded markets where companies live or die on revenue and profit.

For all of the breathless coverage of its IPO expected in May and fevered demand for its pre-IPO shares, Facebook has yet to prove it's ready for the big time. Soon after the opening bell rings, investors will start barking for better results.

Facebook's financials released for the first time in February showed just how far the eight-year-old company has to go to live up to its considerable hype.

Facebook isn't even in whistling distance of its archrival in the battle for eyeballs and ad dollars on the Internet. And while Facebook made $1 billion in profit last year, Google makes nearly 10 times that, yet Google's market value is only about double the anticipated $100 billion Facebook will be worth after its IPO.

Sandberg will have to stoke Facebook's online advertising business to meet the wildly inflated expectations of investors without alienating the site's 845 million users or breaching their privacy with overly intrusive ads. And she will have to defend the company to investors who have already loudly complained that Zuckerberg has too much control over the company with more than one-fourth of the shares and agreements with other investors to give him voting power over almost 60% of total shares.

"It's a tall order to become a blue-chip company in a business that changes as fast as Facebook's does," said David Kirkpatrick, author of "The Facebook Effect." "I am not saying Facebook won't achieve it, but if it's going to achieve it, Sheryl has to stay for a long time."

To skeptics, Sandberg's fans point to her record. She took Google's ad team from four people to 4,000 before Zuckerberg wooed her away, and the Harvard grad's resume includes a stint at the White House, a spot on President Obama's advisory council on jobs and seats on the boards of Disney and Starbucks. But it's what she has achieved in Silicon Valley that has raised her profile.

Sandberg, 42, scored her first big Silicon Valley success at Google. She helped create the search ads business that has turned Google into a media empire.

Since defecting from Google four years ago, she built Facebook's online advertising business from the ground up, attracting some of the world's largest brands and raking in more than $3 billion in sales last year. She still faces the considerable challenge of getting brands to spend more money on the site.

"Wall Street is extremely comfortable with Sheryl," said Anupam Palit, head of research at GreenCrest Capital. "There is an enormous trust factor there because of what she has accomplished."

In March 2008 when Sandberg arrived as Zuckerberg's No. 2, Facebook's user growth had stalled, executives were fighting and, after the disastrous launch of the ill-fated ad service Beacon that unwittingly divulged people's purchases without their permission, the company had plenty of privacy headaches and few business prospects.

Sandberg began to recruit top talent. There was some grumbling at first. The new executives were dubbed FOSS, or Friends of Sheryl Sandberg. The tech gossip blog Valleywag Photoshopped a picture of Sandberg wielding a rifle as several high-profile executives departed, saying: "You're either with Sheryl, or you're against Sheryl. And if you're against Sheryl, you're not long for Facebook."

The sniping stopped when her team started delivering results: a new type of ad that could slip into conversations between Facebook users. Sandberg hopscotched the globe persuading Wal-Mart Stores Inc. and other major brands of the value in friending Facebook and setting aside more of their ad budgets for social media. Facebook soon took the lead in the U.S. online display advertising market.

Sony Corp. of America Chief Executive Michael Lynton said he was skeptical at first that Facebook could help promote his studio's movies. When he had dinner with Sandberg, she asked him why he didn't advertise more on Facebook. He told her he needed better tools to measure the effectiveness of the ads.

"Unlike any other executive, instead of just nodding her head, she and Facebook acted incredibly quickly by going off and forming a joint venture with Nielsen to devise a way to measure how effective our advertising would be on Facebook," Lynton said.

Sandberg also brought some corporate discipline to the freewheeling start-up, putting in place business processes and a more traditional hierarchy. Since Sandberg joined the company, Facebook has quickly grown from 66 million users to 845 million and from 130 employees to more than 3,000.

Sandberg had her share of missteps. Google fumed as hundreds of employees at the search giant ? even Sandberg's favorite chef ? followed her to Facebook, privately griping that Sandberg did not play fair. The animosity intensified last May when Facebook was exposed for quietly hiring public relations firm Burson-Marsteller to plant unfavorable stories about Google's privacy practices. Facebook's own privacy problems did not abate under Sandberg. In November, Facebook had to settle complaints with the U.S. Federal Trade Commission that it failed to protect users' privacy or disclose how their data would be used.

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