I still remember the day I called you up and tried to recruit you to Valleywag — only to learn that that sneaky rapscallion Nick Denton had beaten me to the punch by one whole day in offering you the night shift at Gawker. It all worked out in the end — and perhaps better than I could have imagined back in 2007. But the main lesson I take away from that is that you can get Denton to do pretty much whatever you want if you're patient enough.

Denton, who has a weakness for idle truisms, likes to say that gossip is a young man's game. But you're old enough to remember the first dotcom bubble, and how it popped. That's going to be key in the next few years. We may escape a depression, but Silicon Valley is facing a reckoning nonetheless. Too much venture capital chased too few idea for far too long — and a buoyant economy can no longer hide the startup factory's mistakes.

The biggest mistake you can make is getting too close to your Valley sources and fall for their groupthink in order to ingratiate yourself. (You know how I've scolded you for gullibly buying the hype that Twitter is an amazing source of real-time news. Okay, perhaps it was — for five seconds, before the blowhards, spammers, and self-promoters found it.) At least your schooling will help you remain an outsider: As a Berkeley grad, you'll have an instinctive dislike for the Valley's Stanford in-crowd.

At the same time, don't forget that your years living, studying, and working in the Bay Area give you a better understanding of your beat than anyone can have from 3,000 miles away. Gabriel and Nick, though well-intentioned, have the Manhattan media habit of confusing proximity with relevance. Gawker is much more than New York now — and Valleywag's unique place therein must be firmly grounded in northern California's shaky soil.

Remember: Love is far more powerful than hate. Keep a clear-eyed passion for the Valley. Most tech reporters here secretly loathe their subjects, but try to disguise it with a supine gladhandery as they beg for scoops about new startup website features. They hate themselves and the people they write about. Sad, right? By loving the Valley, you can write about it more honestly than any of them. Just prepare to have your heart broken again, and again, and again. To truly love something, you must love it with all its failings.

For example, the Valley's Alice-in-Wonderland economics — why is Twitter worth more than most startups precisely because it has no revenues to speak of? But the thing you must love most about Silicon Valley — the part of the story the local press corps always skips over in favor of buzzwords, punditry, and lazy analysis — is its people.

The Valley's story is not one of chips and code. It is not a tale of technology. It is the always-running tragicomedy of the people who make technology.

Here are a few characters to watch. I hope it helps — but I can't wait to see who you add to the list.

Marissa Mayer Valleywag's first story remains its best. The public face of Google, Mayer also runs search, the only business that matters there. The cupcake frosting of her girly image — one she assiduously advances at every opportunity — may humanize the otherwise robotic computer scientist. But it is a distraction. The real question to ask about Mayer: Does her spreadsheet-ridden management style scale to new problems beyond search? Are her strengths now turning into limitations?

Mark Zuckerberg Ignore the nerd façade. Facebook's 25-year-old CEO is headstrong and ruthless. Here's the grand irony of Zuckerberg's revolutionary venture: He claims to be all about openness and sharing. But his imperious, my-way-or-the-highway management style has created a fractious culture of dishonesty, delusion, and disillusionment at the social network. His underlings either learn to say things they don't believe, or they move on. This is why Sheryl Sandberg is exactly the wrong COO for Zuckerberg. The veteran of the Clinton Administration has forgotten her Google training and reverted to Washington-player form, where staying on message is all that counts. Facebook's best hope is that Zuckerberg learns from his mistakes — but first he has to recognize them as mistakes.

Carol Bartz Yahoo's CEO swears like a sailor. At last, a boss who has found the right language to describe Yahoo's plight! Bartz brings a refreshing frankness to Yahoo. But the already demoralized troops she inherited will need to start seeing results. Otherwise, Valleywag will continue to be a steady recipient of leaks from Sunnyvale.

Elon Musk The CEO of Tesla Motors and SpaceX is living the geek high life, playing with fast cars, rocket ships, and other people's money. It's wonderful that Musk has realized even a small part of his childhood fantasies. But he risks destroying his dreams by refusing to reconcile them with reality. Factcheck everything Musk says. For example, was he actually running either Zip2 or PayPal, the previous dotcom successes he likes to cite in his bio, when they were sold?

Owen Van Natta Everyone is going to give MySpace's new CEO a pass, because the so-called "social portal" is so clearly troubled. If the former Facebook executive succeeds in a turnaround, it will be viewed as an astonishing achievement; if he fails, people will say no one could save MySpace. That's not fair. Hold his feet to the fire, and judge this disturbingly tan rock-star boss like anyone else on the list.

Peter Thiel Thiel, the PayPal cofounder, likes to brag about how he recruits only the best brains from the best schools to work at Clarium Capital, his hedge fund. Oh, really? Take a look at their résumés on LinkedIn. Like so many of this outspokenly harebrained libertarian's theses, the claim sounds good on paper but doesn't stand up to inspection. Valleywag, alone in Silicon Valley, can take a keen look at Thiel's rhetoric without being dazzled by his inflated wealth.

Tim Armstrong Like Van Natta at MySpace, Armstrong, a Google golden boy now charged with running AOL, will be enjoying a honeymoon. Don't worry: There are plenty of disgruntled AOLers who will gladly help you break up the lovefest.

Jimmy Wales Remind me: What does Wikipedia's founder actually do to earn his keep, besides give speeches? In all this time, I was never able to figure that out. Maybe you can!

Eric Schmidt When did Google's CEO turn into such a raging egomaniac? When the blogosphere was the only corner of the Internet that criticized him, he dismissed it as a "cesspool." But now everyone from Hollywood to the New York Times to the Federal Trade Commission is looking askance at his online empire's practices. "Don't be evil" has turned into "don't get caught." He will, though. Be ready when he does.

Larry Page and Sergey Brin Google's wonder twins have achieved geek nirvana, creating a cloistered campus with free food, lava lamps, and exercise balls to spare. They have a fleet of jets to transport them to rocket launches or rendezvous with Richard Branson and Bono. They've even managed to get married and reproduce. Just one question: Are they still sane? Were they ever?

There are many people who will help you — many of the same people who helped me so much, I hope. They include:

• Nick Denton, for putting up with three years of playing hard to get — and then putting up with much more besides.
• Brian Lam, Choire Sicha, Noah Robischon and Lockhart Steele, for tag-teaming me into taking the job.
• Gabriel Snyder, for expertly steering Valleywag into Gawker's welcoming arms.
• All the Valleywaggers: Paul Boutin, Nick Douglas, Megan McCarthy, Tim Faulkner, Mary Jane Irwin, Jordan Golson, Nicholas Carlson, Jackson West, Melissa Gira Grant, and Tim Woolery. You guys, we've been through so much together!
• Richard Blakeley: We made sweet Photoshop magic together.
• Everyone at Gawker Media: How much do I love you? Far more than just five milligrams.
• Sarah Lacy, Kara Swisher, and Peter Kafka: My peers and fellow purveyors of Valley gossip, you constantly inspired me.
• Countless sources, tipsters, and fellow scribes: Please understand that I esteem you none the less for not naming you here. In fact, your continued anonymity is the best sign of my abiding affection.

The image associated with this post is best viewed using a browser.Good luck, Ryan. I'll be reading eagerly.

Don't screw it up.

Yours,

Owen
The Valleywag

(Photos by Brian Solis and Scott Beale/Laughing Squid)

Yes, Valleywag has gotten Zuck an office befitting Facebook's dwindling cool: a '50s-looking former Hewlett-Packard building in a forgotten corner of Palo Alto near the Stanford campus. (Okay, Facebook COO Sheryl Sandberg helped us get it for him. Thanks, Sheryl!)

Facebook closed early today to finish the move. The company reopens Monday in its new, dreary digs. What better way to note Zuckerberg's now permanently lost youth?

(Birthday card by Richard Blakeley)

Here's Sandberg:

We don't have the need for additional financing. With our current business model, our current plans, we are profitable, on a clear path to being cash-flow positive. We're not short of money. We're doing really well financially in what is a really tough year. Every advertiser segment is growing-we're growing all over internationally. The ad products are really working for people, and they want to do more and more.

This is the first time a Facebook executive has claimed that the social network is "profitable" — a term usually reserved for companies which can show net income according to the strict GAAP standards.

Here's what Sandberg's boss, CEO Mark Zuckerberg, said last week:

Based on our first quarter results, we now believe we are on track to see our revenue grow by at least 70% this year. We just completed our fifth straight quarter of EBITDA profitability. And most importantly, we expect to achieve free cash flow profitability next year.

EBITDA stands for earnings before interest, tax, depreciation, and amortization. It's a handy measure for Facebook, which is believed to be spending hundreds of millions of dollars a year on servers, to make its finances look better. But it's not the same thing as actual profit.

Oh, haha, she forgot a funny-sounding word! Not so funny, actually. Here's what renowned investor Warren Buffett has to say about "EBITDA profitability" in his 2000 and 2002 annual reports to Berkshire Hathaway shareholders:

References to EBITDA make us shudder — does management think the tooth fairy pays for capital expenditures? We're very suspicious of accounting methodology that is vague or unclear, since too often that means management wishes to hide something.

Trumpeting EBITDA (earnings before interest, taxes, depreciation and amortization) is a particularly pernicious practice. Doing so implies that depreciation is not truly an expense, given that it is a "non-cash" charge. That's nonsense. In truth, depreciation is a particularly unattractive expense because the cash outlay it represents is paid up front, before the asset acquired has delivered any benefits to the business. Imagine, if you will, that at the beginning of this year a company paid all of its employees for the next ten years of their service (in the way they would lay out cash for a fixed asset to be useful for ten years). In the following nine years, compensation would be a "non-cash" expense – a reduction of a prepaid compensation asset established this year. Would anyone care to argue that the recording of the expense in years two through ten would be simply a bookkeeping formality?

Oh, and then there's Lynn Turner, the former chief accountant of the SEC, who blamed investors' reliance on EBITDA figures for financial fraud at Enron, WorldCom, and Sunbeam.

We have a suggestion for Sandberg: Try an exciting new measure of profitability we call "earnings before expenses." It was all the rage in the 1990s.

After Yu left abruptly, CEO Mark Zuckerberg trotted out the tired time-with-family cliché to explain his departure. But in the case of Facebook VP Chamath Palihapitiya, the cliché seems to be literally true, and the departure temporary. Sort of. Palihapitiya, a former AOL executive who now heads Facebook's growth initiatives, has said he plans to leave the company altogether, but was persuaded to take a four-month paternity leave instead.

A less likely rumor we've heard: That COO Sheryl Sandberg has been issuing ultimatums, that either she goes or Zuckerberg. That doesn't square with Sandberg's style. She's an experienced Washington operative and former Google executive who always works behind the scenes to get what she wants. But she does have ties to Facebook investors, including venture-capital firm Accel Partners and Elevation Partners' Marc Bodnick, who happens to be her brother-in-law. Could she quietly be spreading the word that it's time for Zuckerberg to go? And if Zuckerberg gets wind of her efforts, could her time be up?

It's not clear why Yu is leaving now. He raised nearly $500 million for the company, and was looking for more. But a few things are known: Zuckerberg has repeatedly said that the company's focus is on growth rather than making money. He has made a habit of quickly cycling through executives. Former Facebook COO Owen Van Natta, who left after an apparent demotion, is a notable example.

The question is who's next? Jonathan Heiliger, a dotcom-era Internet wunderkind now in charge of Facebook's vast technical infrastructure, has long been said to be restive. COO Sheryl Sandberg, the Google veteran splashily hired last year, might be called to account if Facebook's sales don't catch up with its user growth. As the door to Facebook's executive suite keeps swinging, it seems like only a matter of time before people start asking questions about the prickly, isolated 24-year-old at the top.

The redesign is built around a new "stream" of status updates. It closely mimics the "timeline" feature of Twitter, a much smaller service which, like Facebook user, allows people to post short messages which are then broadcast to friends. But in adopting Twitter's simplified look, Facebook threw out or hid a whole host of features users have grown used to. (Try finding upcoming events, for example, or looking for updates on new friends people have made.)

A Facebook application built to poll users on the design is running 94 percent against the new design, with some 716,000 "no" votes against 44,000 "yes" votes.

One might argue that Zuckerberg didn't do the design to please the lowest common denominator of users, but instead was trying to win over the cognoscenti of Silicon Valley, who have been buzzing nonstop about Twitter. If so, he missed that target badly, too.

Facebook has a special program called "Great Apps" to recognize the best third-party add-ons to the social-networking sites. The favored few include iLike, a music app, and Causes, an app built by a startup called Project Agape which helps people rally their friends to various social issues.

Both have close ties to Facebook: Marc Bodnick, an influential Valley investor who sits on iLike's board, is the brother-in-law of Facebook COO Sheryl Sandberg. Project Agape is backed by former Facebook president Sean Parker, who still owns an estimated 5 percent stake in the company.

But guess who's been dissing Facebook's redesign on Facebook? iLike CEO Ali Partovi and Project Agape's Joe Green. Green recently wrote:

The stream does not out-Twitter Twitter and under-Facebooks Facebook.

Partovi snarkily noted that the new design inspired him to join Twitter — and employees at Slide, another Facebook-app maker, applauded his wit:

And mind you, these are people who make a living off Facebook. If they hate it, what friends will Zuckerberg have left?

In 2007, at the height of Facebook buzz, the startup was red-hot, a recruiting machine which could poach employees from a then-untouchable Google. Since then — and especially since Sandberg signed on — the company has been more known for the employees it's lost than the star hires it's made.

Qi Lu, formerly one of Yahoo's brightest tech executives, accepted the CTO job at Facebook, and then reneged on his agreement and joined Microsoft as its online chief instead. Pankaj Gupta, an algorithms expert heavily courted by Facebook, went to Twitter. And we hear there may be more defections in the business-development department, where Dan Rose's incompetent management is steadily driving talent away. We hear Richard Cooperstein, who gave up a senior vice president job at Disney to join Facebook as a director, is thinking about leaving.

The many people who passed on Facebook job offers must surely be congratulating themselves on their decisions. If they hadn't they'd now be filling out "awesomeness" surveys.

A tipster tells us:

[Ask] for results of the employee satisfaction/morale survey called the "awesomeness survey." You'll find that the results were not so awesome, in fact... Very not awesome.

Awww, buck up little Facebookers! Tell us what's got you so down.

And Sheryl? Before you haul off and shoot us, remember that violence never solved anything. Here's a good-will gift: some Successories posters you might want to put up around the office before the next "awesomeness" survey.

In 2007, Facebook was the hot startup where everyone wanted to work, able to steal engineers away from the then-golden Google. Now, in 2009, it's become a company of close to 1,000 employees where more and more, people are eyeing the exits, wondering how they can escape the tyrannical whims of 24-year-old CEO Mark Zuckerberg and his tormented lieutenants. Netanel "Net" Jacobsson is just the latest to make his way out the door.

And he won't be the last: We hear that Charlie Cheever, a Facebook developer who's in Zuckerberg's inner circle, is also planning to leave soon.

Jacobsson was a director of business development at Facebook. Was, as confirmed by his bio on Twitter ("Fmr. Facebook director") and a message on the microblogging service.
Facebook PR is said to be eager to hush up Jacobsson's departure, following a series of exits over the last half-year of vital behind-the-scenes players: the loss of Facebook cofounder Dustin Moskovitz; the contentious firing of platform director Ben Ling; and the deeply hushed-up departure of top designer Katie Geminder, who, it's rumored, was ill-treated by Zuckerberg himself. Moskovitz has a startup, Ling has returned to Google, and Geminder, now works for another Facebook refugee, former COO Owen Van Natta, at his Project Playlist startup.

We hear that Jacobsson's nemesis was his boss, VP Dan Rose, who's already famous for his ill treatment of another underling, Tim Kendall. Our tipster reports:

Lots of wrangling with Dan Rose. The story is very ugly. Dan said lots of inappropriate things to Net and has treated him very poorly, much worse than what he said to Kendall.

Net sent mail to folks today letting people know that he's leaving. Facebook is trying to keep it hush hush given the long series of departures. Wouldn't be surprised if Facebook tries to spin it.

Can't believe the number of enemies Facebook is making!

The problem for Facebook: Like a freshly signed-up user, Facebook is in desperate need of friends. It is constantly redesigning its service in an effort to find some lucrative new way of placing ads in its users' streams of pokes, photos, and Wall posts. And to make friends with businesses, it needs plugged-in glad-handers like Jacobsson.

And it's not like Zuckerberg is doing much to lighten the mood. We hear he threatened to fire his current COO, Sheryl Sandberg, in an argument about the controversial recent revision of Facebook's terms of service. He has a habit of running through confidantes quickly, which may explain Cheever's plans to leave.

It's the ultimate irony of Facebook: The company that aspires to connect the entire world can't keep a handful of key executives linked together.

Last summer, the company settled a dispute with a rival social network, ConnectU, that dates back to the founding of Facebook in CEO Mark Zuckerberg's Harvard dorm room. ConnectU's lawyers — whom the site's founders have since fired — revealed that the case was settled for $65 million in a newsletter bragging about their firm's accomplishments. And now the Associated Press has obtained a court filing which shows the exact breakdown of cash and stock Facebook used to settle the case: $20 million in cash, and 1,253,326 shares of Facebook stock.

That's no mere detail. ConnectU's ex-lawyers at Quinn Emanuel Urquhart Oliver & Hedges are pursuing legal action against ConnectU's founders — Divya Narendra and Olympic-rower twins Cameron and Tyler Winklevoss — to get them to pay $13 million. In other words, a 20 percent cut of the supposed $65 million settlement. But is the settlement really worth $65 million?

In October 2007, Microsoft paid $35.90 a share for $240 million in Facebook preferred stock, which only garnered it a 1.6 percent stake in the company. Preferred stock, the kind usually purchased by venture capitalists, have more rights and protections than common stock, which is the type owned by founders and issued to employees. And when a company is private, it's typical for preferred shares to have a higher value than common shares.

ConnectU's settlement was issued in common shares. And an appraisal Facebook conducted to value the shares it issued to employees valued the company at $3.7 billion, or $8.88 a share — making the stock part of ConnectU's payment only worth $11 million, and the total $31 million.

The uncertain value of Facebook's stock must be why ConnectU's ex-lawyers are in a dispute. If it had been paid in cash, why would they be arguing over how much the lawyers were owed? Instead of having $65 million, the Winklevosses and Narendra find themselves with $20 million in cash, a $13 million legal bill-and 1.25 million shares of Facebook that aren't worth nearly as much as they thought.

How little? An informal market for Facebook stock exists, though it's not publicly traded. Vulture investors are offering to buy shares for as little as $2.50 apiece. At that price, the company as a whole is worth $1.3 billion. That's less than Yahoo reportedly bid for the company in 2006.

And that's where Facebook could really get into trouble.

We hear that Facebook's salesforce had a series of panicked meetings last week as its salespeople tried to drum up more business. Google is actively working to steal advertisers away from the company, which has struggled to come up with new marketing products based on its users' relationships. (It does not help matters that Facebook COO Sheryl Sandberg, who worked in the Clinton Administration before joining Google to run customer service, has no real sales experience, as much as she likes to claim otherwise.) Meanwhile, Facebook continues to spend money as it attracts new users; every million users Facebook adds requires approximately $1 million in new servers.

So Facebook will probably need to raise money soon, and it will have to give up a far larger percentage of the company this time-a scenario its executives have dreaded, but which they have few ways to avoid. It will likely have to make whole Microsoft and other investors who bought in at a $15 billion valuation by issuing them new shares. That will further dilute the stake owned by employees, which will hurt morale and possibly lead to defections. If it loses key salespeople and engineers, Facebook will lose further momentum. The prospect of a death spiral is very real.

Right now, Zuckerberg's problem is averting disaster. After that, he can worry about how to get Facebook's value back up to $15 billion.

"Every day, you need to create a to-do list," Rose told Kendall. "You put the items you need to do on the list, and you need to review the list with me every day. As you do them, you need to cross them off." Kendall's retort, which he delivered not to Rose but to friends within and without Facebook: "No shit Sherlock, I didn't get to where I am today without knowing how to manage a to-do list!" What's odd about this rumor: Rose doesn't have a reputation as a micromanager, and the two both worked at Amazon.com before joining Facebook. They put on a convincing buddy act for the New York Times recently, too. Anyone care to play Encyclopedia Brown and help piece together this puzzle? My only conclusion: The best algorithms can't predict what will break a friendship.

(Photo by Chris Pan)

And yet Facebook will end the year with 750 to 800 employees, Zuckerberg has said — a far cry from the 1,000 employees he projected at the beginning of the year, when Facebook had only 450 employees. Call it what you like, but those are 200 jobs that have gone missing.

One would think that Facebook, more than ever, would have the pick of the litter.

But its potential employees can do math. Facebook's hiring managers do not have the hot hand they played earlier this year. The turmoil within Facebook has made an impression on potential hires. As have Facebook's financials.

Facebook raised $240 million from Microsoft in a deal that valued the entire company at $15 billion. And the company is making real revenues, though they're small by comparison to MySpace; the most solid projection for 2008 is $265 million, down considerably from the $300 million to $350 million Zuckerberg once thought it could make this year.

All the while, it is spending heavily on servers; Facebook's pages, which must chart a user's social connections to determine what news from friends to display, are more computationally intensive than, say, a trivially simple Web search engine like Google. That means, in essence, more money spent on servers per user. What that means: Facebook will have to make more money on advertising per user just to stay even with Google's cost structure, let alone exceed it. It's far from that point.

Most importantly, it's hard for outsiders to see the upside in Facebook shares. Most assume Facebook will issue them options, and wonder how those will appreciate enough to make them rich. In fact, Facebook has been switching to grants of restricted stock — a maneuver Google and Microsoft, too, has used when a lofty share price made options less attractive.

Add skittish candidates and skittish managers, and you get a very tough hiring process; Facebook executives might actually like to hire more people, especially in engineering, but they're having a hard time finding people who meet their requirements and are willing to take the job. Zuckerberg doesn't have to institute a hiring freeze; his lofty opinion of his own company is putting enough of a chill in recruiting to keep costs down.

As much fun as Hart seemed to be having at Facebook, there's a long list of reasonable reasons for Hart to leave: She already made money by joining Google before its IPO. She's shortening her commute by taking a job with the San Francisco Giants. She doesn't want to keep working from 7 a.m. to 7 p.m. But I am skeptical. Why not stay a year and vest a first round of stock options? I can't help wondering if the timing of Hart has something to do with the election — and the opportunities a Democratic administration has opened up for former D.C. power player Sandberg to return to Washington.

But the defense is timely for Sandberg as well. Sandberg served as Summers's chief of staff before she moved to Silicon Valley and joined Google, setting her up for her current job at Facebook. Summers and Sandberg had a close professional relationship; he even escorted her as his guest to a White House dinner in 2000. At Google and Facebook both, colleagues roll their eyes as they recount how often she brings up her Washington experience and brags about how working in tech is a cakewalk compared to D.C.

But Sandberg's tenure at Facebook has been controversial. She's been acting as if she's the company's No. 2 executive, despite CEO Mark Zuckerberg's reassurances that her role is limited and she's not a CEO-in-waiting. Several key tech and product executives have left since she's arrived — and, crucially, she has not made visible progress in improving the company's ad-sales operations. At least one prominent investor has been talking about "reining her in."

So why not head back to D.C.? If Summers gets the Treasury job, he'll surely call on Sandberg for advice, and perhaps more. Will she be able to resist the call to public service? Her husband, Dave Goldberg, is an entrepreneur-in-residence at Benchmark Capital — a placeholder job he could easily leave. Her children are young enough that she could move back east without disrupting their schooling. It might be a now-or-never opportunity.

It must be on her mind — and on the agenda at Facebook's next board meeting. Sandberg leaving Facebook for the government gives everyone a graceful out from a bad situation. Zuckerberg could help give her a nudge; his cofounder, Chris Hughes, was the director of Obama's Web campaign. Perhaps he could put in a good word for Sandberg? If Summers gets the Treasury job, the only question is whether, having made millions at Google, she really wants to work as hard as she tells everyone she used to.

• Steve Jobs, ailing Apple CEO
• Kara Swisher, obnoxious AllThingsD blogger
• Sheryl Sandberg, Facebook COO
• Michael Arrington, TechCrunch editor
• Jerry Yang, Yahoo's undead CEO

How to wear it: Black power suit and a kicky necklace.

How to scare them: Find some Facebook employees. Be really, really nice. Talk their ears off about your days in Washington and how you singlehandedly solved the Asian financial crisis, with a little help from Larry Summers and Bono. At the end of the conversation, take out a notepad and ask them for their names. Frown a little as you write them down.

Next:

Right: Because it's an awesome branding opportunity. The draft is a self-parody of corner office drama, full of Honorary Co-Chairs, Leaders, and Former CEOs. But the real story is: Who's missing? Sergey Brin and Eric Schmidt are here, but not Larry Page. Twitter's Ev Williams is here, but not Digg's Kevin Rose. Federated Media: Present. TechCrunch: Absent. Mark Zuckerberg is not here, but Sheryl Sandberg pulled a John Hancock: She's right up top, where Owen can't miss her. Oh, look, she's trying to make nice! She's going to be sorry.

Here's some back of the envelope math on Facebook's burn rate. Figure the company's operating expenses are divided roughly half in labor, half in operations like running its servers. Count $100,000 in salary per employee, and double that in benefits and other overhead; double that again to account for the company's non-labor costs. You end up with an annual cost structure of $400 million. Facebook's revenues for this year are projected to be $300 million to $350 million; if the company isn't already operating in the red, it's headed there fast.

Microsoft's $240 million investment? Most of that is already gone towards buying servers — and it's not like Facebook can stop buying servers as usage of its site continues to boom.

Publicly, Zuckerberg has talked about the company making growth its priority. But a $400 million a year ship can sink fast, especially if the advertising market faces a hard contraction and media buyers cut back on their more experimental ad buys. And none of Facebook's new ad formats have proven to be a breakout hit, as Google's AdWords was earlier this decade.

That's why I think Facebook's braintrust is talking about whether they can afford to keep hiring — and whether they need to cull their existing ranks.

Here's where Facebook COO Sheryl Sandberg, the law-and-order type Zuckerberg hired from Google, comes in. She's already made hiring considerably more bureaucratic, instituting new requirements straight out of the Googleplex, like a 3.5 GPA from a top school.

Getting strict on recruiting is just the start. Facebookers should expect to see more rules, rules, rules. And even the slightest violation will prove cause for firing — especially for employees who are within weeks of vesting their first batch of stock options, which only come after a year on the job.

Sandberg's very savvy about keeping up appearances. Google thrived in part because, in the darkest days of the dotcom crash, from 2001 through 2003, it was the only company hiring. Until it bought DoubleClick, Google had never done a layoff. That's part of Google's image, and I'm sure Sandberg wants it to be part of Facebook's image, too.

So we won't hear about a Facebook hiring freeze. We certainly won't hear about layoffs. Whatever happens will be quiet: Candidates won't get called back about jobs they applied for. Managers will find their hiring requests tied up in bureaucracy. And employees will quietly box up their things and go.

The sad thing is that those Facebookers will think they screwed up. They won't even have the saving grace of a layoff — the corporate kiss-off that says, "Hey, kid, chin up — it's not you, it's me." A layoff would be the honest thing. But it's the one cost-cutting move Facebook can't afford.