Tech Job Watch May 16 2011

The Facebook Job Engine

By shareen pathak

With job growth ticking up in 2011, some credit should go to Mark Zuckerberg. Facebook employs about 2,000 workers and has grown headcount by about 50% a year since it was founded in 2004, a spokesperson says.

The real action, however, is in the underlying Facebook economy, which is larger and more diverse than the company itself. App developers, data analysts, marketers, PR people and self-styled social media mavens now have jobs because of the overwhelming success and popularity of Facebook. More are being employed every day. Facebook app developers alone number over a million, according to sources close to the company. None work directly for Zuckerberg.

Since July 2009 -- two years after Facebook released its API to third-party developers -- job openings that have "Facebook" has a keyword have grown by 245% on job posting aggregator SimplyHired. The site lists 11,000 Facebook developer positions and 20,000 non-engineering Facebook jobs. That's 31,000 jobs openings in total, few of them at the Palo, Alto, Calif.-based company.

Job growth is also powered by the 2.5 million websites that are integrated with Facebook and employ page managers, social media gurus and web designers. Tech companies like Apple, RIM and Nokia also employ teams to lead their integration with Facebook.

"There are thousands of people employed in the application development industry alone," said Justin Smith, founder of Inside Network, a market research firm covering the social gaming, Facebook apps and virtual goods industries. The number of jobs Facebook has created is "impossible to quantify," said Jillian Carroll, a Facebook spokesperson.

How fast the Facebook economy will continue to grow isn't certain. The industry is already consolidating and even slight changes to Facebook's code can have large impacts on the health of the Facebook economy.



Social Gaming

Before Facebook, "social" gaming was four friends in front of an Xbox. Now, games like Farmville and Mafia Wars have turned that model on its head, connecting thousands of players located around the world.

The social gaming industry is expected to grow to $1.32 billion by 2012. Last year, 23 million users played games on Facebook and other social networking sites at least once a month, according to eMarketer. The top 375 games on Facebook have at least 100,000 monthly active users.

While Facebook is the platform on which these social games sit, the thousands of employees that make social games don't work at Facebook.

San Francisco-based Zynga, the largest social gaming company, plans to hire 700 new staffers by the end of the year, bringing its total headcount to 2,000. It is now valued at $7 billion. It needs developers conversant in Flash, C++, PHP and Java programming languages.

Playfish, a London-based company and the second largest player in the space, employs about 250. According to co-founder Kristian Segerstrale, the company has about 100 openings at its studios in London, San Francisco, Beijing and Norway. With social gaming, "billions of data points are being created," said Segerstrale. That also creates job opportunities for data analysts who can figure out how the game should evolve.

Berlin-based Wooga employs 70 and is hiring at the pace of one person per week. Wooga, which stands for world of gaming, makes money by selling virtual items in Facebook games that it creates, such as magic wands.

Pietro Macchiarella, a research analyst at Dallas-based Park Associates who covers the gaming industry, said that there are literally "hundreds" of social gaming companies out there, mostly because of the low start-up cost.



Preferred Developer Consultants

Facebook app development is another significant area of Facebook-driven job growth. As of May 2010, there were more than 550,000 active applications on Facebook. That's huge, considering that the site only opened itself up to third-party developers in 2007. "We were the first ones to say 'wow, this is big," and this is a platform that will have a healthy, viable economy of apps and app developers," recalls Salil Deshpande, a partner at Palo Alto, Calif.-based venture capital firm Bay Partners which set aside $12 million in its main fund in 2007 to bootstrap Facebook apps. "It was a bold thing to say back then."

Many of the companies that produce the apps are barely companies: one-person operations that publish free apps and produce no revenue.

Some of them are multi-million-dollar companies, like New York-based Snap Interactive, which creates online dating applications for Facebook and posted $6.67 million in revenue in 2010, up from $3.17 million in 2009, although it has yet to turn a profit. About 21 people work at the company.

Monetization rates vary widely and depend on an app's audience demographics, marketing leverage, how established the app is and so on. "It's not possible for us to put any accurate numbers on how much apps are worth because of the sheer diversity," said Susan Su, a data researcher and product marketing manager at Inside Network.

In December 2009, Facebook introduced its preferred developer consultant (PDC) program to sanction organizations creating business via the Facebook platform. The program stared with 14 PDCs; today there are 65 and they run the gamut, from advertising agency R/GA to social media marketing consultant Wildfire to network platform HootSuite. Facebook maintains that what separates a PDC from any other developer is its greater ability to understand the technical possibilities of the platform.

"We've vetted them and they have experience with our platform," said David Swain, a spokesperson for Facebook. The company may refer clients to PDCs and will also provide training for those in the program.

According to data from SimplyHired, Facebook PDCs created at least 4,000 jobs in the last two years and currently have "hundreds of open positions," said Dion Lim, president and chief operating officer of the jobs portal.

One of the better known PDCs is New York technology company Buddy Media. The company creates social network management tools for its 650 clients, including Ford, American Express and Armani Exchange.

Buddy Media founder, Mike Lazerow, is a close friend of Facebook chief operating officer Sheryl Sandberg. The company became a PDC when the program was launched. "We were one of the first companies to be selected," said spokesperson Joe Ciarallo. "It's almost a seal of approval." He said that the verbal referrals and the relationship have been "extremely valuable" for the company.

Buddy Media, which has $33 million in venture funding and counts Deshpande's Bay Partners among its early investors, has 148 full-time employees and plans to reach 210 by the end of the year and over 350 by 2012, said chief operating officer Kass Lazerow. The company will mainly hire developers and account managers to support clients.

"We wouldn't exist without Facebook," said Kevin Barenblat, CEO of Context Optional, echoing a common theme among PDCs.

The San Francisco-based company employs 65 today and will almost double in size by the end of the year. Involver, another San Francisco PDC launched in April 2009 with seven people, now has 75 and plans to employ a total of about 200 soon, according to the company. Palo Alto, Calif.-based PDC Wildfire has 100 on staff and will double by the end of the year, according to founder and CEO Victoria Ransom.



Third-Party Advertisers

Third-party advertisers help brands run thousands of iterations of ads on social networking sites, including Facebook. They then analyze which ones perform best, manage the campaign and report results.

TBG Digital, what Nick O'Neill, the editor-in-chief of Social Times, a blog that covers social networks, calls the "biggest player" by clientele among third-party advertisers, has about 80 staffers in total. Most of its hiring is focused in the U.S. Headcount should double by the end of the year, said senior vice president Patrick Toland. "The Facebook economy is requiring a new type of specialist," he said.

Efficient Frontier, another such company based in Sunnyvale, Calif., employs more than 250. "We're growing very aggressively," said Justin Merickel, the vice president of marketing and new product development at Efficient Frontier. Hiring is not limited to the U.S. and is in areas including sales, marketing and engineering.

Launched in 2010, San Francisco-based Spruce Media has 18 employees and expects to employ 35 by end of the year and 70 by end of 2012.

"[Facebook] needs companies like us to translate their language for clients so that they can monetize themselves," said Rob Jewell, CEO and founder of Spruce Media. "And if they do well, we do well."



Jobs in the Facebook Industry

Software developers, product developers and analysts will have plenty of opportunities in the Facebook industry. Tech types with social media experience are even more desirable.

"The entire gaming market is competitive in terms of recruiting," said Sina Kauffman, a spokesperson for social-gaming company Wooga. "We want people that are specialized in Facebook marketing and developing."

Even in companies that aren't completely dependent on the Facebook economy, opportunities are increasing and positions are becoming more prominent.

And social media types are moving up the food chain in the corporate suite. Lower-level managers called community managers used to deal with PDCs, now more senior-level executives are, said Context Optional CEO Barenblat. "Now some people have a social marketing manager [as] the head of digital," he said. "Now, the chief marketing officer is coming into those meetings."

In an already heated technology job market, social media-related jobs might be the white-hot center.

"If you want to work in tech, there is no more exciting space to get into than social media and digital marketing," said Efficient Frontier's Merickel.

Some of the excitement from working in social media may come from the uncertainty that shrouds this nascent industry. Operating in the shadow of a giant as well as potential mergers and acquisitions contributes to volatility in employment.

Social gaming has had a wave of consolidation and Facebook app developers, consultants and marketers are starting to see the same thing. Last week, PDC Context Optional was acquired by Efficient Frontier for $50 million; game maker PopCap acquired fellow game developer ZipZapPlay; and Flixster, the creator of the "Movies" app on Facebook, was acquired by Warner Brothers for an undisclosed sum. Companies that aren't wiped out by consolidation could fall prey to small changes in Facebook's code or business practices.

"Facebook determines the grounds on which all these businesses operate and they can make or break businesses with just one change, never mind the size of your business," said O'Neill of Social Times. "It's a fairly volatile ecosystem."

Related: Facebook, Twitter, Zynga Bubbles Minting Millionaires

Write to Shareen Pathak



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