Bill Walsh is one of the greatest coaches in the history of the NFL. He started with a 49ers team that only won two games and within two years they had won their first Super Bowl. He retired after 10 years but before he was done they would win two more. A decade later more than half of the head coaches in the NFL had once served on his staff.
Just before he passed away he wrote a book on leadership entitled “The Score Takes Care of Itself.” His idea was simple enough: you don’t win football games by trying to score. You don’t build championship teams by trying to win. Instead he set a high standard of performance and held people to it on the execution of every play. He believed there were good losses and bad wins. He believed that if you had good people, a good culture, and strong guiding principles then the score would take care of itself.
If you go back to 2012 there are some analogies one could draw between the 49ers of that era and the performance of Facebook ads. I don’t know if we even had two wins before 2012. But after? Well, they don’t give out Lombardi trophies for digital advertising but I think if they did we’d be a contender.
The far more interesting connection between these stories is the approach. We didn’t establish ourselves as a leading digital advertising platform by focusing on the obvious metric of revenue. We realized that when it came to revenue there were good losses and bad wins. We explicitly focused on advertiser value and consumer value even when it came at the cost of revenue. This wasn’t just cultural; our ranking systems and auction focus on optimizing advertiser value and consumer experience rather than revenue to Facebook. By focusing on our people, on our culture, and on strong guiding principles we have been able to demonstrate that the revenue takes care of itself.
Focusing on metrics has well established problems, but in the case of revenue there are two even more pathological ones.
Revenue is a trailing indicator. When people are just getting started with a new service they don’t just dive in with their full budget. They invest a little and revise their budget allocation incrementally. If you push too hard on revenue you can get 100% of the budget they allocated you today but you are missing the bigger opportunity to give them outsized returns which is what will cause them to allocate you more of their budget in the future.
Revenue is short term. In many of our products a focus on maximizing revenue would lead us down a very different path than maximizing value. Maximizing value often requires long term investments whose return profile is risky or entirely unknown. But we know that without those types of long term investments our business growth will start to plateau as we saturate the value created by existing solutions.
Mark had a famous line in the S-1 we filed for our IPO: “We don’t build products to make money, we make money to build great products.” I agree wholeheartedly which is why the mission of the Facebook ads organization isn’t to make money. It is to make meaningful connections between people and businesses. And we take that seriously.