Facebook may have revealed a large number of risk factors in Wednesday’s S-1 filing for its initial public offering. But one thing it almost surely won’t have to worry about is its CFO messing up the deal.
Those who know David Ebersman, 42, could hardly be more effusive in their praise of his leadership style – very calming and without ego – and his acute intelligence. “He’s like the guy getting an A+ in your advanced calculus class in college and you’d never know it just hanging around with him,” says Mark Schoenebaum, a senior analyst at ISI Group who covered Genentech when Ebersman was CFO there from 2005 to 2009. “He’s a normal guy, a fantastic human being, but just wicked smart. Put him in front of a room and fire complicated questions at him, and he’s an absolute genius.” (Facebook, currently in a quiet period, did not respond to a request for an interview with Ebersman.)
Ebersman had a nontraditional career path for a CFO. He earned a degree in economics and international relations from Brown University, then took a job as a research analyst with Oppenheimer. Genentech hired him in 1994 as a business analyst. Many regarded his ascension to CFO as an utter surprise.
Genentech, which was regularly at the top of best-places-to-work lists before its takeover by Roche in 2009, “could have hired anyone they wanted to be the CFO,” Schoenebaum observes. “He was only 36. I couldn’t understand what they were doing. Then I met the guy and got it right away.”
Paula Park, a senior client partner in the CFO practice at Korn/Ferry, says Genentech knew he would succeed at whatever executive role the company gave him. It just happened to be in need of a CFO. “It is extremely atypical for a publicly held company, as Genentech was, to bring in a CFO without public-company experience,” Park says. She too applies the “wicked smart” descriptor to Ebersman.
Park worked with Ebersman shortly after he took over Genentech’s top finance slot to find a No. 2 person for the department. He was far more involved in the process than other CFOs in that scenario, especially those at large companies like Genentech, Park says. He was present on phone calls, focused on delivering the desired message to candidates, and handled all the negotiations. “He spent a tremendous amount of time on the search,” she says.
Before Ebersman became Genentech’s CFO, Schoenebaum notes, the company had never made an acquisition. He coaxed the CEO, Art Levinson (now chairman of Apple), to dip into its large pile of cash to acquire Tanox, another biopharmaceutical company, in 2007.
Most amazing to Schoenebaum was the high degree of honesty Ebersman displayed to analysts and investors. For example, Genentech had so many successful trials for Avastin, the cancer-treatment drug, that it knew demand was going to be enormous. In fact, the possibility of not being able to make enough of it emerged as a major risk factor for the company. As it turned out, at first production was sufficient to satisfy the demand, but just barely.
If any plant were to have a problem that caused it to be shut down for a day or two, which happens routinely in manufacturing, Schoenebaum says, it would have interrupted product supply, “which is a very big deal in the drug business.”
But in conference calls with analysts and investors, Ebersman proactively and regularly pointed out the risk. “It hurt the stock, but he gained enormous credibility,” Schoenebaum says. “He had detailed remarks every quarter about progress on the problem. The same thing has happened to other biotech companies, but they didn’t tell anyone.”
Investors were well enriched through Ebersman’s efforts in early 2009, during Roche’s hostile takeover bid for Genentech. He spent a lot of time with investors convincing them of the company’s value and forced Roche to raise its bid from $86.50 per share to $95.
Since coming to privately held Facebook, the unassuming Ebersman has kept a low external profile, though that will of course change when the company’s IPO hits the market. Internally, he’s gained a lot of credibility with employees by playing bass in Feedbomb, an in-house band that plays at Facebook parties and other venues in Northern California. “Musicians have a lot of respect among engineers,” a Facebook employee was quoted as saying by CNN Money. “It gives him a fair amount of cred.”