Facebook’s options not like they used to be

facebooklogo-latest1.jpgThere’s at least one problem with Facebook’s new value of $15 billion: It is so stratospherically high, that it provides less upside to stock the company awards to new employees. That may hurt its recruitment efforts.

Separately, in another downer for Facebook, reports also emerged suggesting the company has lax policies on privacy — letting employees track the profiles specific users are viewing. More on that in a sec.

Microsoft’s investment, which valued the company at $15 billion, was flattering. But even if the company bumps up its reported $150-some million in revenue substantially before it goes public, it would only be fulfilling what is expected of it. Its value wouldn’t necessarily change, because it already assumes significant future revenue growth. So new employees’ stock options have less room left to rise. The Wall Street Journal has a story on this today.

Stock options normally give an employee the right to purchase shares of a company at a set price. If the company goes up in value after the price is set, the options-holder can make money by selling stocks at a higher price.

Facebook’s previous round valued the company at $525 million. Now that it is valued at nearly 30 times higher than that, how much more could Facebook ever be worth? Let’s put this in perspective.Google raised $25 million from Kleiner Perkins and Sequoia in 1999 for 20 percent of the company, meaning it was valued at $125 million post money. That round of financing was its last, except for some convertible debt rounds.

Essentially, Google’s value stayed put until it went public in 2004, and so it had all that time to vacuum up top employees – giving them low priced stock, with a lot of upside.

It was able to hire a total of 1,900 employees before it went public, when it finally was forced to notch up the option price. That’s more than five times the 350 employees Facebook has now.

Even when Google went public, it was valued at a mere $27 billion.

Facebook meanwhile, is trying to double its workforce to 700 employees, one of the reasons it raised the money.

Facebook investor Jim Breyer, of Accel Partners, told the Journal that large tech companies do just fine hiring talented people even after they’ve gone public. However, we’ve also recently written that Google itself is having trouble maintaining key employees, who are leaving to start their own companies. Some of them have been going to Facebook.

We mentioned on Friday that Facebook tracks your every move on the site, including which profiles you look at — Valleywag has since reported that Facebook employees look at this information for fun.

The company, which previously told us that they “track usage on Facebook in order to report accurate metrics on growth and engagement,” said that usage and profile information is restricted at the company. “Any Facebook employees found to be engaged in improper access to user data will be disciplined or terminated.”