Facebook COO Sheryl Sandberg: “We were focused on growth. We were also focused on privacy and security”

Facebook COO Sheryl Sandberg: “We were focused on growth. We were also focused on privacy and security”
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CNBC Transcript: Facebook COO Sheryl Sandberg Speaks with CNBC’s Julia Boorstin Today

WHEN: Today, Friday, May 17, 2019

WHERE: CNBC’s “Squawk on the Street

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The following is the unofficial transcript of a CNBC interview with Facebook COO Sheryl Sandberg and CNBC’s Julia Boorstin on CNBC’s “Squawk on the Street” (M-F 9AM – 11AM) today, Friday, May 17th. The following is a link to video of the interview on CNBC.com:

Watch CNBC's full interview with Facebook COO Sheryl Sandberg

CARL QUINTANILLA: Let’s get to Julia Boorstin in New York with Facebook’s Sheryl Sandberg. Hey, Julia.

JULIA BOORSTIN: Carl, thanks so much, and Sheryl, thank you so much for joining us here today. You are straight off the stage where you were just talking about LeanIn and a new study you just released, indicating that women are actually having less access to mentorship and to their bosses than they were even a year ago. What is going on here?

SHERYL SANDBERG: Yeah, it is really important. So today we just released a LeanIn SurveyMonkey study that shows that 60% of male managers in the United States are afraid to do a one-on-one activity with a woman, including having a meeting. I mean, can you believe that? 60%. A senior man is nine times more likely to hesitate to travel with a woman and six times more likely to hesitate to have a dinner with a woman. And the problem with that is women already weren’t getting the same mentorship that men were, particularly women of color. And no one has ever gotten a promotion without getting a one-on-one meeting. And so, I think men and women need to be able to travel together, they need to be able to go to meetings together, go to meals together. All of that can be done in public spaces. But those one-on-one conversations. And if there is a man out there who doesn’t want to have work dinners with a woman, then he shouldn’t have work dinners with a man. You know, group lunches for everyone if that’s how they feel.

JULIA BOORSTIN: It seems like the movements of the past year or so, the Times Up movement and Me Too, have actually had real negative implications for many women in the workplace. What is your message to corporate America about this?

SHERYL SANDBERG: So, I don’t believe they’ve had negative implications. I believe they’re overwhelmingly positive. Because half of women have been sexually harassed. But the thing is it is not enough. It is really important not to harass anyone. But that’s pretty basic. We also need to not be ignored. And so, my message is if we want to change workplace dynamics, you know where the least sexual harassment is? Organizations that have more women in senior leadership roles. And so, we need to mentor women, we need to sponsor women, we need to have one-on-one conversations with them that get them promoted. This number has moved up. Last year it was 46% of men were afraid to have that one-on-one meeting. Today, it is 60. Both are totally unacceptable.

JULIA BOORSTIN: Now, shifting gears over to Facebook. There have been a growing number of calls to break up the company. Both from people who are -- have been very close to the company such as Co-Founder Chris Hughes, investor Roger McNamee, as well as a number of presidential candidates, including Vice President Biden. Now, how do you respond to these concerns that ‘Facebook just needs to be broken up, it’s too big’?

SHERYL SANDBERG: Well, I know that people have real concerns about the size and power of the tech companies, including Facebook. And I think those are the right questions. And the question is what is the right answer? I think the right answer is to set up the right rules for the internet. Because you could break us up, you could break other tech companies up, but you actually don’t address the underlying issues people are concerned about. They’re concerned about election security, they’re concerned about content, they’re concerned about privacy and data portability. And so, we know at Facebook that we have a real responsibility to do better and to earn back people’s trust. And we’re doing two things. We’re fundamentally changing how we run the company. We are making massive investments in these areas. And if you look at what we have done before to what we’re doing now, we have large teams of people in the company whose only job is to safeguard elections, protect content, protect privacy. But we also know that we can’t do it alone and so we’re call for regulation. Just last week, Mark was in France with President Macron. I was in D.C. meeting with people on both sides of the aisle. We know that we have a real responsibility to get this right, and we’re going to work hard, we’re going to work hard to get the right rules set for our industry, but also to do the work we need to do, no matter how big the investment, no matter how long it takes.

JULIA BOORSTIN: But even if there is regulation around privacy or the spread of hateful content or violent content, there is still a significant concern that that’s not be enough—that either there needs to be a new regulator established or the company needs to be broken up. Are you girding up for an antitrust battle? You have hired a couple of former Microsoft executives.

SHERYL SANDBERG: Well, obviously any concerns we have are ones we need to answer. But let me share with you something else I heard in my meetings in D.C. And I heard this in private meetings from both sides of the aisle, that while people are concerned with the size and power of tech companies, there is also a concern in the United States about the size and power of Chinese tech companies. And that, you know, realization that those companies are not going to be broken up. And so, the question is for us is how do we make sure we protect privacy, how do we make sure we work with authorities to safeguard elections, how do we make sure the right content is on Facebook and how do we make sure that the right regulatory framework is in place? And we’re working hard on all of that.

JULIA BOORSTIN: You are making a lot of changes now, but Chris Hughes said that Mark’s obsession with growth led him to sacrifice security for clicks. When people at the company began to notice issues, whether it was around privacy, or the spread of manipulative fake news, what do you think stopped people from immediately taking action?

SHERYL SANDBERG: I think we have been taking action. I think it is fair to say that as we grew Facebook, we were focused on growth. We were also focused on privacy and security. But I think it wasn’t the most important thing we were doing and we should have been doing it at a higher level. If I look at my job now, my job has really changed. That we -- I used to spend more of my time working on growth and now I’m spending more of my time safeguarding the company. And I think now, this is front and center. And it wasn’t front and center -- it is front and center now because there are things that happened that we didn’t expect. We didn’t expect the kind of interference we saw in the election. We didn’t expect bad actors. And now we know better. We learned from what we missed before. We know we need to work hard to prevent the problems that are happening now. And we need to work hard to make sure that the problems we haven’t even thought of don’t happen.

JULIA BOORSTIN: There is a lot of conversation about, especially in Washington, D.C. right now, about what kind of cultural change needs to happen in the company to make sure people do speak up when they immediately see something and not wait until it becomes a massive issue. The FTC, in addition to levying a fine about $5 billion, is considering all sorts of structural changes. Implementing oversight for as much as 20 years at Facebook. How could that change the company and actually impact your business potentially impact your growth?

SHERYL SANDBERG: Well, we’re going to do the right thing. And the right thing is safeguarding people’s privacy. We have massive teams working on this. It used to be that we had one team working on this. And now, as it has become more integral to what we do, every single engineering team and product team has a safety and security team as part of it. And so, whatever the regulatory framework we end up with, what matters to us is that we take all the steps we can to protect privacy. And that’s what we’re doing.

JULIA BOORSTIN: But to have a team of people from the FTC inside the company, I mean, that would be unprecedented. Would that hurt your ability to make changes and grow your revenue?

SHERYL SANDBERG: Well, I can’t comment on anything we’re talking about with the FTC, but what I can say is we’re going to do the right thing. And that means we’re going to have the right kind of oversight. I think we do have a very strong board. I think we are accountable to people all over the world. And we are taking the steps to protect privacy to go through our systems, find the vulnerabilities, be open about those publicly. We also know that the challenges that we face are unprecedented. With so many people on our services, whether you have them in one company or many, there is still a lot of people. And we’re going to have to go through and make sure that we’re protecting people.

JULIA BOORSTIN: One of your privacy changes is implementing a clear history tool, which you warned advertisers was going to impact the way they can target and reach consumers. Are investors vastly underestimating how much this kind of tool, eliminating targeting for people who opt out of it, could really impact your bottom line?

SHERYL SANDBERG: So our bottom line is getting this right. And we are making real changes that have impact. Our growth rate is lower. We are spending huge amounts of money, billions of dollars, and we are taking on, you know, real things that do change that. But we believe deeply that doing the right thing for people on our service is the only way to protect our long-term business. And it is the right thing to do. So, the bottom line for us is making sure we get this right.

JULIA BOORSTIN: But what will it do to your business? What will it do if any meaningful percentage of your users opt out of targeting? And what will it do when people use Facebook more for private messaging, where we’re not used to seeing ads, than they it for the news feed? I mean, how is this going to change what your revenue model looks like and whether you’re able to grow it? Or whether that actually ends up shrinking revenue because you can’t put as much ads in messaging as you can in a newsfeed or stories?

SHERYL SANDBERG: We’re running the company differently than we used to. And I think you’re already seeing that. We have announced messaging first. We have limited ads targeting for certain categories. We have rolled out and we took the GDPR tools and we rolled it. And you’re right. These things lower the revenue growth and cost a lot of money. But they’re the right thing to do. We have been doing this now for the last few years and we’re going to continue doing it. And we believe in it. We believe if we do the right thing to protect people, the right thing for consumers, that we are going to have the best long-run business we can.

JULIA BOORSTIN: But, I feel like we’re hearing two messages from the company. On one hand, Mark Zuckerberg said on the earnings call, the long-term growth trajectory of this company, the long-term revenue potential, is not going to be impacted by our shift to private messaging and all these changes we’re making. But, on other hand, you’re telling advertisers that the fact that you can’t target consumers as narrowly is going to have an impact and you still have to figure out a business model around inserting ads into messaging. These are two different messages here. Is the growth potential going to be as strong in terms of revenue or are you going to take a real financial hit as you prioritize privacy and security?

SHERYL SANDBERG: Well, I think what we said is the long-run. We believe the long-run growth rate is the most important thing. We have always run the company for the long-run and we do that by making the right decisions in the short-run. So, if people clear their browsing history, we can still target ads because we still have information they have shared on Facebook. But it will make those ads a little bit less effective. But it is people’s information and we want them to use it as they want it to be used. And that’s a choice we are going offer. That’s a choice they might make. It may harm our revenue growth in the short-run. We have been open about that on earnings calls and others. But we also believe in the long-run, it is the right thing for the business and we’ll keep doing the right thing.

JULIA BOORSTIN: Just a final question about WhatsApp. You just revealed this weeks that WhatsApp was basically used to hack into users’ phones. There has been so much talk about how much you’re investing in safety, security, privacy. How can you reassure us now that things have really changed?

SHERYL SANDBERG: Well, that work is because things are changing. So, we have assembled big teams in the company and they’re going after these issues. We found that WhatsApp vulnerability because we’re doing this work. Because we’re putting more engineers on looking for bugs, looking for vulnerabilities. We found this, we shut it down, and here’s what you’re going to see from us. As we continue to do this work, you’re going to see more things. We’re going to find them, we’re going to close them down. We also have other people finding these things and telling us about them and we’re going to be open and honest about those. This is the work we’re doing to make sure we protect people.

JULIA BOORSTIN: Well, we’re out of time. But Sheryl Sandberg, thank you so much for sitting down and talking about these very important issues with us here today. Really appreciate it. Guys, back over to you.

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Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)www.valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver
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