CNBC Transcript: CNBC Exclusive: Julia Boorstin Speaks with Sheryl Sandberg, Facebook COO, From the Makers Conference, Produced by AOL
WHEN: Today, Tuesday, February 11th
WHERE: CNBC's Business Day Programming
Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Facebook COO Sheryl Sandberg, from The MAKERS Conference, produced by AOL. Excerpts of the interview will run throughout CNBC's Business Day programming. Following is a link to the interview on CNBC.com: http://video.cnbc.com/gallery/?video=3000245062.
All references must be sourced to CNBC.
JULIA BOORSTIN: Sheryl, thank you so much for joining us to talk to us today at the MAKERS Conference. Obviously--
SHERYL SANDBERG: Nice to be with you, Julia.
JULIA BOORSTIN: --you're coming out of a great quarter for Facebook. But I want to start off talking about Lean In. Lean In just announced a big content partnership with Getty Images. Why is it so important? And what do you hope it accomplishes?
SHERYL SANDBERG: You can't be what you can't see. And our stereotypes of women are so deeply reinforced by most of the pictures out there in the media. So we partnered with Getty Images to put out The Lean In Collection, 2,500 pictures of women who have agency, who have authority, who are shown in very active positions, both at work and at home, including pictures of men that are really leaning into their family responsibilities with their children.
JULIA BOORSTIN: And it sounds like this is part of a bigger push to do a lot of different partnerships corporate partnerships?
SHERYL SANDBERG: LeanIn.org, the foundation I started along with the book has done great number of content partnerships. We did one with Cosmo Magazine. We've done two and we're about to do our third Cosmo Career Insert. So 24 pages in Cosmo, which had never covered business or careers before, covering careers under the amazing editor Joanna Coles. We did one with Time for Father's Day, where we asked fathers to write letters on their aspiration for their daughters. We've done one with the Chicago Tribune to syndicate the Lean In Stories that men and women write about the moments in their life where they choose to lean in.
JULIA BOORSTIN: So in the nearly year since your book first came out, what has been the biggest surprise?
SHERYL SANDBERG: The best thing in the year since Lean In is not just the conversation that's taken place, even though that's important, but that people are taking real steps to change their lives. I'll give you two examples. At the MAKERS reception just upstairs, before I walked down, a woman came up to me and she said, "Before Lean In, I used to make sure everyone else at the table had a seat and I would sit at the back, even though I was in M&A. And I leaned in. I took my seat at the table. I got a double promotion and doubled my salary, because I asked."
And importantly, Lean In Circles, small peer groups that the organization helps found, anyone can start, that meet once a month. I've met with them from Beijing to a Minneapolis Air Force Base to Turkey a couple weeks ago. And what you hear is that when women come together (and men) and really want to make the most of what they want for their lives, they can do it.
JULIA BOORSTIN: It--
SHERYL SANDBERG: It's exciting.
JULIA BOORSTIN: --it sounds like you're seeing a lot of action on the part of women. And there's certainly been a lot of talk from corporate America. But are you seeing enough action from the companies that could really make a difference?
SHERYL SANDBERG: We have a long way to go to get to real equality, but companies understanding the barriers women face is so important. I have stood on a stage with John Chambers, the CEO of Cisco, looking at his top management, saying, "We have not understood bias and how we've treated all the women in this room. But we're going to get it right going forward."
Bob Moritz is here from PwC. He's made this a corporate priority. I think what we're seeing is that CEOs (and most of them are men, some are women) are recognizing that this isn't something that makes them feel good. This isn't about equality for women. This is about their bottom line. That if they can embrace and use the full talents of the population, their companies can outperform. And I think that leads to the change we need to see.
JULIA BOORSTIN: So looking at Lean In's second year, what is it that you want CEOs to do to really make a difference this year?
SHERYL SANDBERG: I want people to realize -- from CEOs to managers to everyone that all of us benefit when we understand how important gender equality is. Our economies grow faster, when we use the full talents of the population. Our organizations perform better, when we have diverse voices making decisions. And our homes are happier when men are sharing responsibility and being active fathers. This is not an issue just of equality and justice, even though it is. This is an issue that affects all of our lives at a really personal level.
JULIA BOORSTIN: You're speaking here at the MAKERS Conference. Why is this kind of conference important?
SHERYL SANDBERG: For me, as I was, you know, taking the steps in my career, being able to see women who were in leadership roles made a really big difference and told me that maybe I could aspire to that one day. I think what Dyllan McGee and MAKERS has done in putting out all these stories of women has helped all of us. I've sat there for hours and watched and learned so much about the history of women in America.
JULIA BOORSTIN: So shifting gears entirely to Facebook. Facebook is coming off a phenomenal quarter. You really proved the skeptics wrong. You transformed the company to focus in on mobile. And it's really changed the business, the revenue, the bottom line. Has this change happened faster than you expected?
SHERYL SANDBERG: Well, the mobile changed happened faster than anyone expected. And we had to react quickly. And you saw that over the last year and a half. We had to make the company a mobile-first product company. Literally, we would end product reviews, Mark would say, "Where's your mobile screenshot? This meeting's over until we have one."
And we had to change our revenue model. A year ago, we didn't have any mobile ad revenue. And now with this quarter, more than half of our mobile ad revenue. But more importantly, by putting ads into newsfeed and how engaging newsfeed is and how engaging those ads are, we think we have by far the best mobile ad product out on the market. And we're excited to see the growth.
JULIA BOORSTIN: And looking at the transformation of Facebook's business, were you the driving force in getting Zuckerberg and Facebook to focus on growing revenue and profitability?
SHERYL SANDBERG: I think all of us are the driving force. Mark is and I am and the amazing teams. Mark and I work with incredible people at Facebook. We really have focused on investing our business. There have been three main investments we've made. The first is taking advantage and really doubling down on the shift to mobile.
When it started happening, we really put all of our resources there and made a very fast shift. The second is investing in attracting advertisers. We now have over a million advertisers. And having both the big brands and the long tail of the SMBs, small to medium-sized businesses, makes a huge difference. And the third is our ad products. We've invested in targeting, in measurement, in simplification to make sure that we're putting products on the market that return for marketers, but also provide really good experiences for people who are using Facebook when they see the ads.
JULIA BOORSTIN: So in rolling out these products and these changes, what was your biggest challenge in dealing with Madison Avenue?
SHERYL SANDBERG: We have to prove it. And we should have to prove it. The big brand dollars on Madison Avenue are really important to our growth. We're doing well with them. Every one of the AdAge 100 has advertised with us over the past year. But measurement was a really big challenge for us. If you look back a year ago, we could show you that you if you ran ads with us, we improved brand sentiment. But we couldn't link that to in-store sales. And over the last year, we made the product investments and the tools investments to be able to say, "These people saw Facebook ads. These are the sales results they've achieved." And that is really how the dollars start moving.
JULIA BOORSTIN: So have you seen a huge perception change in how Madison Avenue sees Facebook?
SHERYL SANDBERG: Certainly, over the six years I've been at Facebook. You know, three years ago, Facebook was an experimental buy. And while we're still a really small part of ad budgets, we have lots of room to grow to get even what's close to our share of consumer time, in terms of ad budgets. If you're a CMO in this country now, you have a Facebook strategy. And that's because you are starting at least or you do understand that we can really drive your business.
JULIA BOORSTIN: So tell me about small and medium-sized businesses? Why are they so important for Facebook? Are they the holy grail for Facebook's growth?
SHERYL SANDBERG: Small to medium-sized businesses have been described by lots of people as the holy grail of online marketing. Because if you could just get all the SMBs online, we're a very natural entry point. The product we offer, which is for free, pages, works the same way a personal profile does. So as we've gotten to 1.2 billion people on Facebook, small business owners were part of that.
We now have 25 million actively-managed small business pages and over a million advertisers. And over the last year, we've rolled out products which much more easily and rapidly convert the people using our pages into paying advertisers. And you can expect to see us do more of that.
JULIA BOORSTIN: Great now looking at the changes that Facebook has made to its products, Facebook ends up taking on Twitter and Snapchat with its new-- with its new products and services. Do you see Facebook making gains against these competitors?
SHERYL SANDBERG: We're the leader in what is not just a growing space but an exploding space. The amount of time people are spending sharing, being themselves online, direct sharing, all forms of sharing's exploding. We are really happy with our growth. In the last quarter, we've didn't just add lots of people to Facebook, but our engagement metrics are up.
62% of our people using Facebook are coming back every day. We're seeing increases in metrics like time spent. At the same time, people are using other social services. And they're growing too. I think we're at the beginning. I think you're going to see a lot of growth in this space broadly. And hopefully a lot of growth from Facebook.
JULIA BOORSTIN: So people are using multiple services at the same time, which it really does seem like they are, is Facebook at an inherent disadvantage to something like Snapchat, which doesn't yet have ads?
SHERYL SANDBERG: We've rolled out ads very carefully. As we've put ads into our newsfeed, we've very carefully monitored user sentiment. And we're really pleased with how it's gone. In the last quarter, we said at our last earnings, sentiments improved on mobile, -- even as we've added more ads in. And so I think we are very focused on creating good ads for our-- for the people that use Facebook.
JULIA BOORSTIN: I have to ask about the Facebook teen question. Is all this hubbub about teens not being as engaged on Facebook much ado about nothing?
SHERYL SANDBERG: We're really focused on engagement across the board. And we're really happy with how we're doing. Teens remain incredibly active on Facebook and on Instagram. And Facebook remains the best place to attract any broad audience, including teens.
JULIA BOORSTIN: So the fact that this perception is out there, do you feel like you need to shoot it down? Or how would you shoot it down?
SHERYL SANDBERG: We just look at what's happening. How teens are using Facebook, how, you know, older people are using Facebook, how people are making Facebook such a big part of their lives. It was our tenth anniversary last-- week. And we rolled out what we called our "look back videos", which were these kind of one-minute videos of the highlights from other-- from people's Facebook experiences. And it was an incredible thing. Almost 200 million people saw those videos. And importantly, 50% of the people who saw their own video chose to share it. That's what we're focused on, on Facebook is building products that really make people want to share and have great experience doing it.
JULIA BOORSTIN: The idea of doing something like the look back videos and the fact that it was such a success, what does it say about Facebook's future? Or what other new things you could offer?
SHERYL SANDBERG: We're focused on all kinds of sharing-- whether it's one to one sharing. We've put a big investment into our messenger app. And we've seen really strong growth, 70% in the last three months. We just rolled out Paper, which is a newer product out of our new creative labs, which is a really deeply-engaging way for people to share with their friends and take in content. I think you're going to see us continue to focus on our core app, which represents the majority of our business, but also see us increasingly experiment with other ways people can share.
JULIA BOORSTIN: On your recent earnings call, Mark Zuckerberg laid out a vision for really having a portfolio of apps. How does this multi-app strategy change your advertising strategy?
SHERYL SANDBERG: I think for the foreseeable future, the great majority of our business will come from our main app. As we roll out some of these new apps, we'll see what works. We'll see what takes off. And then there are things that will grow like Instagram has grown. And then we will be in a position to introduce modernization and ads. But out focus when we first roll out these products is on the experience of the people who use them.
JULIA BOORSTIN: So what do you have to do to avoid confusing or overwhelming advertisers and consumers?
SHERYL SANDBERG: I think advertisers right now know that they can buy ads on Facebook and get great returns. And we'll continue to work with them to prove that case and enable them to launch great ad experiences. And for people who use Facebook, we want to enable them to share however they want to share. So if they want to share in the main Facebook app or they want to send a one-to-one message, we want to offer both of those.
JULIA BOORSTIN: With advertisers setting aside a social ad budget, how do you keep from hitting a ceiling of how much money advertisers have set aside for social?
SHERYL SANDBERG: So we think we're way beyond what is a social ad budget. If you look at the numbers, 12% of consumer media time is on mobile. And just 3% of the budgets. And we think we offer, by far, the best opportunity to reach consumers on mobile. Facebook gets one in seven minutes on the desktop. We get one in five minutes on mobile. So a greater percentage. And when people are on Facebook on their mobile phones, the thing they do the most is read their newsfeed and engage with our newsfeed. And so our ads in newsfeed offer a really interesting way to reach people wherever they are.
JULIA BOORSTIN: But it seems like there's this shift away from just being about social ads to being about really personalize ads. How big a deal is that shift for your business going forward?
SHERYL SANDBERG: What's exciting for us is we're both. We're personalized marketing at what is a really unprecedented scale. So every day, 750 million people come to Facebook. That's massive reach. And a lot of our clients take advantage of that reach. But what's more interesting than that are the targeted segments we can do. The 20 million U.S. consumers who are in the market for a mid to-- mid to small size SUV right now. The 35 million U.S. households who buy premium grocery products. We're able to offer both that massive reach and very targeted, but still at scale opportunity to give messages that are really personal.
JULIA BOORSTIN: Now whenever you talk about personal messages, you have to also ask about privacy concerns. How much do you think about that creep-out factor of really personalized ads?
SHERYL SANDBERG: We care about privacy a lot. It's a cornerstone of our business. We can serve very targeted ads to people based on the information we have without ever giving that information to people they haven't given it to. And that's really important to us.
JULIA BOORSTIN: But even without violating privacy rights, there is still that sort of ick factor. You must want to be useful without being too personal?
SHERYL SANDBERG: I think ads that are relevant to you are a much better experience. I would much rather see ads for a movie I'm going to like than a movie my husband's going to like, because there's not a lot of overlap there. I think as long as people understand that their privacy is protected, that it is their data and it is their data to share, which we really believe, getting a targeted ad experience that's-- better and more relevant for them is just a better experience.
JULIA BOORSTIN: I know you're testing auto-play video ads. It seems like this could be a huge leap to help Facebook eat into TV ad budgets. What's the potential?
SHERYL SANDBERG: There's a big demand for sight, sound, and motion, because it's very compelling. We have video ads already on Facebook. And they're running and doing really well. And as you said, we are testing auto-play video ads. We're rolling out very slowly. But so far, the results are really good. And there's a demand-- there's demand from advertisers. But we'll roll out slowly.
JULIA BOORSTIN: Mark Zuckerberg talked a lot about his vision for the next-- what Facebook's going to do in the next year, the new two years, the next ten years. What's your vision for what the business of Facebook's going to do and how it's going to change?
SHERYL SANDBERG: I think we're at the beginning of personalized marketing at scale. I think what people want are messages that matter to them and communication-- commercial communication and other communication that feels relevant. Our goal is to make our advertisements on Facebook as relevant and useful and even fun as the content you get from friends. We've made progress, but we have a long way to go to get there. We also really want to help people share more and connect more. And that means share more with each other, but also share to more to the business-- with the businesses that matter to them and are part of their lives.
JULIA BOORSTIN: And I know we're running out of time, so I'll be very brief. But with AOL sponsoring this conference and this conference being about women and about health care costs being so much in-- the focus right now for corporate America, I have to ask you very quickly what your reaction was to Tim Armstrong's comments on AOL's policy changes with its 401(k).
SHERYL SANDBERG: I'm here to talk about MAKERS and Facebook.
JULIA BOORSTIN: Okay, and then a quick final question. CNBC is doing its list of the 25 most influential people over the past 25 years. You were nominated, as was Mark Zuckerberg. Who do you think's influential that you would add to the list?
SHERYL SANDBERG: Oh my God, there are so many amazing, amazing influential people. And actually, a lot of them are here at the MAKERS Conference. I look at someone like Gloria Steinem and have so much respect for how she led and continues to lead women all across the United States and all across the world.
JULIA BOORSTIN: She's a great addition. Sheryl Sandberg, thanks so much for talking to us today here at the MAKERS Conference, we really appreciate you taking the time.
SHERYL SANDBERG: Thank you. Great to be with you, Julia.
JULIA BOORSTIN: Thanks.
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