Facebook CEO Mark Zuckerberg made it clear to investors on Wednesday that 2013 will be a year of growth and innovation, but perhaps not the kind that will help the company’s bottom line in the near future.
“We aren’t operating to maximize our profits this year,” Zuckerberg said on Facebook’s fourth quarter earnings call this week. “We’re doing what we think will build the best service and business over the long term.”
That includes a lot of hiring, especially in the area of product development. Facebook picked up 1,419 additional employees last year, and we’ve heard it plans to hire more than a thousand more this year. Zuckerberg says this is likely to lead the company’s expenses to grow at a faster rate than revenue will.
Although Zuckerberg didn’t say it specifically, part of more hiring means more acquisitions. In addition to the $521 million it spent on Instagram, the company reported spending $87 million on other business acquisitions last year. Facebook bought mobile gifting and commerce service Karma, which has become Facebook Gifts, but many other acquisitions are purely for talent, and founders and employees go on to work on completely new products at Facebook.
Product development is something that some say Facebook is struggling with, pointing to how the social network has copied a number of existing services, such as Snapchat, but it hasn’t completely innovated since f8 in 2011, when it announced Open Graph and Timeline. That’s likely because 2012 was a major transition period for Facebook. The company went public and devoted more resources for monetization, building its mobile ad business from $0 to more than $305 million in the fourth quarter, and introducing powerful new targeting opportunities such as FBX and Custom Audiences.