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Facebook's Company Town: Good for Recruiting, Bad for Innovation

Housing employees in a company-built, $120 million housing complex may sound like smart strategy, but it also might make things too close for comfort.
Facebook founder Mark Zuckerberg and architect Frank Gehry look over the plans.
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You see all kinds of odd perks in the high tech industry: free food, massages, foosball tables, gym memberships. But Facebook has either gone either one step better or worse. Or maybe both at the same time.

Facebook apparently has plans for a "$120 million, 394-unit housing community within walking distance of its offices," according to the Wall Street Journal. It will even have a sports bar and dog daycare facility. We can presume high speed Internet will be everywhere.

Although a Facebook spokesperson said that this wasn't a move to increase retention, some employees have begun to wonder where they should live, as housing availability in Menlo Park, California, is tight.

21st Century Company Town

Of course the first thought many will have is how this could parallel the 19th and early 20th century concept of a company town. At times necessary to enable the large number of workers they needed (Hershey, Pennsylvania, was an example of a company town developed by the chocolate firm), some company towns also became largely synonymous with exploitation. A corporation would own the housing, food store, and anything else of substance and only take company script for payment. High prices would keep workers effective slaves, as they fell into debt and never made enough to clear it.

Facebook already has a reputation of creating an elaborate and attractive environment for workers. So why not return to the good old days when CEO Mark Zuckerberg and a coterie moved to California and rented a house. After all, having people in constant contact has to supercharge innovation, right? That's what the new entrepreneurial communes hope for, at least.

Not a chance. The assumption that people in close quarters during work and private hours will naturally generate great things is a big mistake. First of all, how anxious would you be to go into business with your parents and all live in the same house? It's OK, just wait: the panic attack will subside.

Although in any entrepreneurial endeavor there will be times when long hours are necessary, getting away from everyone you're around all day long is healthy. Who wants to have a phalanx of unwilling stalkers? Just as work can let some people get needed space from home, home should do the same for work. Interpersonal problems are just as likely, and I'd argue more, to blossom the more you are around coworkers.

The Cost to Innovation

As for innovation, it requires creativity and research shows that creativity requires the collision and melding of seemingly disconnected and different ideas. You want to absorb new experiences and different ideas to recharge yourself and have something to bring to attempts at innovation. When everyone is around each other too much, you cut down on the unexpected parts of life that are the fuel your creativity needs.

And let's consider some practicalities. Someone is fired or quits. So, what, suddenly the person has to find a new home? Talk about awkward moments in the hallways.

Facebook, there's nothing wrong with trying to ensure that employees have someplace to live. Maybe building housing will be the only option. But that seems hard to believe. Why not invest in a real estate developer who could build lots of housing for all the people who need it? That might offer a good return. And it's bound to be better than what you might get when co-workers get a little too close for comfort.

IMAGE: Facebook
Last updated: Oct 4, 2013

ERIK SHERMAN | Columnist

Erik Sherman's work has appeared in such publications as The Wall Street Journal, The New York Times Magazine, and Fortune. He also blogs for CBS MoneyWatch.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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