The Accidental Billionaires: The Founding of Facebook A Tale of Sex, Money, Genius and Betrayal
“The girls were both Asian, pretty, and a little overly made up for a lecture like this. The tallest of the two had long sable hair pulled back in a high pony tail and was wearing a short skirt and a white shirt open one button too far down the front. Eduardo could see wisps of her red lace bra wonderfully offset by her tan, smooth skin. The other girl was in an equally short skirt, with a black leggings combo that showed off some impressively sculpted calves.
Both had bright red lipstick and too much eye shadow, but they were damn cute – and they were smiling and pointing right at him.
Well, at him and Mark. The taller of the girls leaned forward over the empty seat and whispered in his ear.
“Your friend – isn’t that Mark Zuckerberg?”
Eduardo raised his eyebrows.
“You know Mark?” There was a first time for everything.
“No, but didn’t he make Facebook?”
Eduardo felt a tingle of excitement move through him, as he felt the warmth of her breath against his ear, as he breathed in her perfume.
“Yeah. I mean, Facebook, it’s both of ours – mine and his.”
“Wow that’s really cool,” the girl said. “My name is Kelly. This is Alice.”
Other people in the girls’ row were looking now. But they didn’t seem angry that the whispers were interrupting their enjoyment of Bill Gates. Eduardo saw someone pointing, then another kid whisper something to a friend. Then more pointing – but not at him, at Mark.”
When Mark Zuckerberg became more interesting than Bill Gates
There is a first time for everything. The scene quoted above is set at a lecture at Harvard University. Bill Gates is at the podium speaking. But, according to the story, more interesting than Bill Gates is a student – Mark Zuckerberg. And who is Mark Zuckerberg? One of the co-founders of Facebook. The story above, is the way things were in 2004, at least, as told by Ben Mezrich in the book: The Accidental Billionaires: The Founding of Facebook A Tale of Sex, Money, Genius and Betrayal.
The Accidental Billionaires has gotten nearly universal bad reviews at Amazon.com. The common consensus of Ben Mezrrich’s book is that it is mostly a work of fiction. In fact, you get what you get. And, if you read the first page of the book, Ben tells you as much – “The Accidental Billionaires is a dramatic, narrative account based on dozens of interviews, hundreds of sources, and thousands of pages of documents, including records from several court proceedings.” Noticeably absent from Ben’s book is a direct contribution by Mark Zuckerberg.
Whatever the real facts of the founding of Facebook, sometime between a 2004 article in the Harvard Crimson by staff writer Alan Tabak and 2008 – 4 short years later – Mark Zuckerberg, a “socially inept computer geek”, became a billionaire.
The Harvard Crimson in 2004
On February 9,2004 from the Harvard Crimson
Published on Monday, February 09, 2004
Hundreds Register for New Facebook Website
Facemash creator seeks new reputation with latest online project
By ALAN J. TABAK
Crimson Staff Writer
When Mark E. Zuckerberg ’06 grew impatient with the creation of an official universal Harvard facebook, he decided to take matters into his own hands. After about a week of coding, Zuckerberg launched thefacebook.com last Wednesday afternoon. The website combines elements of a standard House face book with extensive profile features that allow students to search for others in their courses, social organizations and Houses.
“Everyone’s been talking a lot about a universal face book within Harvard,” Zuckerberg said. “I think it’s kind of silly that it would take the University a couple of years to get around to it. I can do it better than they can, and I can do it in a week.”
As of yesterday afternoon, Zuckerberg said over 650 students had registered use thefacebook.com. He said that he anticipated that 900 students would have joined the site by this morning.
“I’m pretty happy with the amount of people that have been to it so far,” he said. “The nature of the site is that each user’s experience improves if they can get their friends to join it.”
Zuckerberg’s site allows people with Harvard e-mail addresses to upload their pictures and personal and academic information. Just as with the popular website Friendster, which Zuckerberg said was a model for his new website, members can search for people according to their interests and can create an online network of friends.
Zuckerberg said that the most innovative feature of the site is that people can search for other students in their classes so that they can branch out to form friendships and study groups.
“If you’re in a class where you don’t vknow anyone and want to ask somebody for help, this is a way to find out the names of people in that class,” said thefacebook.com user Roberto C. Acosta ’05.
Zuckerberg said that the extensive search capabilities are restricted by a myriad of privacy options for members who do not want everyone to be able to look up their information.
While Zuckerberg promised that thefacebook.com would boast new features by the end of the week, he said that he did not create the website with the intention of generating revenue
Now skip ahead four short years and the kid that had no intention of creating revenue with Facebook is named to the list of Forbes richest americans. At age 23, Zuckerberg is worth 1.5 Billion dollars. ( Read it )
Forbes 2008 – Mark Zuckerberg #785
Left school for Silicon Valley later that year; scored initial $500,000 investment from PayPal cofounder Peter Thiel. Venture firms soon swooned, among them Accel Partners and Greylock Partners.
Today Facebook boasts 66 million active users. Estimated annual sales: $150 million. Expanding beyond being a college-only message system and photo album; now courting users to 55,000 different high school, business and city networks.
Problems with privacy: installed “News Feed” in 2006; program automatically alerted users’ friends to changes they made to their profiles. Outcry over privacy concerns led company to backpedal; Zuckerberg issued apology. Similar controversy ensued after release of Facebook Beacon late last year; program automatically alerted friends of activities on selected outside sites, including eBay and Fandango.
Microsoft bought 1.6% stake for $240 million last October; deal led many to suggest the company is worth $15 billion. Some analysts—and even a few Facebook investors—suggest the company’s value is far lower.
Not good enough – Mark moves up from #785 to #158 on Forbes400 roster of richest Americans.
Forbes 2009 – Mark Zuckerbery #158
A Tale of Sex, Money, Genius and Betrayal
But, somewhere between the article in the Harvard Crimson in 2004 and Zuckerbergs rise to billionaire status, there is a tale of Sex, Money, Genius, and Betrayal.
What exactly that story is, the facts and the events that transpired? Well, that is the memories of the aggregate of participants. Writing the history of Facebook is a historians task of sorting out fact from fiction in primary and secondary sources.
In parallel with Ben Mezrich’s book, as a “dramatic, narrative account“, there are a large number of attempts to tell the story in less prosaic format. One such story appeared in Rolling Stone.
Highlights from the 8 page Rolling Stone article cited at the end of this posting
The Skinny on the founding of Facebook (from Rolling Stone June 26, 2008)
The courses didn’t help him much with his personal life. Sitting alone in his dorm room that night in 2003, Zuckerberg had just been jilted by a girl. He started drinking and once again sought solace in the realm that never let him down. Logging on to his blog, he created an entry titled “Harvard Face Mash: The Process.” His plan was as simple as it was vindictive: create a site called Facemash.com, hack into Harvard’s directory, download photographs of his classmates and post them online next to photos of farm animals to rate who was more desirable.
He began like any other hurt schoolboy. “Jessica A— is a bitch,” he wrote. “I need to think of something to take my mind off her. I need to think of something to occupy my mind. Easy enough, now I just need an idea.”
At 11:09 p.m., invention was in full swing: “Yea, it’s on. I’m not exactly sure how the farm animals are going to fit into this whole thing (you can’t really ever be sure with farm animals . . .), but I like the idea of comparing two people together.”
Zuckerberg wasn’t the only student at Harvard exploring the Web’s potential for bringing people together. All over campus, students were thinking up ways to use this new tool to make online the personal connections that seemed to elude them in real life.
“Networking is a time-honored practice at Harvard, going back to FDR,” says Lawrence Summers. “It was waiting to happen. It was a wave of the next Internet thing and a group of very talented, social people. All innovators are great adapters to social need.”
Ten months before Zuckerberg launched Facemash, a Harvard junior named Divya Narendra had come up with the idea of creating a social network aimed at college students.
Narendra went to two of his dormmates, identical twins Tyler and Cameron Winklevoss, and told them he had an idea for an online community for Harvard students, with access granted only to those with a college e-mail address. The twins instantly recognized the idea’s potential.
Throughout 2003, Narendra and the twins worked on the site, hiring several fellow students to help them code it. But by that fall, the site still wasn’t finished. Then, in November, the entrepreneurs, who’d heard about the rise and fall of Zuckerberg’s Facemash, decided to contact the programming prodigy and catch some of his computing heat.
On January 12th, while he was still ostensibly working for Harvard Connection, Zuckerberg e-mailed Saverin and told him the Facebook site was almost complete and it was time to discuss marketing strategies. They each agreed to invest $1,000 in the site, with Zuckerberg owning two-thirds of the company.
Unencumbered by class work, Zuckerberg plowed ahead with his new project, isolating and exhausting himself. Facebook launched on February 4th, 2004. “If I hadn’t launched it that day,” he told the Crimson, “I was about to just can it and go on to the next thing.”
But Zuckerberg’s burgeoning success online did little to stop him from burning those closest to him in real life. After school ended, he packed a bag and took a plane to California. In his eyes, Silicon Valley was “sort of a mythical place for a startup.” Taking a leave of absence from Harvard, like Bill Gates before him, Zuckerberg moved to Palo Alto in the summer of 2004. His goal was to take his extraordinarily popular Website to the next level. He and Saverin each agreed to invest another $20,000 in the operation. While Zuckerberg was in California, Saverin stayed behind in New York. That decision would prove ill-advised.
Saverin countersued, claiming that Zuckerberg never matched his $20,000 in seed money and, further, used that money for personal expenses.
That summer, Zuckerberg transferred all intellectual-property rights and membership interests to a new version of the company in Delaware. The value of Saverin’s stock was unhinged from any further growth of Facebook, and Saverin was expunged as an employee.
Not long after the incident, Cameron Winklevoss ran into Saverin in a bar in New York. Saverin, Winklevoss said in a deposition, apologized to him.
“Sorry that he screwed you,” Saverin allegedly said. “Mark screwed me, too.”
“He’s young — and I’m nervous about that,” says Kara Swisher, a columnist who writes about Silicon Valley for The Wall Street Journal. “How many people has he burned, and he’s only 24? Even if he’s not culpable, the number of people he’s had problems with at a young age is remarkable — and not in a good way.”
[From Issue 1055 — June 26, 2008]
What to learn from all this…
The story of the two Asian girls at the Harvard lecture who found the socially inept Mark Zuckerberg more interesting than the lecture by Bill Gates may be fact or fiction. Nonetheless, it could have happened and it makes a good story.
What is certain is that between 2004 and 2008, Mark Zuckerberg became a billionaire – and others did not. Along with Mark becoming a billionaire, the Facebook user community grew from several hundred users at Harvard to 350 million users globally.
Is success so much about randomness, luck, and chance?
Is success so much about randomness, luck, and chance – being at the right place at the right time with the right skills and the tenacity to pursue and refine a vision? Mark Zuckerberg just happened to be the person – and Facebook, the opportunity.
One could ask the same question about Bill Gates, Paul Allen, Steve Jobs, and Steve Wozniak and the personal computer revolution of the 1970’s. Were these folks of particular genius or where they just in the right place at the right time while the inevitable confluence and convergence of technology, unmet need, events, and ideas assembled before them as if it fell from the sky and landed at their feet before them.
Did they have a choice in the matter? Was the computer revolution going to happen no matter what – and Gates, Allen, Jobs, and Wozniak just happen to be the “unlucky” folks that were destined to carry it through – not by choice but by circumstance? And, through any means possible – “the end justifies the means”.
An Accident… – waiting to happen
The “Accidental” in “Accidental Billionaires” – the title of the book, might be the exact right term. From the article in the Harvard Crimson… “While Zuckerberg promised that thefacebook.com would boast new features by the end of the week, he said that he did not create the website with the intention of generating revenue.”
“There is a new kind of Internet Emerging…”
Maybe it was “in the air”. But the fundamental change that Facebook, MySpace, Friendster, and other social networking sites brought about was a fundamental new way of looking at the Internet.
It was the fall of 2003, and the World Wide Web was just beginning its love affair with social networking. That month, Fortune wrote, “There may be a new kind of Internet emerging — one more about connecting people to people than people to Websites.”
Connecting people to people rather than connecting people to websites and information was the fundamental change in the global internet perception. This fundamental change was endorsed by the 350 million people on Facebook.
The cost of entrepreneurship
If there’s going to be another Bill Gates,” says former Harvard president Lawrence Summers, “Mark is as close as anyone.” And like Gates early in his career, Zuckerberg is facing serious allegations that his creation was based on ideas he stole from others.
In a lawsuit one judge describes as a “blood feud,” three fellow Harvard students claim Zuckerberg fleeced their idea after they hired him to code a social-networking site they were creating. “We got royally screwed,” Divya Narendra, one of the students, has testified. And in April, another classmate, Aaron Greenspan, filed a petition to cancel Facebook’s trademark, claiming he invented an online facebook months before Zuckerberg. Greenspan, who has compiled reams of e-mails chronicling his months of communication with Zuckerberg, bristles at equating the Facebook prodigy with Microsoft’s founder. “Gates was shrewd, calculating and insanely competitive, bordering on autistic,” Greenspan writes in his self-published autobiography. “Mark was inarticulate and naive.
A great entrepreneurial story & Accidents in History
Fact or “a dramatic, narrative account“, Ben Mezrich’s book is a good story. Take a read. If anything, Merrich’s book can be a springboard to investigating the primary sources – if you so desire. If one reads these primary sources, the founding of Facebook really is a story of sex, money, genius, and betrayal.
Is Mark Zuckerberg a model of entrepreneurship to be emulated? Maybe. Perhaps if you are in the wrong place, at the wrong time, and “a new kind of internet is emerging” drops from the sky and lands at your feet – maybe you don’t have a choice in the matter. You have to do what you have to do – no matter what. There are a few quotes from the team the developed the Macintosh that suggest that “they had to do it” – as if driven by some cosmic force of time, place, and opportunity. They were self-proclained “revolutionaries”. A recruiting poster from the time of the Mac said: “Why join the Navy when you can be a Pirate?” A black pirate flag flew over the building at Apple where the Mac was being developed.
Accidents do happen. A recent casualty of such an accident was Mark Zuckerberg – number 158 on the Forbes roster of the richest Americans. According to Mezrich, the motivation for thefacebook at Harvard was – “They just wanted to meet some girls…” Mark Zuckerberg is an “Accidental” Billionaire.
The Battle for Facebook. Article from Rolling Stone – ( Cached copy here )
60 Minutes Interview (Video) with Mark Zuckerberg – “Mark Zuckerberg is said to be worth $3 billion for founding the social networking Web site Facebook. Lesley Stahl talks to the man whose $15 billion company could be the next Google.”
At Web 2.0 Summit. Interview (Video) with Mark Zuckerberg
Fast Company – Facebook’s Mark Zuckerberg: Hacker. Dropout. CEO.
Betrayal and Settlement – Facebook paid up to $65m to founder Mark Zuckerberg’s ex-classmates
Where In The World Is Eduardo Saverin?
Facebook Timeline – http://www.facebook.com/press/info.php?teline
Judge Ends Facebook’s Feud With ConnectU
Social Networking Statistics –
Facebook – The Movie – http://en.wikipedia.org/wiki/The_Social_Network
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