Founders - #14 The Accidental Billionaires: The Founding of Facebook: A Tale of Sex, Money, Genius, and Betrayal

Episode Date: September 17, 2017

What I learned from reading The Accidental Billionaires: The Founding of Facebook: A Tale of Sex, Money, Genius, and Betrayal by Ben Mezrich. Microsoft had offered Mark between $1 million and $2 million to go work for them. Amazingly, Mark had turned them down (1:25)Maybe he knew he was about to cross a line. But he had never been very good at staying in the lines. From Mark's history, it was obvious that he didn't like the sandbox. He seemed the type of kid that wanted to kick out all the sand. (8:01)He didn't care what time it was. To guys like Mark time was another weapon of the establishment. The great engineers and hackers didn't function under the same time constraints as everyone else. (11:23)Mark wondered: If people want to go online and check out their friends couldn't they build a website that did just that? (14:36) Mark. Founder. Master and Commander. Enemy of the State. (21:19)Instead of attacking Baylor head on they made a list of schools within 100 miles of it and dropped Facebook in those schools first. Within days the kids at Baylor begged for Facebook on their campus. (24:20)Mark Zuckerberg had found his place in the world (32:38) ----Founders Notes gives you the ability to tap into the collective knowledge of history's greatest entrepreneurs on demand. Use it to supplement the decisions you make in your work.  Get access to Founders Notes here. ----“I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — GarethBe like Gareth. Buy a book: All the books featured on Founders Podcast

His name was Mark Zuckerberg. He was a sophomore, and although Eduardo had spent a fair amount of time at various Epsilon Pi events with him, along with at least one pre-punch Phoenix event that Eduardo could remember, he still barely knew the kid. Mark's reputation, however, definitely preceded him. A computer science major who lived in Elliott House, Mark had grown up in the upper middle class of Dobbs Ferry, New York, the son of a dentist and a psychiatrist. In high school, he's supposedly been some sort of master hacker, so good at breaking into computer systems that he ended up on some random FBI list somewhere, or so the story went. Whether or not that was true, Mark was certainly a computer genius. He had made a name for himself at Exeter when after he had honed his coding skills, he created

a computerized version of the game Risk. He and a buddy had created a software program called Synapse, a plugin for MP3 players that allowed the players to learn a user's preferences and create tailored playlists based on that information. Mark had posted Synapse as a free download on the web, and almost immediately, major companies came calling, trying to buy Mark's creation. Rumor was, Microsoft had offered Mark between one and two million dollars to go work for them, and amazingly, Mark had turned them down. He followed Synapse up with a program he'd written at Harvard, something called Course Match, that allowed Harvard kids to see what classes other kids had signed up for.

Eduardo had checked it out himself once or twice, trying to track down random hot girls he'd met in the dining hall, to little avail. But the program was good enough to get a pretty big following. Most of the campus appreciated CourseMatch, if not the kid who created it. Okay, so that was Eduardo's impressions of Mark when he first met him. They wind up hanging out in the same kind of geeky Jewish fraternity. They ran in similar circles, and they wound up becoming friends. And Eduardo becomes the first co-founder of Facebook. Before he does that, you'll see how he talks about all these programs that Mark's making.

So course match, you'll see a little bit of that in the first iteration of Facebook. But the precursor to that was this thing called FaceMash, which is how Mark gets in trouble at Harvard. And we have a pretty good history of like breakdown of how he's making this because he would, he was emailing and instant messaging with people. And so I'm going to read this part. It's called make the making of Face Mash. And the reason I included this part is because a lot of this, as much as I can, I want to use Mark's own words because there's a lot of them in here, and a lot of them came to light through various different lawsuits at the time, and I just think it's interesting.

So this part is a little longer, but this is the precursor to Facebook in case you haven't seen the movie and haven't read the book. Behind every great fortune there lies a great crime. If Balzac had somehow risen from the dead to witness Mark Zuckerberg storm into his Kirkland dorm room that monumental evening during the last week of October 2003, he might have amended his famous words. Because that historical moment, one that inarguably led to one of the greatest fortunes in modern history, did not begin with a crime so much as a college prank. If the newly revived Balzac had been there in that Spartan claustrophobic dorm, he might have seen Mark head straight for his computer.

There would have been no question that the kid was angry, that he had with him a number of Beck's beers. As usual, he was probably wearing his Adidas flip-flops and a hoodie sweatshirt. It was well known that he pretty much hated any shoes that weren't flip-flops, and one day he determined to be in a position where those were the only shoes he'd ever have to wear. Maybe Mark took a deep swig of beer, let the bitter taste bite the back of his throat, and as he was typing his fingers against his laptop keyboard, gently summoning the thing awake. Since high school, it could be observed, his thoughts had always seemed clearer than when he let them come out through his hands. To an outside observer, the relationship he had with his computer seemed much smoother than any relationship he'd had with anyone in the outside world.

He never seemed happier than when he was looking through his own reflection into the glassy screen. Maybe deep down, it had something to do with control. With the computer, Mark was always in control. Or maybe it was more than that, an almost symbiosis that had grown out of years and years of practice. The way Mark's fingers touched those keys, this is where he belonged. Sometimes, it probably felt like this was the only place he belonged. That evening, at a little after 8 p.m., he stared into the brightly lit screen, his fingers finding the right keys, opening up a fresh blog page, something that had most likely been percolated in the back of his mind for a few days. The frustration, likely the result of the evening he had just has,

was, it seemed, the final impetus to move further along with the idea. Turn the kennel, kernel, into corn. He started with a title. This is his words. Harvard Face Mash forward slash the process. Back to the book. He might have looked at the words for a few minutes, wondering if he was really going to go through with this. He might have taken another drink from his beer and hunched forward over the keys. Now this is Mark's words at 8.13 p.m. And it's a girl's name that's been edited out. So it's blank, which some girl's name is a bitch. I need to think of something to take my mind off her.

I need to think of something to occupy my mind off her. I need to think of something to occupy my mind. Easy enough now. I just need an idea. This is back to the book. Maybe somewhere inside of Mark's thoughts, he knew that blaming it all on a girl who had rejected him wasn't exactly fair. How were this one girl's actions different from the way that most girls had treated Mark throughout high school and college? Even Eduardo, geek that he was, had better luck with girls than Mark Zuckerberg did. And not that Eduardo was getting into the Phoenix. Well, tonight Mark was going to do something about his situation. He was going to create something that would give him back some of the control, show all of them what he could do.

He turned back to the laptop and went back to work on his blog. 9.48pm. I'm a little intoxicated, not gonna lie. So what if it's not even 10pm and it's a Tuesday night? What? The Kirkland Facebook is open on my computer desktop and some of these people have pretty horrendous Facebook pics. I almost want to put some of these faces next to pictures of farm animals and have people vote on them, vote on which one is more attractive. It's not such a good, great idea and probably not even funny, but Billy comes up with the idea of comparing two people from Facebook and only sometimes putting a farm animal in there. Good call, Mr. Olsen. I think he's on to something. 1109 PM. Yeah, 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. It gives the whole thing a very Turing feel, since people's ratings of the pictures will be more implicit than, say, choosing a number to represent each person's hotness like they do at hot or not.com. The other thing we're going to need is a lot of pictures. Unfortunately, Harvard doesn't keep a public centralized Facebook, so I'm going to have to get all the images from the individual houses that people are in, and that means no freshman pictures. Drats. Maybe at this point he knew that he was about to cross a line, but then he'd never been very good at staying within lines. That was Eduardo's game, wearing a jacket and tie, joining the final club, playing

along with everyone else in the sandbox. From Mark's history, it was obvious that he didn't like the sandbox. He seemed the type of kid who wanted to kick out all the sand. Very typical of many founders. So this is now back to Mark's blog. 12.58 a.m. Let the hacking begin. First on the list is Kirkland. They keep everything open and allow indexes in their Apache configuration.

So a little magic is all that's necessary to download the entire Kirkland Facebook. Child's Play. 1.03 AM. Next on the list is Elliot. They are also open, but with no indexes in Apache. I can run an empty search and it returns all of the images in the database in a single page. Then I can save the page and Mozilla will save all the images for me.

Excellent. Moving right along. 106 AM. Lowell, and the names he's using, these are all the different names of the houses at Harvard. Lowell has some security. They require a username password combo to access to Facebook. I'm going to go ahead and say that they don't have access to the main FAST user database, so they have no way of knowing what people's passwords are. And the house isn't exactly going to ask students for their passwords, so it's got

to be something else. Maybe there's a single username password combo that all of Lowell knows. That seems a little hard to manage, since it would be impossible for the webmaster to tell Lowell residents how to figure out their username and password without giving them away completely. And you do want people to know what kind of authentication is necessary. So it's probably not that either. So what does each student have that can be used for authentication that the house webmaster

has access to? Student IDs? Suspicions affirmed. Time to get myself a matching name and student ID combo for Lowell, and I'm in. But there are more problems. The pictures are separated into a bunch of different pages and I'm way too lazy to go through all of them and save each one. Writing a Perl script to take care of that seems like the right answer. Indeed. 1.31am. Adams has no security but limits the number of results to 20 a page. All I need to do is break out that same script I just used on Lowell and we're all set.

1.42am. Quincy has no online Facebook. What a sham. Nothing I can do about that. 1.43am. Dunster is intense. Not only is there no public directory, but there's no directory at all. You have to do searches, and if your search returns more than 20 matches, nothing gets returned. And once you get results, they don't link directly to the images. They link to a PHP that redirects or something. Weird. This may be difficult. I'll have to come back later. 152 AM Leveret is a little better.

They still make you search, but you can do an empty search and get links to pages with every student's picture. It's slightly obnoxious that they only let you view one picture at a time, and there's no way I'm going to go to 500 pages to download pics one at a time. So it's definitely necessary to break out Emacs and modify that Perl script. This time it's going to look at the directory and figure out what pages it needs to go to. Then it'll just go to all the pages it found links to and jack the images from them. It's taking a few tries to compile the script.

Another Bex is in order. Mark was most likely wide awake now, deep into the process. He didn't care what time it was or how late it got. To guys like Mark, time was another weapon of the establishment. Like alphabetical order. The great engineers and hackers, they didn't function under the same time constraints as everyone else. 208 AM. Mathur is basically the same as Leverett, except they break their directory down into classes.

There aren't any freshmen in their Facebook. How weak. and on and on and on he went into the night by 4am it seemed as though he had gone as far as he could go he had downloaded thousands of photos from the house's databases it was likely that there were a few houses that weren't accessible online from his james bond like layer in kirkland house you probably need an IP address from within those houses to get at them. But it was also likely that Mark knew how to do that, and it would just take a little legwork. In a few days, he could have everything he needed. Once he had all the data, he'd just have to write the algorithms, then the program itself. It would take a day, maybe two at the most. He was going to call the site facemash.com, and it was going to be beautiful. These are back to Mark's words. Perhaps Harvard will squelch it for legal reasons without realizing its value as a venture that could possibly be expanded to other schools,

maybe even ones with good-looking people. But one thing is certain, and it's that I'm a jerk for making this site. He then spelled out the introduction that would greet everyone who went to the site when he finally launched it. Were we let in for our looks? No. Will we be judged on them? Yes. So he winds up being successfully downloading the rest of the pictures. He launches the website. Within a day, it becomes so popular, he shuts it down. He gets basically disciplined by Harvard for breaking into their systems, put on probation. They start covering it in the Harvard student newsletter called The Crimson. And that's where the Winklevoss twins, if you know the story, find his name.

They ask him to do some work on a social network they're trying to develop based just on Harvard students. And throughout this whole process, he's taking all these experiences and coming up with the idea for Facebook. And so I want to go to the part where he first tells Eduardo, before he fills Facebook, what he's doing. I think I've come up with something, he started, and then he launched right into it. Over the past month, beginning right after the FaceMash incident, Mark had been developing an idea. It had really started with FaceMash itself, not the website per se, but the frenzied interest that Mark had witnessed firsthand. Simply put, people had reacted to the site in

droves. It wasn't just that Mark had put up a picture of hot girls onto the internet. There were a million places people could go to see pictures of hot girls. But FaceMash had offered up pictures of girls whom the kids at Harvard knew, sometimes personally. The fact that so many had clicked onto the site and voted showed that there was real interest in checking out classmates in an informal online setting. Well, Mark wondered, if people wanted to go online and check out their friends, couldn't they build a website that offered exactly that? An online community of friends, of pictures, profiles, whatever, that you could click into, visit, browse around?

A sort of social network, but one that was exclusive in that you had to know the people on the site to get into it. Kind of like in the real world, real social circles, but put online by the people in those social circles themselves. Unlike FaceMash, he wanted to create a website where people put up their own pictures. And not just pictures, but also profiles. Where they'd grown up up how old they were what they were interested in maybe the classes they were taking what they were looking for online friendship love interest whatever and then he wanted to give people the ability to invite their friends to join punch them in a way and invite them into your online social circle punch them

meaning uh the process used to invite people into finals clubs at Harvard I'm thinking we keep it simple and call it the Facebook mark said and his eyes were positively on fire Mark's idea wasn't really different it was about moving your so real social network on to the web okay so there's mark outlining the original idea for Facebook. I'm going to skip ahead by about 20 pages, and they cover the actual launch of Facebook. Mark had been working so hard, the hours must have blended together in one blur of pure programming. He had barely eaten, barely slept. It seemed like he had missed almost half of his classes and had probably been in real danger of screwing up his grade point average. In one class, called Art in the Time of Augustus, he had supposedly fallen so far behind that he'd almost forgotten about an exam that was going to be worth a large percentage of his overall grade.

He had no time to study for the damn thing, so he reportedly figured out a unique way of dealing with the situation. He created a quick little website where he posted all of the artwork that was going to be on the exam and invited people in the class to comment, effectively creating an online crib sheet for the test. He had essentially gotten the rest of the class to do the work for him, and he aced the exam, saving his grade. And now, sitting here in front of Mark's creation, it seemed like all the work had paid off. The website was pretty much done.

They had registered the domain name, thefacebook.com, a couple of weeks ago on January 12th. They booked the servers, around $85 a month, from a company in upstate New York. They'd take care of any web traffic and maintenance. Mark had obviously learned his lesson from the FaceMash incident. I don't know why I can't say that word. I keep mispronouncing FaceMash. There we go. So let me start that sentence over.

Mark had obviously learned his lesson from the FaceMash incident. He didn't need any more frozen laptops. The servers could handle a pretty large amount of traffic, so there wouldn't be any problems with the site freezing up. Even if the thing was as popular as FaceMash had Face, everything was in place. The Facebook.com was ready to roll. Let's do this. Mark pointed to his laptop, which was open on the desk next to his desktop computer. Eduardo moved beside him, hunching over the laptop keyboard, his sloped shoulders curved inward as he attacked the keys. He quickly opened his email address book and pointed to a bunch of names grouped together near the top. These guys are all members of the Phoenix. If we send it to them,

it'll get spread around pretty fast. The Phoenix is a finals club at Harvard that Eduardo was asked to join, and it's known for being really social and having a lot of parties. Mark nodded. It had been Eduardo's idea to go to the Phoenix members first. They were the social stars on campus after all, and the Facebook was a social network. If these kids liked it and sent it on to their friends, it would spread pretty fast. And these Phoenix guys knew lots of

girls. If Mark had simply tried to send it out to his own email list, it would bounce around the computer science department and the Jewish fraternity. Certainly wouldn't get too many, if any, girls, and that would be a problem. The Phoenix was a much better idea. That, along with the Kirkland House email list, which Mark had legal access to as a member of the house, would get things started right. Okay, Eduardo said with a quiver in his voice. Here we go. He wrote a simple email, just a couple of lines of text, introducing the site, and linked it to facebook.com. Then he took a deep breath and hit the key, sending out the mass email with a single stroke of his finger.

It was done. The website was out there. Live. Alive. Eduardo put a hand on Mark's shoulder, startling him. Let's get a drink. It's time to celebrate. No, I'm going to stay here. You sure? I hear there's some girls coming over to the Phoenix later. Mark didn't respond. At the moment, Eduardo could tell from Mark's expression that he was a distraction, like the sound of the

radiators near the wall or the traffic in the street down below his little window. You're going to just stay in here and stare at the computer screen? Again, Mark didn't answer. He was bobbing a little behind the computer. It was a strange sight, but Eduardo obviously decided not to judge his awkward friend. And why should he? Mark had been working around the clock to get the Facebook ready for this launch. If he wanted to sit by himself and stare, he had earned that right. Eduardo backed away from him, crossing the small bedroom in near silence.

Then he paused at the doorway, tapping the doorframe with his outstretched fingers. Mark still didn't turn around. Eduardo shrugged, turned, and left the kid alone with his computer. That was the launching of Facebook. I want to skip ahead a little bit. This one paragraph stood out for me and I labeled it Mark's sense of humor. So they're breaking the Facebook is growing at this time I'm jumping ahead a little bit in the story and so they're adding some different people some other co-founders like like Mark's roommate Dustin and well just here's mark's sense of humor eduardo would still handle the business side of things if indeed there would be a business side

of things the four of them would be the team to take facebook to the next level and they were all going to have titles eduardo was going to be cfo dustin vice president and head of programming and chris director of publicity and mark founder master and commander and head of programming, and Chris, director of publicity. And Mark, founder, master and commander, and enemy of the state. Mark's words, Mark's sense of humor. Okay, so I want to skip ahead. The Facebook at this time is spreading. It's in multiple schools. And this was a turning point in Facebook's history. And it's the first time that Mark Zuckerberg meets Sean Parker. And Eduardo's really not a big fan, and we'll kind of see that here. Speak of the devil.

Eduardo caught sight of Parker first as he stepped out from behind the curved glass entrance. Although it would have been hard to miss the guy, because he was making quite an entrance, bouncing off the walls like some sort of animated cartoon creature, a Tasmanian devil spinning through the restaurant. He seemed to know everyone as he moved through the place. First, he was saying hi to the hostess, while hugging one of the waitresses. Then he was stopping at a nearby table to shake hands with a guy in a suit, while roughing the hair on the guy's kid, like they were family friends. Christ, who the hell was this character? He reached their table and smiled. There was a bit of wolf in that grin.

Sean Parker, you must be Eduardo and Kelly, and of course, Mark. Sean reached across the table going right for Mark, and Eduardo saw, then and there, the look on Mark's face, the sudden flush in his cheeks, and the brightness in his eyes. Pure idol worship. In Eduardo's eyes, to Mark, Sean Parker was a god. Eduardo should have realized it earlier. Napster was the ultimate geek banner, a battle that had been fought by hackers on the biggest stage of all. Ultimately, the hackers had lost, but that didn't matter. In a way, it was still the biggest hack in history, and Sean Parker had survived that,

gone on to Plaxo, made a name for himself a second time. Eduardo didn't have to remember what he'd read on Google because Sean launched right into it himself after taking a seat next to Kelly and ordering them all drinks from one of the passing waitresses, a friend, of course, from a previous visit. Sean spun story after story, his energy level beyond incredible, about Napster, the battles he had fought, about Plaxo, and the even uglier battles he had barely survived. He was completely open about everything, life in Silicon Valley, parties at Stanford and down in LA, friends who had become billionaires, and others who were still searching for that big hit.

He painted a really exciting picture of his world, and Eduardo could see Mark was eating it all up. He looked like he was about to run out of the restaurant and book a plane ticket straight to California. When Sean finally reached the last of his stories, for the moment, Eduardo assumed, he turned around, asking them about their most recent progress with the Facebook. Eduardo started to explain that they were now in 29 schools, but Sean turned right back to Mark, asking him about the strategies they were applying to get the different schools to sign up. Eduardo sat there, a little miffed, as Mark explained their strategy by way of an example. This is a really actually interesting story. He told the Baylor story, how the little Texan university had first

refused to adopt the Facebook because the school had a social network of its own. So instead of attacking Baylor head-on, they made a list of the schools within 100 mile radius of it and had dropped the Facebook into those schools first. Pretty soon, all the kids at Baylor were seeing all their friends on the website, and they practically begged for the Facebook into those schools first. Pretty soon, all the kids at Baylor were seeing all their friends on the website, and they practically begged for the Facebook on their campus. Within days, the Baylor social website was history. Sean seemed really excited by this story. He then added to it by quoting something he'd read in the Stanford newspaper. And this is a direct quote from the Stanford Daily on March 5th. Classes are being skipped.

Work is being ignored. Students are spending hours in front of the computer in utter fascination. The Facebook.com craze had swept through the campus. After that article had come out, 85% of Stanford had joined the Facebook within 24 hours. Mark seemed thrilled that Sean had been reading up on him, and Sean, for his part, seemed happy that Mark was a fan. They had an instant connection. There was no denying it. And as for Eduardo, well, Sean wasn't purposely ignoring Eduardo, but he definitely was paying a lot more attention to Mark. Maybe it was just the fact that they were both computer savvy.

But then again, Sean didn't strike Mark as a computer geek. He was a geek for sure, but his geekiness seemed more chic, like he was just playing a geek on some primetime television show. It wasn't just the way he dressed or his amped up demeanor. It was the way he handled the room, not just their table. He was a showman, and he was damn good at what he did. The dinner went by pretty fast. After that, although it seemed like forever to Eduardo, who had almost applauded when Kelly finally got her ice cream. Once the Chinese takeout boxes were empty, Sean picked up the check, excused himself, and promised Mark that

they'd be talking again soon. Then the whirling dervish was gone as quickly as he had appeared. Okay, so I put that apart in there because you start to see right from the jump that Eduardo and Sean, mainly from Eduardo's part, were not really clicking. The next two parts before we get to the entire, basically, main point of this book about how Eduardo was basically kicked out of the company. So let me jump into Mark takes a sabbatical from Harvard. Over the summer, he moves to California, saying he might come back for the fall semester. Facebook takes off.

He doesn't come back. He's living in a rented house in Palo Alto. Sean needs a place to stay, so he crashes there and basically starts working as Mark's partner. Obviously, he becomes the first president of Facebook a little later on, and he helps with like the raising the money and everything else. So we're just going to talk about the differences that start to appear between Mark and Eduardo. And there's just two sections that are both

separated by about, let's see, 35 pages that I think are interesting. Mark Zuckerberg was living it. He had the drive, the stamina, and the ability. He was obviously a genius, but more than that, he had the strange, unique focus that was necessary to pull something like this off. Watching him program at 4 or 5 in the morning every morning, Sean had no doubt that Mark had the makings of one of the truly great success stories in the modern revitalized Silicon Valley. But where was Eduardo? Or more accurately, was Eduardo Saverin even part of the equation anymore? Eduardo had seemed like a pretty perfectly nice kid, and of course he'd been there in the beginning.

He put up a thousand dollars, according to Mark, to pay for the first servers. And it was his money at the moment that was financing the current operation. That gave him some weight, sure, like any investor in a startup. But beyond that, Eduardo saw himself as a businessman. But what did that mean exactly? Silicon Valley wasn't about business. It was about an ongoing war. You had to do things out here to survive that weren't taught in any business class. Hell, Sean had never even gone to college. He started Napster while still in high school. Bill Gates had never graduated Harvard. None of the true success stories out here had gotten where they were by taking classes.

They became successes by coming out here, sometimes with just a duffel bag on their back and a laptop in their hand. And Eduardo wasn't here. And as far as Sean could tell, he wasn't interested in being here. So all the Facebook employees at the time and the interns are out in California with Sean and Eduardo's in New York trying to take an internship and he's getting ready to go back to Harvard in the fall and selling advertising. So he's basically one foot in, one foot out. And the next section I titled All or Not.

And this is basically describing setting the ground for Eduardo to be kicked out. So at this time, Facebook took $500,000 from Peter Thiel, which was set up by Sean Parker. And they're reincorporating and becoming a corporation instead of an LLC. Reincorporating was necessary. Both Thiel and he had agreed. Facebook had to become a new entity, shredding its dorm room genesis and moving into a sort of New Testament status. They were going to have to reissue shares to represent the new setup, to include Thiel, and of course, Sean himself, who had been working as a partner to Mark since he'd moved into the house anyway, and to Dustin and to Chris. Dustin and Chris both went to

California. Which left the question of Eduardo. Initially, Mark had decided, and Sean had agreed, Eduardo would still get his 30%. The intention was to include Eduardo and involve him as much as he wanted to be involved. But the new corporation would have different rules. It had to have different rules. There just wasn't any way to run a business without the ability to issue more shares as was necessitated by the evolving situation. Going forward, people had to be given shares based on the amount of work any particular individual gave to the company. This wasn't some dorm room project anymore. This was a real company with a real investor.

People had to be reimbursed as if this was any other company, because otherwise it would be impossible to create a real valuation based on what Facebook achieved. Which meant that if Mark, Dustin, and Sean were doing all the work to make the company successful, they would get issued more shares. If Eduardo was in New York working on finding more advertising partners, he would get shares accordingly. But if he didn't produce, well, he would be diluted, just like anyone and everyone else. Hell, if they needed to raise more money in the future, they would all be deluded. From Sean's point of view, Eduardo had done a horrible thing.

He threatened the very company during its most fragile stage. Mark didn't seem to hate Eduardo for it. What they're talking about here is Mark and Eduardo were getting into fights, so Eduardo froze the bank account because he feels like he wasn't being included on decisions anymore. So they wind up patching up at this point, but it looks like the damage is already done. Mark didn't have the capacity or the interest to hate anyone, but in Sean's view, Eduardo had shown where he stood. To Mark and Dustin and Sean, Facebook was everything. It was their lives. In fact, Mark had told Thiel in the meeting that he'd probably not ever return to Harvard

when the summer ended. He was going to stay in California and continue the adventure. He'd take it month by month, but if Facebook kept progressing, he didn't envision returning to Harvard anytime soon. Like Bill Gates had said, if Microsoft didn't work out, he could always go back to Harvard. Sure, if Facebook didn't work out, Mark could always go back to school, but Sean doubted he ever would. He was going to continue his endless summer, and most likely Dustin would stay out in California as well. But Eduardo? Well, from what Sean knew of the kid, Eduardo would never quit school. He'd already proven that he wasn't going to give up everything else for Facebook. That simply wasn't

who he was. He had other interests, for instance. Back at Harvard, from what Sean understood, he had the Phoenix. In New York, he had the internship. Eduardo would go back to school, but Mark Zuckerberg had found his place in the world. Okay, and I want to wrap here with the ambush. Eduardo would remember the moment for the rest of his life. He started to shake as he stood there in the mostly bare office, staring down at the papers that the lawyer had handed him the minute he'd walked through the door. It was a a different lawyer this time and it was a different door not the dorm like dorm like sublet in a leafy suburb but a real office with glass walls maple covered desks new computer monitors carpeting even a staircase covered in

graffiti by a local artist who'd been commissioned for the task. That was David Cho, by the way. A real office and another real lawyer standing between Eduardo and Mark, who was somewhere inside at one of the computers where he always seemed to be, safe in the glow of that goddamn screen. At first, Eduardo had thought the guy was joking, greeting him with more contracts to sign, even before he had a chance to check out the place or ask Mark about the new hire, the $2 million stock sale, the email. He's talking about Mark, Sean, Dustin were able to sell about $2 million worth of stock on the latest fundraising, but Eduardo wasn't included in that. So he wanted to talk to mark about it face to face but as eduardo started to read the

legalese he realized that this trip to california wasn't about a business meeting this was an ambush it took eduardo a few minutes to understand what he was reading but as he did his cheeks turned white his skin going cold then the full realization hit him like a gunshot to the chest, shattering him from the inside out, destroying a part of him that he knew he'd never get back. No amount of hyperbole, no adjectives, no words, nothing could describe what it felt like, because even though, deep down, he should have seen it coming, he should have known. God damn it, he should have seen the signs. He simply hadn't. He'd been so fucking blind. So fucking stupid. He simply hadn't expected it from Mark. From his friend. From the kid he'd met when they were two geeks in the underground

Jewish fraternity trying to fit in at Harvard. They had their problems, and Mark had the ability to be pretty cold and pretty distant, but this was way beyond that. To Eduardo, this was a betrayal, pure and simple. Mark had betrayed him, destroyed him, taking it all away. It was right there in the paper in his hands, as clear as the pitch black letters imprinted on those ivory white pages. First, there was a document dated January 14, 2005, a written consent of the stockholders of the Facebook to increase the numbers of shares the company was authorized to issue up to 19 million common shares. Then there was a second action dated March 28th,

issuing up to 20 million shares. And then there was a document allowing the issuance of 3.3 million additional shares to Mark Zuckerberg, 2 million additional shares to Dustin Moskovitz, and 2 million additional shares to Sean Parker. Eduardo stared at the numbers, rapidly doing the calculations in his head. With all the new shares, his ownership of Facebook was no longer anywhere near 30%. If just the new shares had been issued to Mark, Sean, and Dustin, he was down to well below 10%. And if all the authorized new shares were issued, he'd be diluted down to almost nothing. They were deluding him out of the company.

The lawyers started to talk as Eduardo looked at the papers. Eduardo wondered what Mark would expect him to do. Or maybe Mark didn't think Eduardo was going to have any reaction at all. Maybe Mark believed that Eduardo had already left the company a long time ago, back in the fall, when he'd signed the papers that had made all this possible, or maybe even earlier than that, during the summer, after he'd frozen the bank accounts. Two different wavelengths, two different points of view. The lawyer droned on, explaining that the new shares were necessary, that there were interested VCs who would need them, that Eduardo's signature was a formality, that the shares had already been authorized anyway, and that it was good and necessary for the company, that it was a decision that had already been made. No! Eduardo heard his own voice reverberate through his head,

bounce off the glass walls, up the graffiti marked staircase, throughout the near empty office. No! He refused to sign away his ownership of Facebook. He refused to sign away his accomplishment. He had been there in the beginning. He had been in that dorm room. He was a founder of Facebook, and he deserved his 30%. He and Mark had an agreement. The lawyer's response was immediate. Eduardo was no longer a member of Facebook. He was no longer part of the management team, no longer an employee, no longer connected in any way. He would be expunged from the corporate history. To Mark Zuckerberg and Facebook, Eduardo Saverin no longer existed. Eduardo felt the walls closing in around him. He had to get out of there, back to Harvard, back to campus, back home. He could not believe what

he was hearing. He could not believe the betrayal, but he had no choice, he was told. The decision had been made, he was told, made by Mark Zuckerberg, the founder and CEO, and by the new president of Facebook. Eduardo had one more thought as the horrible news washed over him. Who the hell was the new president of Facebook? When he thought about it, he realized he already knew the answer.