Thefacebook’s early features were purposefully limited. You could map your connections to your fellow students, and originally, your connections were restricted to your own school. As Thefacebook started spreading to other colleges, you could eventually connect to outside friends only if you both mutually acknowledged your relationship. You could only post one photo: your profile picture. You could fill out a whole range of personal categories ranging from sex and relationship status to courses enrolled in, extracurricular activities, hobbies, favorite films and the like. There was a “status update” feature taken directly from AIM. And there was the ability to “poke” other users, which meant—well, no one was exactly sure. But it was college, so if you poked someone, it could mean whatever you wanted it to mean.
It’s important to see Thefacebook for what it was at this moment: a social directory. A cool little utility. Zuckerberg himself repeatedly described the project as a “social utility.” This was just another one of his hacks, but it happened to be one that had gotten the most traction. It was no different than Course Match or anything else he had done previously. In fact, had Facemash not been shut down by the authorities, perhaps Zuckerberg would have ridden that wave instead of this one. Maybe he would have enlisted his friends in building HotorNot-like sites for Stanford and for Yale and on and on. In fact, on his blog, right around the time he released Facemash, Zuckerberg had suggested exactly that: “Perhaps Harvard will squelch it [Facemash] 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 . . .).”15
Well, Harvard hadn’t squelched Thefacebook, and the boys in Kirkland House were going to take it as far as they could. But that required more money, of course. So, from very early on, Facebook had ads. That was Saverin’s main contribution to the project. He was indeed business savvy and he did have actual connections to advertisers. Saverin hooked Thefacebook up with Y2M, a company that sold ads for college newspaper websites. Cannily pitching Thefacebook as a new way to reach the coveted college demographic, Y2M began brokering ads on the site. One of the first advertisers was MasterCard. Unsure of Thefacebook’s viability as a marketing tool, MasterCard refused to pay up front, or even to pay for pageviews served. They were willing only to pay a flat fee if a user actually opened a new credit card account. Within a day of launching the ads on Thefacebook, there were twice the applications MasterCard had anticipated for the entire four-month campaign that had been planned.16
Saverin continued shaking the trees and landing deals like this, depositing the proceeds into the bank account he controlled. He and Zuckerberg both invested $10,000 more of their own money to serve as working capital. But almost from the first weeks, Saverin was also lining up meetings with financiers. At one meeting that June, an investor offered $10 million for the company, which was barely four months old. And at another meeting, in New York City in April, Saverin and Zuckerberg met Sean Parker (of Napster fame) for dinner. The famous line from The Social Network movie is “A million dollars isn’t cool, you know what’s cool? A billion dollars.” That’s just dialogue invented by the screenwriter, Aaron Sorkin, but what is true is that the dinner depicted in the movie really did take place (at Jean-Georges Vongerichten’s 66 restaurant in Tribeca) and Zuckerberg really was awed by Parker’s geek celebrity.
And that dinner does seem to have been a turning point in Thefacebook’s destiny. From twenty-year-old Mark Zuckerberg’s perspective, it felt like maybe he was sitting on some sort of web phenomenon. Perhaps he could be the next Shawn Fanning or Sean Parker. Napster, of course, was a cautionary tale, a tragic failure. But maybe Zuckerberg could do better. He wanted to give it the old college try. And that, he decided, meant leaving college (temporarily, at least) and heading out to California. Where the Internet happened. And so, when the spring 2004 semester wound down, he rented a house in Palo Alto and moved out for the summer, along with Dustin Moskovitz and three other Harvard friends/interns.
At that point, Thefacebook had launched at thirty-four schools and had 100,000 users.17
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WE’VE SEEN HOW the startup culture of modern Silicon Valley was created to serve the habits and metabolism of postcollege white males, especially (although in slightly different ways) in the examples of Netscape and Google. But the summer of 2004 that Thefacebook spent in a rented ranch house on a cul-de-sac at 819 La Jennifer Way has gone down in lore—at least in some circles—as the bro-tastic, edenic ideal of an Internet startup’s incubation. These weren’t college graduates, these were college sophomores. So: There was a swimming pool. There was a jury-rigged zipline that was strung from the chimney so that you could drop down from the roof into the pool. There was alcohol and marijuana at all hours. There were beer-pong tournaments. There were parties. These were the guys who were running the most popular college-based website in the world, after all, so when the boys wanted to throw a kegger, they just posted a notice on Thefacebook pages of nearby Stanford University. Hundreds of kids would show up. People passed out on the floor and slept where they landed. Friends and hangers-on would come and crash on the couch, sometimes staying for weeks. The whole house was littered with used soda cans and empty pizza boxes.
But amid all of this, on desks and in corners and sometimes out by the pool, there were kids hunched over their keyboards coding up one of the hottest websites in the world. It was a startup, but it was a startup in the hands of nineteen- and twenty-year-olds: just as much frat party as work. Zuckerberg himself usually didn’t start programming until the early afternoon, but the coding sessions could stretch on until dawn—in spite of whatever other activities were going on in the house. Even if there was loud music playing or a raucous party going on in the background, everyone working on Thefacebook tended to communicate over AIM anyway, even when they were sitting right next to each other. Noise was not an issue. Distraction was not a factor. All summer, at all hours, there was almost always somebody, head down, staring at lines of code on a computer screen.
“We were doing fourteen- or sixteen-hour days,” Moskovitz recalled later. They mostly worked in the kitchen on their personal computers and, in Moskovitz’s words, “hammered away.”18 The goal that summer was to prepare for classes to resume in the fall. The expectation was that, come September, Thefacebook would launch on seventy new campuses.19 There were new features to test, new servers to bring online. But at the same time, there was still a sense that this was all some elaborate (but “kind of” serious) lark. When a reporter from the Crimson stopped by to check in on these wayward Harvard boys, Zuckerberg described the operation this way: “Most businesses aren’t like a bunch of kids living in a house, doing whatever they want, not waking up at a normal time, not going into an office, hiring people by, like, bringing them into your house and letting them chill with you for a while and party with you and smoke with you.”20
It was just kids playing grown-up, seeing how far they could take things. Whether it was posturing or not, the official line was that they’d all be heading back to Harvard in the fall to continue their studies. “We like school and want to go back to school and at some point somebody’s gonna offer us a lot of money and we’ll probably take it, you know?” Zuckerberg told the Crimson.21 Until that happened, they were just living the Silicon Valley startup fantasy. Zuckerberg even seemed to be hedging his bets, concentrating a lot of his time on a Napster-like file-sharing program called Wirehog, which he intended to integrate into Thefacebook’s feature set so that users could trade MP3s, videos, files, what have you. It seems that, despite Thefacebook’s success, even Mark Zuckerberg wasn’t exactly sure that this social-networking thing was much more than that almost dismissive word he used to describe it: a utility.
And then into this scene came Sean Parker.
If there was anyone who was plugged into—who virtually embodied—the web’s zeitgeist, it was Sean Parker. What had fascinated him the most during his time at Napster were the social el
ements of the thing. The sharing. He wasn’t surprised when these trends resurfaced in Napster’s wake. After he was pushed out of Napster, he founded a new startup called Plaxo, which used people’s email and contact lists to, almost literally, put everyone’s Rolodex online where it would be searchable, shareable and constantly updated. It was a virtual white pages of everyone’s contact info. Parker was convinced that mapping digital identity was the next big thing. And in Thefacebook, he saw the purest expression of this idea so far.
Parker was the one who had initiated that New York dinner with Zuckerberg after watching Thefacebook take over Stanford’s campus, where his then-girlfriend was matriculating. Now that Thefacebook was, at least temporarily, carpetbagging in his Silicon Valley stomping grounds, when he and Zuckerberg crossed paths in Palo Alto (that same girlfriend lived down the street from Thefacebook house), Sean Parker jumped on board as Thefacebook’s most committed true believer.
In fact, he moved into the house.
Parker, like everyone else involved in Napster, had not made very much money when the company went belly-up. And even though Plaxo was enjoying some measure of success, Parker was, at that very moment, in the process of being pushed out of his latest startup as well. But now the issue was not careless emails. Now the whispered accusations were about partying, drugs, and generally erratic behavior. Whether those accusations were true, or whether they were just part of a smear campaign, as Parker claimed, when Parker moved into 819 La Jennifer Way, he was not only between gigs, he was quasi-homeless.
But Mark Zuckerberg continued to hold Parker in great esteem. Everyone in the house did. Parker was five years older, for one thing, so he was of age and could keep the house well stocked with alcohol. And he had a car. The boys from Thefacebook had simply been walking everywhere. Most important, Parker had already played an integral role in the launch of two major web startups. To Zuckerberg and Thefacebook team, he was basically a grizzled Silicon Valley veteran. As Zuckerberg spent the summer considering his options, and considering the possibilities for Thefacebook going forward, he increasingly turned to Sean Parker for counsel. “You trust people you can relate to; I could relate to Sean,” Zuckerberg would say later. “And I was impressed he had done something cool.”22
Zuckerberg would later say that he and Parker bounced so many different scenarios off each other that summer that he’s not sure, in retrospect, which ideas were Sean’s and which ideas were his. But if there was one idea Parker seemed hell-bent on drilling into Zuckerberg’s head, it was that Thefacebook was the thing. Zuck should just stick to his instincts and keep with the original game plan: build out Thefacebook school by school and see how big it could get.
“I’ve really got something here?” Zuckerberg asked one evening.
“Yeah, Zuck, you do,” Parker said.23
At Parker’s urging, Zuckerberg decided that Thefacebook shouldn’t just plan for the immediate future; it should plan for an exponential future. To prepare for the coming autumn and the anticipated influx of users, Thefacebook desperately needed new servers. Zuckerberg decreed that, rather than struggle to keep up, the site’s infrastructure should, from that point forward, be architected to anticipate ten times the number of users it was getting at any one moment. That would cost more money than Facebook was already generating. Zuckerberg and his family were forced to sink $85,000 into the company, mostly for buying new servers.24
The time had clearly come to land serious VC backing. But Zuckerberg and the others had listened in that summer as the humiliating legal process of Parker’s ouster by Plaxo’s investors played out to its sorry conclusion. The experience gave Zuckerberg a sobering education about what he might be in for (“VCs sound scary,” he remembers thinking).25 So, when it came time to shake the trees for money, Sean Parker made it his mission in life to make sure Thefacebook got a good deal.
Parker introduced Zuckerberg to LinkedIn’s founder Reid Hoffman, as well as Mark Pincus, a Web 2.0 entrepreneur who had founded another early social network, Tribe.net. Both made angel investments in Thefacebook. Parker also got Zuckerberg a meeting with the de facto head of the PayPal Mafia, Peter Thiel. Thiel gave Zuckerberg a $500,000 loan, which would convert into about 10% of the company’s equity. The terms were generous, and Parker was confident that Thiel was the sort of investor who would leave Zuckerberg alone to pursue his vision. The only instruction Thiel gave the twenty-year-old was: “Just don’t fuck it up.”26
Thiel did ask if the boys were still planning on returning to Harvard in the fall. Zuckerberg said yes.
“Okay,” Thiel said. “Sure you are.”27
By going the angel route and avoiding big-name venture capital firms, Parker ensured Zuckerberg maintained majority control of the company’s precious equity. Parker also reincorporated Thefacebook as a proper company, jettisoning the old LLC structure set up by Saverin, and further consolidated Zuckerberg’s control (Parker also gave himself a healthy chunk of equity and a seat on the company’s board of directors for his troubles). With this cash infusion, Thefacebook would have the funds necessary to meet the expected fall crush head-on. And Zuckerberg would control where the company went from there.
Which was a good thing, because Zuckerberg wasn’t going anywhere. It turned out that Peter Thiel had sized up the boys of Thefacebook correctly. When the summer ended and the crucial fall season approached, Moskovitz and some of the others agreed to take a semester off, stay in California, and see how things went with the major school expansion. The idea of returning to school seemingly faded into the background after that, never to be seriously considered again.
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IN THE FALL OF 2004, Thefacebook went gangbusters. Even though it was supposed to be a slow period, the user base had actually doubled over the summer, to 200,000.28 In September alone, that number doubled again as new schools were brought online.29 The site also rolled out two major new features. Each profile now had a “wall,” which was like a virtual corkboard outside a dorm room—a place where you or your friends could post messages and greetings. And now there were also ad hoc “groups” that you could join, for things like study sessions and campus causes, but really, anything under the sun.
On November 30, 2004, Thefacebook passed the million-user mark. It had been live for all of ten months.30
And yet, Zuckerberg still did not seem convinced that Thefacebook was his meal ticket. “What was so bizarre about the way Facebook was unfolding at that point,” Sean Parker has said, “is that Mark just didn’t totally believe in it and wanted to go and do all these other things.”31 The main “other thing” was Wirehog, which was taking up just as much of Zuckerberg’s time—if not more. There was also the continued sense of kids-playing-dress-up. Zuckerberg had business cards printed up that read: “I’m CEO . . . bitch!” It was probably a riff on the then-ubiquitous Rick James sketch from Chappelle’s Show, but as early Facebook employee Andrew “Boz” Bosworth has written, the card also spoke to “how unclear it was even in his own mind at the time that he would someday become such an important (and scrutinized) leader.”32
It was around this time that Zuckerberg infamously showed up late to a meeting with the venture firm Sequoia Capital, still dressed in pajamas and pitching from a PowerPoint presentation that included a slide with the title “The Top Ten Reasons You Should Not Invest.”33 This incident was a prank instigated by Parker, who had a grudge against Sequoia, blaming them for his exile from Plaxo. Any entrepreneur who was even halfway serious about his reputation in Silicon Valley would never be so openly contemptuous of one of the most successful VC firms in the tech universe. Zuckerberg later apologized for the stunt.
Three things conspired to turn Zuckerberg’s attitude around and get him to take Thefacebook seriously. First, Wirehog was a dud. After it was launched on Thefacebook in November of 2004, essentially nobody used it. So, Zuckerberg’s notion that social media was more important than social networking was proven wrong.34 The second factor was competition, pure and
simple. Just as Myspace and Thefacebook were arguably Friendster clones, there were now clones of Thefacebook as well. These copycat sites were opening social networks to target less prestigious schools, the state colleges and even the community colleges that Thefacebook was, up until that point, ignoring. To combat this competition, Zuckerberg accelerated the campus-by-campus rollout so that the clones couldn’t steal Thefacebook’s thunder. And then there was Myspace itself. The same month that Thefacebook hit 1 million users, Myspace hit 5 million.35 Zuckerberg was always contemptuous of Myspace, once telling a potential investor that the difference between Myspace and Facebook was the difference between a Los Angeles company and a Silicon Valley company. “We built this to last, and these guys [Myspace] don’t have a clue.”36 But then, in July of 2005, Myspace was acquired by News Corp for $580 million. At that point, Thefacebook had only a fraction of the users Myspace did, but if Myspace could command a valuation like that, then Thefacebook was clearly worth some fraction of a very big number.
But the main thing that affected Zuckerberg’s thinking was data. From the very first days, Zuckerberg was obsessed with watching how users actually used his site. While monitoring the behavior of his users, Zuckerberg was fascinated by the very real info his network could tease out, and how little tweaks he made to Facebook’s systems could affect user activity. He had inherited the Google guys’ obsession with algorithms. Zuckerberg ran some numbers and realized that, based on things like status updates and wall posts, he could predict with about 33% accuracy whether two members would be “in a relationship” within a week.37 In theory, he could also predict what movies would be popular, what songs would soon be hits, all from simple posting frequency. That was all pretty cool. But the numbers that really impressed him were those related to user engagement. Usage was off the charts. By the fall of 2005, fully 85% of American college students were members of Thefacebook and 60% returned to the site daily.38 Ninety percent logged in at least once a week.39 What product or service in any industry got used so obsessively? Parsing the server logs, Zuckerberg and the others could see user behavior that they termed “the trance.” Users would log on and then click and click and click and click, browsing people’s profiles for hours at a time. “Wanting to look people up is kind of a core human desire,” Zuckerberg said around this time. “People just want to know stuff about other people.”40 It was beginning to dawn on him how powerful harnessing that need-to-know was.
How the Internet Happened Page 31