The Accidental Billionaires

by Ben Mezrich

  People had dropped the the, were pretty much calling it Facebook all over campus. And even though it had only been a couple of weeks since they’d launched the site, it already felt like everyone was on it—because, well, everyone at Harvard was on it. According to Mark, they had now signed up five thousand members. Which meant that almost 85 percent of the university undergraduates had put up a Facebook profile.

  “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 point, then another kid whisper something to a friend. Then more pointing—but not at him, at Mark.

  Everyone knew Mark now. The Crimson had made sure of that—printing article after article about the Web site, three already in the past week. Quoting Mark about the Web site, even printing his picture. Nobody had interviewed Eduardo—and the truth was, he was happy about that. Mark wanted the attention; Eduardo just wanted the benefits that came with attention, not the attention itself. This was a business they’d created, and getting it out there was important, but Eduardo didn’t want to be a celebrity because of it.

  And it was beginning to look like becoming a celebrity was a real possibility. Though thefacebook had been up and running only for a short time, it was really changing life at Harvard. It was insinuating itself into everyone’s routine: you got up, you checked your Facebook account to see who had invited you to be their friend—and which of your invites had been accepted or rejected. Then you went about your business. When you got home, if there was a girl you saw in one of your classes—or even just somebody you’d met in the dining hall—you simply searched for her on Facebook, then invited her to be your friend. Maybe you added some little message about how you’d met, or what you saw in her listed interests that jibed with one of your own. Or maybe you just invited her cold, no message, just to see if she knew you existed. When she opened her account, she’d see your invite, look over your photo, and maybe accept your invitation.

  It was really such an amazing tool, lubricating the social scene—making everything happen so much faster. But it wasn’t a dating Web site—the way Eduardo saw Friendster. For all its hype as a social network, Friendster—and MySpace, which was just beginning to catch fire nationwide—was really just about searching through people you didn’t know and trying to hook up with them. The difference was, on Facebook you already knew the people you invited to be your friends. You might not know them well, but you knew them. They were classmates—or friends of friends, members of a “network” that you could join, or be asked to join, by people you knew who were already members.

  That was the genius of it all. Mark’s genius, really, but Eduardo felt he was a part of that as well. He’d put up the money for the servers—but he’d also had a hand in discussing some of the attributes of the site, the ideas behind some of the simplified structure.

  What neither he nor Mark had known when they started the damn thing was how addictive Facebook was. You didn’t just visit the site once. You visited it every day. You came back again and again, adding to your site, your profile, changing your pictures, your interests, and most of all, updating your friends. It really had moved a large portion of college life onto the Internet. And it really had changed Harvard’s social scene.

  But that didn’t make it a business yet—just a highly successful novelty. Eduardo had some ideas about that, and after the lecture, he and Mark were going back to Mark’s room to discuss them. The main thing he wanted to push Mark into understanding was that it was time to start chasing advertising dollars. That’s how they would monetize Facebook, through ads. Eduardo knew it was going to be a tough sell; Mark wanted to just keep it as a fun site, not try to make any money off of it yet. But then again, he was the kid who had turned down a million bucks in high school. Who knew if he’d ever want to monetize Facebook?

  Eduardo had a different worldview. Facebook was costing them money. Not much, just the cost of the servers, but as more people joined in, surely those costs would go up. The thousand dollars Eduardo had put into the Web site wasn’t going to last forever.

  Until the company had some sort of profit model, until they could figure out how to make money off of it—it was still just a novelty. Its value was certainly going up—but to turn that value into cash, they needed advertisers. They needed a business model. They needed to sit down and hash it all out. Most of all, Mark needed to let Eduardo do what he did best—think big.

  “Very nice to meet you,” Eduardo finally whispered back to the girls, who giggled again. The taller one—Kelly—leaned even closer, her lips almost touching his skin.

  “Facebook me when you get home. Maybe we can all go out for a drink later.”

  Eduardo felt his cheeks blush. He turned back to Mark, who was looking at him now. Mark had obviously noticed the girls, but he didn’t even try to talk to them. He raised his eyebrows for a second—then turned back toward Gates, his idol, and forgot all about them.

  It wasn’t until two hours later, when Eduardo and Mark were finally ensconced in the overheated warmth of Mark’s Kirkland dorm room—Eduardo absentmindedly picking through a stack of computer books that towered over the small color TV in the corner, while Mark lowered himself onto the ratty old couch in the center of the cheaply appointed common area, bare feet stretched out on the low coffee table in front of him—that Mark finally brought up the girls.

  “Those Asian chicks were pretty cute.”

  Eduardo nodded, turning one of the books over, trying to make sense of the cover, which was covered in equations he knew he’d never understand.

  “Yeah, and they want to meet us later tonight.”

  “That could be interesting.”

  “Could be—Mark, what the hell is this?”

  A piece of paper had slipped out from beneath the computer book and had landed, facing up, on Eduardo’s laced-up Italian leather shoes. Even from a stooped position, Eduardo could clearly make out the legal looking header and script; it was a letter, from some Connecticut law firm, and it looked really serious. It was addressed to Mark Zuckerberg, but from the first sentence alone Eduardo could see that it involved him, too. The words TheFacebook were hard to miss—as were the words damages and misappropriated:

  From: Cameron Winklevoss

  Sent: Tuesday, February 10, 2004 9:00 PM

  To: Mark Elliot Zuckerberg

  Subject: Important Notice

  Mark,

  It has come to our attention (Tyler, Divya and myself) that you have launched a website named TheFacebook.com. Prior to this launch, we had entered into an agreement with you under which you would help us develop our proprietary website (HarvardConnection) and do so in a timely manner (specifically noting that the window for launching our site was quickly closing).

  Over the last three months, in breach of our agreement, and to our material detriment in reliance on your misrepresentations, fraud and/or other actionable behavior, for which we assert that damages are payable, you stalled the development of our website, while you were developing your own website in unfair competition with ours, and without our knowledge or agreement. You have also misappropriated our work product, including our ideas, thoughts, concepts and research.

  At this time we have notified our counsel and are prepared to take action, based upon the above legal considerations.

  We are also prepared to petition the Harvard University Administrative Board regarding your breach of ethical standards of conduct, as stated in the Student Handbook. Please note that our petition will be based on your violation of the College’s expectations of honesty and forthrightness in your dealings with fellow students, your violation of the standard of high respect for the property and rights of others, and your lack of respect for the dignity of others. Misappropriation is also actionable under these ethical rules, as well as at law.

  We demand the following
in order to put a temporary stay to these actions, until we have fully evaluated your website and what actions we may take:

  Cease and desist all further expansion and updates of TheFacebook.com;

  State in writing to us that you have done so; and

  State in writing that you will not disclose to any third person our work product, our agreement, or this demand.

  These demands must be met no later than 5pm Wednesday, February 11th, 2004

  Notwithstanding your compliance with the above, we reserve the right to consider other action to further protect our rights and to recover damages against you. Your cooperation will prevent further violation of our rights and further damages.

  Any failure to meet these demands will lead us to consider immediate action on both legal and ethical fronts. If you have any questions you are welcome to email me back or set up a meeting.

  Cameron Winklevoss

  Hardcopy also sent via University Mail

  “I think they call it a cease-and-desist letter,” Mark mumbled, leaning back against the couch, hands behind his head. “What were the girls’ names? I liked the short one.”

  “When did you get it?” Eduardo said, ignoring Mark’s question. He felt blood rushing into his head. He reached down, picked up the letter, read it over quickly. It looked pretty intense. It was full of accusations—and at the bottom, in clear words, it spelled out who was making the accusations. Tyler and Cameron Winklevoss, on behalf of their Web site the Harvard Connection. They were accusing Mark of stealing their idea, their code—and demanding that he and Eduardo shut down thefacebook or face legal action.

  “A week ago. Right after we launched the site. They also sent an e-mail, a letter saying they were going to appeal to the school, too. That I had violated Harvard’s code of ethics.”

  Jesus Christ. Eduardo stared at Mark, but, as usual, couldn’t read anything from his blank expression. The Winklevosses were accusing Mark of stealing their idea? Their dating Web site? They wanted to shut thefacebook down?

  Could they even do that? Sure, Mark had met with them, had e-mailed with them, had led them on. But he hadn’t signed any contracts, and hadn’t written any code. And to Eduardo, thefacebook seemed so different. Well, it was also a social Web site—but there were dozens—if not hundreds—of social Web sites. Hell, every computer science major on campus had a social Web site under development. That Aaron Greenspan kid had even called part of his networking portal “the facebook,” or something like that. Did that mean they could all sue one another? Just for having similar ideas?

  “I talked to a three-one at the law school,” Mark said. “I sent a letter back. And another one to the school. Under that next book.”

  Eduardo reached for another computer book in the stack on the TV and found the second letter, this one written by Mark to the university. Eduardo skimmed it quickly, and was immediately surprised—and pleased—to see some real emotion in Mark’s response to the Winklevosses’ claims. Mark had told the university, in no uncertain terms, that thefacebook was not related to the tiny bit of work he’d done for the Winklevosses.

  Originally, I was intrigued by the project and was asked to finish the Connect side of the website… After this meeting, and not before, I began working on TheFacebook, using none of the same code nor functionality that is present in Harvard Connection. This was a separate venture, and did not draw on any of the ideas discussed in our meetings.”

  Furthermore, Mark felt he had been fooled by the initial meeting, that the twins had misrepresented what they wanted him to do:

  From the initiation of this project, I perceived it as a non-business oriented venture, with its primary purpose of developing an interested product to aid the Harvard community. I realized over time that my concept of the web site was not as it had initially been portrayed.

  And what’s more, Mark hadn’t really led them on at all:

  When we met in January, I expressed my doubts about the site (where it stood with graphics, how much programming was left that I had not anticipated, the lack of hardware we had to deal with, the lack of promotion that would go on to successfully launch the web site, etc.). I told you that I had other projects I was working on, and that those were higher priorities than finishing [your site].”

  Mark had concluded that he was appalled to find himself “threatened” by the twins because of a few meetings in the Kirkland dining hall and some e-mail conversations he’d had with Cameron, Tyler, and Divya. And that he saw their claims as an “annoyance,” something he was “shrugging off,” that it was the kind of unabashed moneygrubbing you had to expect when you made something successful.

  Which, of course, seemed a little over-the-top to Eduardo, considering that thefacebook wasn’t making anyone any money—and the Winklevosses were hardly hurting for cash. But it was good to see that Mark had stood up for himself.

  Eduardo calmed down a bit, placing Mark’s letter back on the stack of computer books, along with the cease-and-desist order. If Mark wasn’t scared, he wasn’t going to be either; after all, he hadn’t met with the twins, he wasn’t a computer coder, and he could only go by what Mark had told him about the differences between the two Web sites. The way Mark painted it, it was like one furniture maker trying to sue someone for designing a new kind of chair. There were thousands of different types of chairs, and making one didn’t give you the right to own them all.

  Maybe it was a simplified way of looking at the issue—but fuck it, they were college kids, not lawyers. The last thing they wanted to do was get into some bullshit legal battle. Over a Web site that was, perhaps, about to get them both laid.

  “Their names were Kelly and Alice—” Eduardo started, but before he could finish, the door to the dorm room opened, nearly hitting Eduardo in the back. Eduardo turned to see Mark’s two roommates enter, as disparate-looking a pair of college kids anyone could imagine.

  Dustin Moskovitz, in front, was baby-faced and dark-haired, with thick eyebrows and a very determined look in his equally dark eyes. He was quiet, kind of withdrawn, an economics major and a whiz with computers, also incredibly affable, a truly nice guy. Chris Hughes was the far more flamboyant of the two; shaggy blond hair, extroverted, outspoken, with traces of a Southern accent from his upbringing in Hickory, North Carolina. In high school, Chris had been president of the Young Democrats Society and could easily be described as an activist on a number of liberal issues. A bit of a fashionista, he gave Eduardo a run for the most presentable of the group; though where Eduardo chose conservative blazers and ties, Chris favored designer shirts and pants. Sometimes, Mark called him “Prada” because of the way he looked.

  The four of them, together—Mark, Eduardo, Dustin, and Chris—were certainly not what you’d call part of the social elite at Harvard. In fact, they’d probably be outsiders at any college, not just the home to Rockefellers and Roosevelts. They were all geeks, each in his own way. But they’d found one another—and something else.

  Mark started the conversation, because it was something he’d already decided—and Eduardo was rapidly realizing that that’s the way things worked, in Mark’s world. Thefacebook was growing fast, and Mark was having trouble keeping up with it all. He was in real danger of flunking some of his classes—and if he wanted to keep thefacebook growing, he was going to need help.

  Dustin could handle the computer stuff that Mark couldn’t do himself. And Chris was a talker—better than any of them, that was for sure—so he could take charge of the publicity and outreach. The Crimson had been a great friend so far; it turned out, Mark had done some IT work for the student paper during his freshman year, which explained all the glowing articles. But going forward, they were going to need to keep on top of the press, because so much of Facebook was about getting people excited, interested enough to log on.

  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 lev
el. And they were all going to have titles. Eduardo was going to be CFO. Dustin, vice president and head of programming. Chris, director of publicity. And Mark—founder, master and commander, and enemy of the state. Mark’s words, Mark’s sense of humor.

  Eduardo listened to it all, contemplating what it meant. He knew that things had been much simpler when it was just him and Mark; but he also knew that running a company meant employees, and they didn’t exactly have revenues coming in to pay for people’s help. So the only option was adding more partners. Mark’s roommates were smart, and trustworthy. They were geeks, just like him. And this was a dorm-room operation anyway.

  He agreed to the new leadership, and he also agreed to restructuring their ownership agreement. Dustin would get around 5 percent of the company, Chris would get a percentage that would be more fully worked out later on, when they figured out how much work he’d be doing. Mark would drop his ownership down to 65 percent. And Eduardo would own 30 percent. It seemed more than fair. And anyway, there wasn’t any money coming in yet, so why haggle over 30 percent of nothing?

  “First order of business,” Mark said, when that was settled. “I think it’s time we open thefacebook up to other schools. Expansion seems like the natural thing.”

  They’d conquered Harvard, it was time to see how much farther their model could go. They agreed to begin with just a few other elite schools. Yale, Columbia, and Stanford, to start. The site would stay exclusive—you’d have to have an e-mail address from one of those schools to join. Eventually, the community could get bigger, and they’d allow cross-college pollination. Facebook had to keep getting bigger.

  “But we also have to start talking to advertisers,” Eduardo chimed in, refusing to let the issue go. “We need to start monetizing this.”