The Accidental Billionaires

by Ben Mezrich

  In the end, Eduardo, after having calmed down a bit from his burst of anger back in July, had come to the conclusion that Mark was going to do things Mark’s way; and now that the summer was over and Eduardo was back in school, he was probably better off anyway. The important thing was that the company was thriving. With Thiel’s money, Eduardo wasn’t risking his own cash anymore; and really, Thiel was a bottomless pit, so there was no risk that the company wouldn’t be able to handle whatever was thrown its way.

  For Eduardo’s part, he was actually glad to be back at school. One of the great thrills of his senior year had been the first week; he’d heard, through friends at the Phoenix, that President Summers had announced to the entering freshmen that he had checked them all out on Facebook. It was a pretty incredible thought—that the president of Harvard was using their site to get to know the incoming class. Just ten months earlier, Mark and Eduardo had been two geeky nobodies, and now the president of Harvard was name-checking their creation.

  In light of that, did any of the squabbling between him and Mark really matter? When Mark had called and asked him to come out to California to sign some papers—basically, some new incorporation stuff, for the new restructure of the company now that Thiel was on board—Eduardo had shrugged, figuring it was all for the best.

  So, as one of the lawyers wandered across the central office and handed him a stack of legal papers, he took a deep breath, glanced at Mark again—then started reading through the legalese.

  From a first glance, it was pretty complicated stuff. Four documents in all, numbering many pages altogether. First, there were two common-stock purchase agreements—essentially, allowing him to “buy” stock in the newly reincorporated “Facebook,” instead of the now worthless “stock” he had in the old thefacebook. Second, there was an exchange agreement, for exchanging his old shares of thefacebook for new shares in the new company. And last, there was a holder voting agreement, something Eduardo didn’t entirely understand, but seemed like more legalese that was necessary for the new company to function.

  The lawyers did their best to explain the documents as Eduardo leafed through them. After the repurchases and the exchange, Eduardo would have a total of 1,328,334 shares of the new company. According to the lawyers—and Mark, who looked up a few times from his computer to help outline the new structure—Eduardo would thus have about 34.4 percent ownership of Facebook at the moment—the rise in his share percentage from the original 30 percent due to the necessity, in the future, of dilution as they hired more people and awarded other investors that would surely come along. Mark’s own percentage had gone down to about 51 percent, and Dustin now owned 6.81 percent of the company. Sean Parker had been given 6.47 percent—more than he deserved, in Eduardo’s mind—and Thiel had what worked out to around 7 percent.

  Included in the documents was a vesting schedule—Eduardo wouldn’t be able to sell his shares anytime soon, so really his ownership was still on paper—like Mark and Dustin and Sean, he assumed. Furthermore, there was also included a general release of any claims against Mark and the company; basically, if Eduardo signed the papers, he’d be saying that these new papers outlined his position at Facebook in its entirety—that everything that came before was simply history.

  Sitting there in the dormlike house, listening to the clack of Dustin and Mark’s fingers against the computer keys, Eduardo read through the papers again and again. Part of him knew that these papers were important—that they were legal documents, that signing them was a big step forward for the company—but he felt protected, first, because the lawyers were there—Facebook’s lawyers, which meant, in his mind, that they were his lawyers as well—and more important, because Mark, his friend, was there, Mark was telling him that these documents were necessary and good. Parker was somewhere else in the house—and now, legally, he’d be part of the team for good—but he had brought in investor money, and he was one of the smartest people in Silicon Valley.

  The important thing was, Eduardo would still have his percentage of the company. Sure, there would be dilution, but wouldn’t they all be diluted together? Did it matter that it was no longer thefacebook—wouldn’t he be in the same position with Facebook?

  He thought back to a few conversations he’d had with Mark recently—about school, about life, about what he should be doing in Cambridge while Mark was in California. There had been a bit of a miscommunication, in Eduardo’s mind—at some points, Mark seemed to be telling him that he didn’t need to work that hard for the company while he was in school, that they were going to hire salespeople, that he could step back—and Eduardo, for his part, had maintained that he still had the time to do what was necessary for Facebook.

  Well, these papers seemed to say—in Eduardo’s mind—that he was just as big a part of the company as he’d ever been. Things might change a bit going forward as more money came in, as more people were hired—but the papers were just a necessary restructuring.

  Weren’t they?

  In any event, Mark had also told him that there was going to be a party, something really cool, when the site reached a million members. Peter Thiel was going to throw it at his restaurant in San Francisco, and Eduardo would have to make the trip back out, because it was going to be well worth the flight.

  Thinking about that party, Eduardo had to smile. Just a necessary restructuring, some legal paperwork that had to be done. Everything was going to work out just fine. A million members. It was a crazy thought.

  He’d definitely come back out to California for that, he thought to himself as he reached for a pen from one of the lawyers and began signing the legal documents. After all, now he owned 34 percent of Facebook—he had reason to celebrate.

  Didn’t he?

  Eduardo’s eyes burned and his ears rang as he stumbled through the hip and pretty crowd, his head spinning from the music—a throbbing mix of techno, alternative, and rock—and the bright, multicolored lights that swirled across the domed ceiling high above: purples, yellows, oranges, circular patterns twisting and curving like galaxies going supernova, washing the entire restaurant in a truly psychedelic glow.

  The place was called Frisson and it was currently the hottest lounge in downtown San Francisco. The decor was somehow exceedingly modern and painfully retro at the same time—landing somewhere between the bridge of the starship Enterprise and a 1960s psychedelic drug trip. Eduardo’s head was really spinning by the time he’d gotten through the thick of the crowd, partly because of the fairly massive amount of alcohol he’d already consumed, but mostly because he was suffering from major culture shock, having just flown in once again from the staid, and frozen, Harvard campus.

  He paused a few yards from the DJ booth that was planted at the head of the circular dining area, and surveyed the crowd and the posh restaurant. He had to admit, the restaurant was a pretty good choice for Facebook’s Millionth Member Party—the shindig Mark had invited him to, set up to celebrate the millionth account activated on the Web site, just days earlier—and barely ten months from the time they’d launched the thing in Mark’s Kirkland dorm room. Frisson was modern, hip, and exclusive, just like Facebook. It also happened to be owned by Peter Thiel, who was paying for the party out of his own deep pocket.

  Eduardo watched the young, Northern California crowd bouncing to the music; it was almost an even mix of jeans and collared shirts and sleek black European-style duds. Overall, the party was very Silicon Valley, very hip San Francisco. And it was also very Facebook. Much of the room was college-aged, or close to it. Lots of Stanford kids and fresh graduates. Everyone was drinking colorful mixed drinks, and everyone seemed to be having a good time. Eduardo couldn’t help noticing the group of cute girls on the other side of the DJ booth. One of them seemed to smile at him, and he blushed, quickly looking away. Yeah, he was still pretty shy, despite everything that had changed in his life.

  The party had been going pretty well for him, too. Since he’d walked through the door, he’d been telli
ng everyone who would listen that he had cofounded Facebook along with Mark and Dustin. Sometimes the girls smiled and sometimes they just looked at him like he was crazy. It was a little strange—at Harvard, everyone kind of knew him, what he had done. Here, they were all looking at Mark—and only Mark.

  But that was okay, really. Eduardo didn’t mind being in the background, here in California. He hadn’t gotten into this for the fame. He didn’t really care if people knew he had been there in that dorm room, that he owned more than 30 percent of the company, that he was the person most responsible for those million members—other than Mark. He only cared that these people loved the site, and that it was turning into one of the biggest businesses in Internet history.

  He grinned sloppily at the thought, then shifted his eyes past the dance floor, to the lounge tables on the other side of the restaurant. Toward the back of the room, seated around a circular table, he could barely make out Mark and Sean and Peter, sitting together, deep in conversation. He knew that coincidentally, it happened to be Sean’s birthday—how old was the kid now, twenty-five? He considered heading over to them, but at the moment, he felt a bit more comfortable lost in the crowd, anonymous—alone. The culture shock, again; this place felt so far from Harvard Yard that he might as well have been on the starship Enterprise.

  He blinked, letting the swirl of lights wash through him.

  This place, this restaurant—it was so much to take in. It felt so completely foreign. It felt so—fast. He’d known it from the minute he’d gotten out of the cab in front of the place. Peter Thiel’s Ferrari Spyder was parked at the curb outside. Mark’s Infiniti—the one he’d been given when his own Craigslist car hadn’t been able to get him to that business meeting on time—was somewhere down the street. Maybe next to Parker’s BMW.

  Eduardo still lived in a dorm room. He walked to classes, through the now snow-covered Yard, lost in the cold shadows of Widener Library.

  Okay, he’d been wrong—things had changed pretty dramatically since the beginning of summer. But it was okay. It was a choice he had made. He had nobody to fault but himself. He could have moved out to California. He could have taken time off from school. Anyway, he was a senior, now, only five months to go before graduation. Then he could throw himself into Facebook like the rest, go right back to where he and Mark had started.

  For now, tonight, he was going to enjoy himself. He was going to have another drink. He was going to go talk to the pretty girl on the other side of the DJ booth. And then tomorrow, he was going to fly back to Cambridge and get back to his schoolwork. Mark had Facebook under control.

  He was pretty sure everything was going to be just fine.

  Seated at the circular table in the lounge beyond the dance floor, Sean Parker leaned back against a modern Deco chair, listening to Thiel and Mark go on about the new applications they were contemplating for Facebook. Better ways to allow college kids to find one another on the network. Enhancements to the already popular wall where kids could share info. Maybe even a future photo-sharing app—still maybe half a year away—that would rival anything anyone else had come up with. Innovation after innovation after innovation.

  Sean smiled to himself; everything was going exactly according to plan. Thiel and Mark were a great match, as he’d suspected.

  He took a deep breath, looking beyond his two partners and out into the crowd. Almost immediately he caught sight of Eduardo Saverin, talking to a cute Asian girl by the DJ. Eduardo looked as lanky and awkward as usual, hunched forward as he hit on the girl. She seemed to be smiling, which was good. Eduardo was happy, the girl was happy, everyone seemed happy.

  It had all gone so smoothly. Eduardo had signed the necessary legal papers, and had executed the restructuring agreements. Thiel had given them the money they needed to continue flying forward. Facebook had passed a million users, and they were adding tens of thousands more a week. Pretty soon, they’d be opening it up to more schools, more campuses. Eventually, maybe even high schools. And after that—who knows? Maybe Facebook would one day be open to everyone. The college format, the exclusivity—it had already worked its magic. People trusted Facebook. People loved Facebook. People were going to want to pay billions for Facebook.

  “And there it is. It’s official. Spring has come to New England.”

  Eduardo grinned as his buddy AJ pointed at the girl with the superbly toned legs strolling by the base of the stone library steps, her nose buried in an economics textbook, her flowing blond hair raining down around the wires of her ivory-white iPod.

  “Yep,” Eduardo responded. “The first short skirt of the season. It’s all downhill from here.”

  Eduardo didn’t think he’d ever get used to how long winter seemed to last at Harvard; just a week ago, the Yard was white with snow, these very steps covered in sheets of ice, the air so sharp and cold it hurt to take a breath. It had seemed like March didn’t even have a spot on the Harvard calendar—it was just February, February, and more goddamn February.

  But finally, finally, the snow was gone. The air smelled alive, the sky was bright and blue and pretty much cloudless, and the girls had started to rearrange their closets, putting the thick, ugly sweaters away and reaching for the skirts, the cute little tops, the open-toed shoes. Well, maybe the tops weren’t all that cute—it was Harvard, after all—but the skin was showing, and that was a damn good thing.

  Of course, it could change on a dime; tomorrow, those gray clouds could roll back in and the Yard could turn back into an inhospitable lunar landscape. But then again, tomorrow, Eduardo wouldn’t be in New England. He’d be back in California once more, because he’d been summoned from on high.

  AJ gave him a wave, then headed down the stone steps, on his way to a seminar on the other side of the Yard. Eduardo would follow in a few minutes—but he wasn’t in any rush. They were seniors, barely two months from graduation. They could be late to class. Hell, they could skip class entirely, it wouldn’t make any difference. As long as they passed the few exams they had left, they were pretty much on their way out of Harvard, with those golden diplomas that supposedly meant so much in the real world.

  The real world. Eduardo wasn’t even sure what that term meant anymore. It certainly wasn’t California, where Mark was still holed up, in yet another sublet in another leafy suburban town, furiously building Facebook ten thousand users at a time. And it wasn’t the new Facebook offices in Palo Alto that Mark had told him about, the ones they were putting the finishing touches on before the upcoming round of new hiring—the growth they’d talked about back in the fall, when they’d signed all the papers for the company restructure.

  The real world couldn’t have anything to do with Facebook, because the real world simply didn’t move that fast.

  One million members had suddenly become two, on its way to three. And the little Harvard-based Web site was now simply everywhere—on five hundred campuses, in every newspaper Eduardo saw at the newsstand, on every news show he happened to catch before or after classes. Everyone he knew was on Facebook. Even his dad had logged on, using his account, and had loved what he’d seen. Facebook wasn’t the real world—it was way bigger than that. It was a whole new universe, and Eduardo couldn’t help but be proud of what he and Mark had done.

  Even though, over the past two months, he’d had almost no significant interaction with the guys out in California—other than the odd phone call, the odd request for a contact from New York or a name from his research into potential advertisers. In fact, Eduardo had been so distant from Mark over the past couple of months, Eduardo’d had time to launch a whole separate Web site—something called Joboozle that aimed to be a sort of Facebook for jobs, where kids could go to search out potential employers, share résumés, network. Eduardo didn’t have any expectations that Joboozle would ever be anything close to Facebook, but it certainly had passed the time while he waited for Mark to get back in touch.

  And finally, Mark had gotten back in touch—an e-mail, just a coupl
e days ago, asking him to make the trip back out to Cali. Something about an important business meeting, and a new hire that Eduardo was supposed to help train.

  In the e-mail, Mark had also mentioned something that had caused Eduardo a little bit of concern. Recently, some big-name venture capital funds had been circling the company—Sequoia Capital, the biggest fund in Silicon Valley, run by Sean Parker’s old nemesis Michael Moritz, and Accel Partners, a very prestigious Palo Alto fund that had been active in the space over the past decade, and Mark had intimated in the e-mail that there was a chance they’d let one of the funds invest. Mark had also mentioned that Don Graham, the CEO of the Washington Post Company, was interested as well.

  Furthermore, Mark had noted, he and Sean Parker and Dustin were thinking about selling a little of their own stock if a deal went through—two million dollars apiece was the figure he gave in the e-mail.