Edited by- Aruna Nidamarthy
‘Facebook’ the most harmless looking website, which has 2 billion active monthly users, which created billionaires overnight, which connects people in the modern world like nobody else, has the most incredible story ever. But, this story is not just about the ‘Big American Dream’ but it is about what went behind the scenes of founding - of what I call the most harmless looking website. The founding spiraled into two million-dollar lawsuits, a 200 million-dollar Hollywood film & a truck load of speculative media.
‘thefacebook.com’ was launched in 2004 by two Harvard students, one we know and love & another ‘Eduardo Saverin’ - who was booted out of his own company. Just one week after the founding, the Winklevoss twins & Divya Narendra accused Mark Zuckerberg of idea theft. This further spiraled into a lawsuit, then a deposition case and finally settled in an out of court settlement where Facebook ended up paying 65 million dollars to the Winklevoss twins along with an undisclosed share in Facebook. In the deposition transcript, the Winklevoss twins accused Mark Zuckerberg of developing Facebook while working on their idea ‘ConnectU’ which was arguably quite similar to Facebook. A fact that cannot be ignored here is that, Mark has had his fair share of hacking into official systems, intruding personal privacy, etc. before founding Facebook. Mark, in his defence, stated in the deposition that, he didn’t use any of the codes of ‘ConnectU’ to build Facebook. So the important question is can a ‘dorm room talk be considered an agreement in legal terms ?’
‘Twice is fun isn’t it’, so here is the second lawsuit. So forget everything you know.
‘Mark Zuckerberg boots Eduardo Saverin out of Facebook’
Jan 8, 2004
Message conversation between Mark & his friend
Zuckerberg: Eduardo is paying for my servers.
Friend: A sucker born every day.
Zuckerberg : Nah, he thinks it will make money.
Friend: What do you think?
Zuckerberg: Well I don't know business stuff
Zuckerberg: I'm content to make something cool.
So far so good, now the tables turn and how ?
Eduardo wanted to monetize Facebook and cash in on its popularity. Due to Mark’s reservations about the same, Eduardo ran unauthorised ads of his startup ‘Joboozle’.
Mark’s mail to Eduardo after the incident -
You developed Joboozle knowing that at some point Facebook would probably want to do something with jobs. This was pretty surprising to us, because you basically made something on the side that will end up competing with Facebook and that's pretty bad by itself. But putting ads up on Facebook to advertise it, especially for free, is just mean.
With Peter Thiel on the side offering funding to Facebook for its operations and Eduardo not signing the papers. Mark decided to do what he did along with Sean Parker (Founder of Napster) who joined Facebook recently and arranged for funding.
Confidant: How are you going to get around Eduardo?
Zuckerberg: I'm going to buy the LLC
Zuckerberg: And then give him less shares in the company that bought it
Confidant: I'm not sure it's worth a potential lawsuit just to redistribute shares. You have nothing to gain.
Zuckerberg: No, I do because until I do this I need to run everything by Eduardo. After this I have control
Mark’s lawyer warns of the consequences in the following mail.
"As Eduardo is the only shareholder being diluted by the grants issuances there is substantial risk that he may claim the issuances, especially the ones to Dustin and Mark, but also to Sean, are a breach of fiduciary duty later on if not now. "
As expected, it all ended with Eduardo filing a lawsuit and getting an undisclosed amount and share in Facebook. But the question still lingers what is the truth?
So this was the story, as I repeat again, of the - “Most harmless looking website in the world”.