The Accidental Billionaires

by Ben Mezrich

  Even so, if the twins persisted—and the legal letter seemed to indicate that they would—it was going to cost Mark upward of two hundred thousand dollars to defend himself. Which meant he needed to raise more money—fast. And since selling the company wasn’t an option—not in Sean or Mark’s mind, that was certain—they needed an angel investment to tide them over until they could reach a valuation that would make all these problems seem petty and insignificant. Sean only wished he had that sort of money—but the way things had worked out with Napster and Plaxo, Parker didn’t have anywhere close to what Mark would need to keep thefacebook afloat.

  So instead, Sean did what he did best; he made a connection—one that he was pretty sure was going to be the key to what had to happen next, to make thefacebook into what he knew it could be.

  Watching the numbers sprinting upward as the elevator brought them closer and closer to their goal—Sean knew that once again he’d done exactly the right thing. All Mark had to do was ace the meeting—and they were on their way.

  He threw another sideways glance at the boy wonder—and again, got nothing in return. He reminded himself that Mark’s silence didn’t mean anything. The kid would be able to perform when the time came. All Sean needed from him was fifteen minutes.

  “You know they filmed Towering Inferno here, right?” Sean said, trying to keep the mood in the elevator light and easy. He thought he saw the slightest sliver of a smile on Mark’s lips.

  “That’s comforting,” Mark robotically responded. Sean was pretty sure he was being ironic, and he allowed himself that grin he’d been fighting.

  It really was a fitting place for the meeting—not because of the movie, but because it was one of the most impressive landmarks in the city. Formerly the Bank of America Center, the behemoth at 555 California Street was an architectural wonder, an enormous, polished granite tower with thousands of bay windows that could be seen for miles, a 750-foot spire rising right out of the epicenter of the city’s financial district.

  And the man they were on their way to meet—well, he was nearly as impressive as the building itself, both in personal reputation and in what he had already achieved.

  “Peter’s going to love you,” Sean responded. “Fifteen minutes, in and out, that’s all it’s going to take.”

  Deep down, he was certain that he was right. Peter Thiel—the founding force behind the incredibly successful company PayPal, head of the multibillion-dollar venture fund Clarium Capital, former chess master, and one of the richest men in the country—was intimidating, fast-talking, and a true genius—but he was also exactly the sort of angel investor who had the guts and the foresight to understand how important—how groundbreaking—thefacebook had the potential to be. Because Thiel, like Sean Parker and Mark Zuckerberg, was more than just an entrepreneur: he saw himself as a revolutionary.

  A former lawyer from Stanford, Thiel was a well-known libertarian; during law school, he’d founded the Stanford Review, and he was a firm believer in the value of the free exchange of information that thefacebook celebrated within its social networks. Though secretive and incredibly competitive, Thiel was always searching for the next big thing—and Sean knew that he shared his own interest in the social networking space.

  Sean had never worked directly with Thiel before, but he’d been involved in getting Thiel invested minorly in Friendster, and he’d always kept the former PayPal CEO in the back of his mind, in case another opportunity ever arose.

  The opportunity had arisen—and was still rising, floor by floor, toward Thiel’s glass-and-chrome office, where Thiel—along with Reid Hoffman, his colleague from PayPal and also the CEO and cofounder of LinkedIn, as well as Matt Kohler, a brilliant engineer and rising Valley star—were waiting to hear the pitch from the quirky kid who’d lately been taking the Internet world by storm.

  If Thiel liked what he heard—well, Sean could think of no better way to put it: the revolution that was thefacebook would truly, and earnestly, begin.

  Five hundred thousand dollars.

  Three hours later, the number reverberated through Sean’s skull as he stood in near silence in the rapidly descending elevator next to Mark, watching those same glowing numbers count back down as they hurtled back toward the lobby of the great, granite building at 555 California.

  Five hundred thousand dollars.

  In the general scheme of things, of course, it wasn’t a huge number. It wasn’t life-changing money, it wasn’t empire-making money, it wasn’t fuck-you money—it wasn’t even as much money as Mark had once turned down, back in high school, when he’d created that MP3 player add-on, simply because he didn’t really give a damn about money, whether it was a thousand dollars borrowed from a friend to start a company, or a million dollars thrown his way from an even bigger company. As far as Sean could tell, Mark still didn’t really give a damn about money; but he couldn’t ignore the sentiment that came with those five hundred thousand dollars, the promise of a future for the company that he’d started in that Harvard dorm room.

  Peter Thiel had been exactly everything that Sean had prepared Mark for. Scary as hell, brilliant as hell—and willing to play ball. More than that, he’d turned a fifteen-minute pitch meeting into a lunch and an afternoon spent going over the details—of the deal that would ensure thefacebook’s survival, once and for all. At one point, Sean and Mark had even been sent out of the meeting, to walk around town while Thiel and Hoffman and Kohler discussed their pitch—but by the end of the afternoon, Thiel had given them the great news: thefacebook was on its way.

  Or, as the company was now going to be called—just “Facebook.” Sean’s idea, because he’d been so damn annoyed by that the in the Web site’s name, he’d finally gone and gotten Mark to slice it right off in the reorganization that was now an inevitability, a necessary step in getting that five-hundred-thousand-dollar “angel” investment that was going to save all their necks.

  Seed money, Thiel had called it. Enough to get them through the next few months—and along with it, a promise of more when the time came, when the need arose. In exchange, Thiel was going to get about 7 percent of the newly formed company, and a seat on the five-man board of directors that would lead the company going forward. Mark would still control the majority of the seats, and thus the company itself. He’d also keep the lion’s share of the company’s stock, even in its new iteration. But Thiel would become a guiding force, leading them forward along with Sean and Mark. It simply didn’t get any better than that.

  Standing there in that elevator, listening to the Muzak—some Rolling Stones bastardization that made Sean want to vomit on the inside—it was an overwhelming moment. Still, Sean knew that there was work to be done; he knew that this re-formation of the company was going to create a pretty intense situation.

  Reincorporating was necessary, both Thiel and he had agreed. Facebook had to become a new entity, shedding 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’d been working as a partner to Mark since he’d moved into the house anyway—and Dustin and Chris.

  Which left the question of Eduardo. Initially, Mark had decided, and Sean had agreed, Eduardo would still get his 30 percent. 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 th
e 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 diluted.

  From Sean’s point of view, Eduardo had done a horrible thing; he’d threatened the very company during its most fragile stage. Mark didn’t seem to hate Eduardo for it—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 even 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 on 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’d had that internship, even though he’d quit in the first week.

  Eduardo would go back to school. But Mark Zuckerberg had found his place in the world.

  Sean watched the numbers descending, the excitement finally starting to die down inside him. He forced his pulse to return to a steady beat, like the steady bytes and bits of a processing computer hard drive.

  He knew that there were still obstacles ahead. So much work still to be done.

  First and foremost, Mark would probably have to get Eduardo to agree to the legal details—just to make things cleaner, from a lawyer’s point of view. As harsh as it sounded, from a practical point of view, Eduardo should understand. This wasn’t a personal issue, it was business. And Eduardo saw himself first and foremost as a businessman.

  Sean and Peter were successful entrepreneurs, and they had explained to Mark how all this worked. Start-up companies like Facebook really had two distinct starting points. There was the first starting point: some kids in a dorm room, hacking around on a computer. Then there was the second starting point: here, in a skyscraper in downtown San Francisco.

  If you were there in the dorm room, you had an exciting and wonderful story to tell. You got to be part of something really cool, that spark of genius, that flame bursting up out of nowhere, that lightning bolt of imagination.

  If you were there in the skyscraper—well, that was something very different. That was the real beginning of the Company with a capital C. That was the real business, the corporation—the second lightning bolt, that really took you straight up into the heavens.

  Really, it was something Eduardo should understand. It wasn’t about two kids in a dorm room anymore.

  And if he didn’t get it? If he didn’t understand? If he didn’t want to understand?

  Well, in many ways, if Eduardo didn’t get it—then in Sean’s opinion, he didn’t really care about Facebook the same way they did. Then he was no better than the Winklevoss twins, trying to grasp onto Mark’s ankles as he headed toward the heavens.

  Either way, Mark had to know he was making the right decision for the company. Sean and Thiel had made it clear; no investor was going to hand them money with some kid running around New York, claiming to be the head of the business side of the company, flaunting some “30 percent” ownership status, holding it over them like a saber, ready to chop off their heads.

  Freezing their bank account.

  Threatening them.

  Threatening Facebook.

  That’s what it all came down to—Facebook. The company. The revolution. Sean could tell, that’s all Mark cared about now. He knew he was on top of something huge. This Mark Zuckerberg production was going to change the world. Like Napster, but bigger—Facebook was all about freedom of information. A truly digital social network. Putting the real world onto the Internet.

  Eduardo would have to understand. And if he didn’t?

  Then, in the larger scheme of things, he didn’t matter. He didn’t exist.

  Standing there in the elevator, Sean thought about the last thing Peter Thiel had said to Mark after making the deal that would take the company to the next level. Right after telling Mark that when they got to three million Facebook members, he could take Thiel’s 360 Ferrari Spyder out for a drive. Right after filling out the paperwork that would enable Mark to draw on that five hundred thousand dollars in seed money—to build Facebook however he wanted, as big as he could dream.

  Thiel had leaned forward over his desk, and looked Mark right in the eyes.

  “Just don’t fuck it up.”

  Sean grinned as he stared at the glowing numbers above the elevator doors.

  Thiel had nothing to worry about. Sean knew his new friend. Mark Zuckerberg wasn’t going to let anyone fuck Facebook up. He was going to lead this revolution—no matter what the cost.

  If Eduardo had squinted real hard, maybe spun himself around a little, he could have been right back in Mark’s messy dorm room in Kirkland House, watching his friend plug away at his laptop. Even the furniture in the open, central office of the new rental “casa Facebook” in Los Altos, California, looked like it had been shipped in from Harvard—scuffed wooden chairs, futons, worn desks and couches that seemed a dorm-room-chic mix of IKEA and the Salvation Army. Out back, the porch was speckled with paintball shots, and there were cardboard boxes everywhere, making it seem like they were a team of squatters more than a start-up operation in full swing. Of course, there were computers everywhere—on the desks, on the floor, on the counters next to boxes of cereal and bags of potato chips—but even with all the hardware, the house had the feel of a college dorm—which was exactly what Mark and the rest had been going for. Even though they were now working round the clock—at that very minute, Mark and Dustin were behind computer screens, plugging away, while two young men in suits—lawyers, Eduardo knew, from the firm the company had contracted to handle the new incorporation contracts, among other things—shuffled around by the door that led to the kitchen—they did not want to lose the college feel of the company, because it would always be, at its heart, a college experiment gone viral.

  And despite the somewhat choreographed chaos, this five-bedroom house was still more suited for Mark and the gang than the previous one in suburban Palo Alto—not that the move had entirely been Mark’s choice. After a series of complaint letters and visits from the landlord, they’d been pretty much kicked out of the La Jennifer Way sublet for, among other things, climbing on the roof, playing music too loud, throwing patio furniture into the pool, and damaging the chimney with the zip line. Eduardo had a pretty good feeling that they wouldn’t be getting the security deposit back anytime soon.

  Which was okay, now, because Facebook had its own financing in place; an angel investment from Peter Thiel, which was paying for this new house, all this computer equipment, more servers than Eduardo had imagined they’d ever need—and the lawyers, who had greeted Eduardo with smiles and handshakes when he’d entered the house after the long flight and taxi ride that had brought him in from Cambridge that very morning.

  Eduardo had slept most of the trip; eight weeks into the new school year—his senior year—and he was already exhausted. Even though he was taking a bit of a reduced class load so that he could continue his work on Facebook, there was always so much to do at Harvard—from the thesis he was already working on for his major, to the Investment Association, which he was still a part of, and of course the Phoenix, which kept his weekends f
illed—especially since he was single after having broken up with Kelly. And now that it was the beginning of another punch season, it was his turn to help pick the new crop of campus social kings.

  On top of all that, of course, there was Facebook.

  Eduardo leaned back in his chair, which was positioned to the side of a round table that took up most of the center of the main office in the house, and watched Mark as he worked away at his laptop computer. The glow of the screen splashed across Mark’s pallid cheeks, tiny sequences of code reflecting across the bluish globes of his eyes. Mark had barely greeted him when he’d first come into the house—really, just a nod and a word or two—but that wasn’t unusual, nor did Eduardo read anything into it. Actually, things had been going quite well between them over the past eight weeks, since he’d been back at school.

  The rocky few weeks of summer seemed almost forgotten, now; Mark had been pretty pissed off about the bank account situation, and he’d gone right ahead with the investor meetings that had led to the financing from Thiel, despite Eduardo’s wishes. They’d had it out on the phone a number of times—arguing like any two friends might, who were involved in something that had gotten bigger than either of them had really expected—but they’d come to a sort of détente, finally agreeing that the important thing was the company, that it continued moving forward in a smooth fashion. Eduardo had probably overreacted with the bank account, and Mark had been a bit distant and selfish by keeping Eduardo out of the loop—but Eduardo was willing to be reasonable and move forward, for the good of the company. This was business, and they were friends; they would find a way to work things out.

  To that end, Mark had asked that Eduardo step back a little—to ease his own concerns, and also so that Eduardo could focus on finishing up school. He’d convinced Eduardo that the company was getting too big for one person to try to control all the business side of things, that it was simply impossible what he’d been demanding. As things continued to grow—they were closing in on 750,000 users now, heading toward a million!—Mark and Dustin were taking time off from college, maybe a semester, probably not longer—and they were also planning on hiring a sales executive to pick up the slack, handle some of the things Eduardo had been working on in New York. They were also rapidly adding functions to the site—some of them quite incredible. They’d created something called a “wall,” where people could communicate with one another in a very open format that hadn’t really been seen before on any social network. And there were now groups available for people to join and create—an idea Eduardo had talked about with Mark back when they were first coming up with the site. The pace of invention was just incredible, almost mimicking the viral growth of the user base.