Zuckerberg hated doing interviews and talking in public, but he gave the Stanford Daily a lot of time. “I know it sounds corny, but I’d love to improve people’s lives, especially socially,” he told the paper. He also said that since the site was still only costing him eighty-five dollars per month, he didn’t feel any business imperative: “In the future we may sell ads to get the money back, but since providing the service is so cheap, we may choose to not do that for a while.”
He didn’t want to do many interviews like that in the future. The newspaper at every new school seemed to want to talk to him, and the guys were planning to add a lot of colleges. So shortly thereafter, Zuckerberg recruited yet another likely prospect, his own roommate, Chris Hughes. Hughes became Thefacebook’s official spokesman. The company’s founding quartet was complete. Thefacebook had 10,000 active users. It had been operational for one month.
As Thefacebook grew at Harvard, Zuckerberg continued to disavow any serious business motivation. But once he began extending it to other schools, he started showing strategic instincts that would befit a CEO, as well as a steely willingness to confront competition. The reason he decided to expand first to Columbia, Stanford, and Yale, he says now, is that those three schools each already had its own homegrown social networks. It was a sort of market test—putting his product up against the best competition that was out there. “If TheFacebook still took off at those schools and displaced those [other networks] then I would know it would go really well at all the other ones,” he explains.
At Stanford, Thefacebook took off like a rocket. A school-specific social network there called Club Nexus had already mostly flamed out. When students saw Thefacebook, it felt to many like exactly what they’d been waiting for. “It wasn’t something that had to be explained,” says a 2005 graduate.
But at Columbia, a student named Adam Goldberg had launched a commercial site called CUCommunity a month before Zuckerberg created Thefacebook. By the time Thefacebook came to Columbia four weeks later, 1,900 of the school’s 6,700 undergraduates were active on CUCommunity. It would be several months before Thefacebook overtook it. CUCommunity also soon started expanding to other schools. At Yale, the student-run College Council had launched a dating website and online facebook called YaleStation on February 12. Though it had fewer features than Thefacebook, it was experiencing a similar stratospheric uptake—by the end of the month about two-thirds of undergraduates had registered.
But Zuckerberg was convinced that his service had legs, so he decided to extend it further into the Ivy League—launching at both Dartmouth and Cornell on Sunday, March 7. At Dartmouth, a friend of Zuckerberg’s from Exeter was chair of the Student Assembly’s Student Services Committee. Like student governments at Harvard, Penn, Yale, and other schools, it had been lobbying to put the campus facebook online. The friend agreed to promote Thefacebook using the assembly’s email system to all students. That message went out at 10 P.M. By the following evening, 1,700 of Dartmouth’s 4,000 undergraduates were users. The speed of adoption got Zuckerberg so excited he agreed again to talk to the college newspaper, the Dartmouth. “It blows my mind that people have actually used the site,” he told the paper. “I’m all about people expressing, and however people see fit to use the site, that’s cool.” Zuckerberg had also gotten help at Stanford, where a childhood friend from Dobbs Ferry provided him with a password to get into the Stanford network as well as a list of student email addresses and dormitories.
Pretty quickly, though, it was more about fending off interest than stimulating it. Emails started to arrive from around the country, begging Zuckerberg and crew to bring Thefacebook to other schools. Within weeks the four Harvard sophomores—all still carrying a full course load—had launched their service at MIT, University of Pennsylvania, Princeton, Brown, and Boston University. By mid-March the total user number hit 20,000. Yet another high school classmate of Zuckerberg’s at Exeter entered the picture. This time it was Adam D’Angelo, Exeter’s other programming whiz, Zuckerberg’s summer roommate, and co-author of music recommendation program Synapse. From his dorm at Caltech, D’Angelo helped Moskovitz do programming to add new schools. The Ivy League and similar schools were the first to launch largely because that’s where the real-world social networks of users at Harvard could be found—mostly friends from high school. Thefacebook had an elite edge.
Up until now, it had been designed so that within each school, users could see one another’s profiles unless they chose not to. You could deliberately ratchet up your privacy settings, but most students didn’t. Any user from Harvard, for example, could see most Harvard students’ profiles. That was the default. Harvard students could not, however, see profiles of students at Stanford. But for Thefacebook to continue to grow, it would need cross-campus linking, and there was a growing chorus of complaints that it wasn’t possible. So Zuckerberg and Moskovitz decided that such links could be created by the mutual agreement of both people. This became the template for how Facebook connections are established to this day.
As costs mounted, Zuckerberg mused to the Crimson, which had taken to idolizing him, that “it might be nice in the future to get some ads going.” By the end of March, with the active-user number surpassing 30,000, Thefacebook was paying $450 per month for five servers from Manage.com. Zuckerberg and Saverin each agreed to invest another $10,000 into the company. Meanwhile, Saverin had begun selling a little advertising and had secured a few small contracts with companies that sold moving services, T-shirts, and other products to college students. These ads began to appear in April.
It was harder and harder simply to keep Thefacebook operating smoothly. Thousands of users could be online at once, straining the servers. Zuckerberg and Moskovitz tried to delay adding new schools until they had worked out kinks for the users they already had. “Our growth to other colleges was always constrained by our server capacity,” recalls Moskovitz. “We simply could not scale the architecture fast enough.” Luckily they could hold off on new schools until they resolved the kinks. The two programmers were continually re-architecting how the site operated and working to make it more efficient. Moskovitz was trying to pick up as much as he could from the more experienced Zuckerberg, and from D’Angelo, twenty-five hundred miles away at Caltech.
Zuckerberg now marvels with gratitude when he recalls Moskovitz’s dedication in those days. “Dustin took the competition so seriously,” he says. “I’d be like ‘Hey, I heard through the grapevine that this other service is thinking of launching at this college.’ He’d be ‘Really? No way!’ And that paper he was supposed to be doing he’d just like scrap it and go and launch at that school. He was just a workaholic and a machine. Early on I viewed it as a project. I wasn’t super-invested in it because it wasn’t clear to me it was going to be this huge thing. I was like ‘Yeah, this is pretty neat. It’s not the end-all be-all, but it’s cool. And I have these other classes.’ But Dustin joined and really helped scale it.”
The boys were using free open-source software like the MySQL database and Apache Web server tools, which made the entire undertaking affordable. But while the software might have been free, it was not simple to operate. Zuckerberg was a more practiced programmer than Moskovitz, but he had never operated these kinds of programs before. He was learning by the day, even as he studied for four courses, including a demanding one in computer science. But so popular was Thefacebook that by the end of the semester, each time they added a new school its students signed up almost en masse.
Zuckerberg had a burning desire to try new things, but his ability to create a fast-growing website in his spare time had a lot to do with where he was situated. “Having genius and ambition alone isn’t going to get you there. It’s really important to be lucky,” says Moskovitz. “But Mark had all three in spades, including luck. He just fell into the right situations a lot, and had extremely good timing. And when he saw a good idea he wanted to pursue it, whereas another person might have felt he needed to finish school first
.”
Facebook’s ultimate success owes a lot to the fact that it began at college. That’s where people’s social networks are densest and where they generally socialize more vigorously than at any other time in their lives. Moskovitz actually studied this question during that fateful spring semester. He wrote a paper for a statistics class using data from Thefacebook. It demonstrated that, as he describes it, “any individual student is within two degrees of everybody else on a given campus.” On average, students are separated from each other by no more than one intermediary relationship. “That’s why Thefacebook grew so well in college,” explains Moskovitz. He got an A in the statistics class, which wasn’t bad considering that the majority of his time that semester was spent working on the site. “And I got a bunch of sweet-ass bonus points for the data set,” Moskovitz remembers with relish.
Harvard offered Zuckerberg unique resources for developing his business. “At Harvard people were starting up websites pretty frequently,” says Moskovitz. “Even an impressive hedge fund—people were doing that as undergrads. So it wasn’t that crazy to say ‘my roommate happens to like to do these big consumer websites.’” Several others, like the Winkelvoss/Narendra team, were even working on social networks.
And the sheer talent that existed among Zuckerberg’s roommates was extraordinary. There aren’t many schools where he could find someone as talented as Moskovitz in the bedroom on the other side of the wall. The two hadn’t met until move-in day at the beginning of the year, but Zuckerberg found in his suite-mate not only a hardworking programmer but an intellectual and leader who would effectively serve as Facebook’s chief technology officer for years. Likewise, Chris Hughes, his own roommate, was so articulate and polished that he served as Facebook’s spokesman. Later Hughes played an important role in the 2008 presidential campaign of Barack Obama.
Then of course there’s the allure of something that began in the most exclusive halls of all academia. Harvard confers an imprimatur that carries unique weight in any field. A Harvard connection makes a product less suspect. To join a social network that began at Harvard might seem perfectly natural to anyone with a high opinion of himself. That was an important early dynamic.
It also didn’t hurt that Harvard students are preternaturally status-conscious. The service served as a validation of the scale of your social ambitions even as it measured your success. Sam Lessin, a Zuckerberg friend and classmate who was an early user, says, “There is incredible latent social competition at Harvard which I think really helped Facebook in the early days.” If people were going to maintain their profile and social networks online, then the kind of natural elitists who attend Harvard had no compunction attempting to construct the best and largest of them. Back in that Crimson opinion piece written when Thefacebook was less than two weeks old, Amelia Lester nailed it: “There’s little wonder why Harvard students, in particular, find the opportunity to fashion an online persona such a tantalizing prospect. Most of us spent our high school careers building resumes so padded they’d hold their own in a sumo match, an experience which culminated in the college application.…Most of all [Thefacebook] is about performing…and letting the world know why we’re important individuals. In short, it’s what Harvard students do best.”
But some proffer a darker narrative for how and why Zuckerberg got Thefacebook started at Harvard. By these accounts, Zuckerberg is a thief, and Thefacebook was the idea of other Harvard students. The most serious accusation is one made by Cameron and Tyler Winkelvoss and Divya Narendra. The trio say Zuckerberg stole numerous ideas from their plan for Harvard Connection after they hired him to program it. After a month or two of work, Zuckerberg concluded that their plan was unlikely to succeed. Shortly thereafter he began work on Thefacebook. This disagreement would become an expensive problem for Zuckerberg’s nascent company.
In mid-April 2004, over two months after the site had gone live, business manager Saverin, now calling himself the company’s chief financial officer, took steps to formalize Thefacebook as a business. He set up a limited-liability company in Florida, where he had attended high school. The partners listed were Zuckerberg, Moskovitz, and Saverin.
Though revenues for Thefacebook were nonexistent in its first weeks, by mid-February Zuckerberg had already begun fielding calls from people interested in investing. They’d heard about the extraordinary growth of this new site and wanted to get a piece. At the end of the semester, classmate Lessin, whose father was a well-known investor, took Zuckerberg around New York to meet with venture capitalists and executives in the finance and media industries.
At one of those meetings in June, a financier offered Zuckerberg $10 million for the company. Mark had just turned twenty. Thefacebook was four months old. He didn’t for a minute think seriously about accepting.
2
Palo Alto
“Founder, Master, and Commander, Enemy of the State.”
As the Spring 2004 Harvard semester wound down, things at Thefacebook just got busier. By the end of May it was operating at thirty-four schools and had almost 100,000 users.
In June 2004, business manager Saverin opened a bank account and deposited more than $10,000 of his own money as working capital and also began depositing advertising revenues there.
A month or so earlier, Saverin had gotten in touch with a firm called Y2M. Y2M sold ads for college newspaper websites and Saverin invited them to come talk about selling ads for Thefacebook. The meeting was delayed a couple of times because Mark and Eduardo had exams or papers due. When Y2M’s Tricia Black finally sat down with them, Zuckerberg pulled out a notebook with a printout of Thefacebook’s traffic data. Black was nonplussed. “You must be tracking it wrong,” she said. “There’s no way you could have this much traffic.” Zuckerberg suggested that the ad company put their own monitoring software on the server for a few days to track it for themselves.
The stunning numbers weren’t an error. Black and her colleagues were thrilled. Y2M began almost immediately placing ads for clients, taking a commission of around 30 percent. One of the first advertisers was MasterCard, seeking applications for a special credit card for college students. But like Y2M itself and most of its other advertisers, MasterCard executives were skeptical Thefacebook could really deliver results. So instead of simply paying to display ads, as it did with this campaign on other college sites, MasterCard agreed to pay only when a student filled out a card application. At this point Thefacebook operated at about twelve schools. MasterCard turned on its campaign at 5 P.M. on a Thursday. Within one day it received twice the applicants it had expected for the entire four-month campaign. Thefacebook was getting ads in front of exactly the right customers—wealthy undergrads at the best schools. MasterCard continued advertising.
Y2M’s executives started to see Thefacebook as a potential game-changer and by summer they wanted a piece of the action. Black and another executive met with Zuckerberg and asked if Y2M could invest. The young CEO said he’d consider it, but that they would have to give Thefacebook a valuation of at least $25 million. Y2M decided to hold off.
In situations like this, Zuckerberg tends to be impassive. Often he says little, despite facing extravagant praise or seductive entreaties. He was unimpressed with Y2M’s advances. Even then he had his own vision for the potential of Thefacebook, and it didn’t have a lot to do with money. “We’re going to change the world,” Black remembers him saying. “I think we can make the world a more open place.” These were words he would speak again and again in coming years.
Maximizing revenue by selling ads was less important to Zuckerberg than keeping users happy. He would allow advertisements, but only on his terms. Advertisers could only use a few standard-size banners. Those who requested customized treatments were refused. Zuckerberg turned down ads from companies he thought were out of keeping with the playful student mood of Thefacebook, including Mercer Management Consulting and Goldman Sachs. Zuckerberg for a while even put little captions above the display ads readin
g “We don’t like these either but they pay the bills.” Says Joshua Iverson, a sales rep who worked for Black at Y2M: “Mark never wanted ads. Eduardo was the businessperson.” Of course it wasn’t unusual for contemporary Web thinkers to be uninterested in advertising. Sites like Craigslist and Wikipedia were at that time rapidly becoming among the Internet’s largest by taking a patently noncommercial approach.
Y2M tried to convince Zuckerberg to expand Thefacebook onto campuses with larger student populations, like the University of Arizona. But he was resolute it remain mostly Ivy League, or at least limited to schools his users were asking him to add—places where their friends went to school. This kept the circle small and exclusive those first few months. Advertisers themselves couldn’t even log on to Thefacebook.com, since Zuckerberg insisted membership remain limited to students, faculty, and alumni of the schools where it operated. It was unheard-of for advertisers not to be able to see their own ads running.
But despite these challenges, Black was growing ever more certain that Thefacebook was a sure thing. After Y2M itself failed to get a piece of Thefacebook, she started campaigning for Saverin to hire her full-time.
Meanwhile, Zuckerberg was hedging his bets. He didn’t take Thefacebook’s success for granted. In fact, while he had high hopes, he still wasn’t certain the website would amount to much. He still looked at it as just one of his projects, although it was becoming an interesting one. So, ever the entrepreneur, he embarked on yet another new project. While he still spent most of his nonstudy time on Thefacebook, he and Andrew McCollum, another talented sophomore programmer, started working on new software they called Wirehog. Inspired in part by the once-notorious music-sharing site Napster, Wirehog was going to be a peer-to-peer content-sharing service. It would allow users not only to exchange music, but video and text files or any kind of digital information—and only with friends. It would connect directly to Thefacebook, turning your friends there into sources for content.
The Facebook Effect Page 5
