“Mark was actually very rational about the low probability of building a true empire,” recounts Parker. “He had these doubts. Was it a fad? Was it going to go away? He liked the idea of Thefacebook, and he was willing to pursue it doggedly, tenaciously, to the end. But like the best empire builders, he was both very determined and very skeptical. It’s like [former Intel CEO] Andy Grove says, ‘only the paranoid survive.’”
Adam D’Angelo, up from Caltech, was by far the most gifted and accomplished programmer of the bunch, but he was working on his own projects. He was also neither expert in nor very interested in the relatively simple Web-based languages Thefacebook was employing—PHP, JavaScript, and HTML. D’Angelo had a bad case of carpal tunnel syndrome, which meant his hands and arms hurt when he typed. So he was trying to come up with his own alternative—invent a way to move his hands in the air that a video camera could recognize, in order to manipulate text on a screen. It was a pretty challenging project, maybe too challenging, and as summer went on he spent less time on that and more time helping McCollum and Zuckerberg with Wirehog.
While the young engineers worked to bolster the site and refine its features, Parker started thinking about what it would mean to turn Thefacebook into a company. He hired the lawyer who’d helped set up Plaxo. He started looking for someone to manage “operations,” a fundamental task in Internet companies that involves making sure the data center and servers are operating properly. Up until then, all that work had been outsourced to third-party companies, but Thefacebook was getting too big for that. Parker discovered that his young colleagues didn’t even know the basics about network management, like what a router was. He found an engineer named Taner Halicioglu, who had experience at eBay. He worked from home in San Jose.
Parker became Thefacebook’s front man, especially with investors. It wasn’t uncommon for fancy cars to be parked outside on the dead-end street, under the big droopy trees that loomed over the front of the house. That meant someone with money was inside. Some guys from the Benchmark venture capital firm wanted to know if there was a chance of an equity investment. The answer was no, for the time being. But Thefacebook was going to need more funding in the near future, so Parker made sure such people felt comfortable calling or stopping by.
A couple of Google executives came over to see if there might be a way to work with or even buy Thefacebook. Even at this early date, Google was well aware that something noteworthy was going on in Palo Alto. Zuckerberg and Parker were leery, though, because the risk of becoming subsumed by Silicon Valley’s Internet giant was real. If they wanted to do their own thing, they had to stay independent, they believed. Anyway, what they were trying to do was very different from what Google did. Their site was about people; Google was about data.
One area where Parker and Zuckerberg clashed was over Wirehog, on which development continued. The new president thought it was a huge distraction from the work of growing Thefacebook. And his history with Napster made him leery of getting into another tussle with music and media companies. To Parker it seemed likely that such companies would accuse Wirehog—and with it Thefacebook—of helping users steal content, just as the music industry had with Napster. With Wirehog engineer McCollum, the two flew down to Los Angeles where they met with Edgar Bronfman, Jr., CEO of Warner Music Group, and Tom Whalley, who ran Warner Bros. Records. Parker had gotten to know Whalley in his Napster days. Unsurprisingly, they were wholeheartedly opposed to Wirehog. Though Parker feared that a successful lawsuit against Wirehog could take Thefacebook down along with it, he failed to sway Zuckerberg, who persevered.
“Really great leadership,” says Parker, “especially in a start-up, is about knowing when to say no—evoking a vision very clearly, getting everybody excited about it, but knowing where to draw the line, especially with products. You can’t do everything. And that’s a lesson Mark didn’t know yet. That’s a lesson Mark learned.”
Work was hardly the only priority, of course. What group of twenty-year-olds suddenly occupying their own house wouldn’t want to party? Nerds these guys might have been, but they were fun-loving nerds. Stanford was just a mile or so away. It operates on a quarter system, so students were still around in the summer. Using a feature in Thefacebook that enabled ads to be targeted at just one school, the housemates announced their parties right on the service—“Thefacebook is having a party!”—and then often found themselves mobbed by both Stanford students and townies. Moskovitz started dating a girl who had just graduated from Palo Alto High School.
The parties were typical beer-and-booze-fueled affairs. Here’s where Parker came in particularly handy. He was the only one in the group over twenty-one, so they relied on him to buy the alcohol. There was a fair amount of pot smoking, too, though Zuckerberg frowned on it and didn’t partake. “Mark is just about the most anti-drug person I’ve ever met,” says one friend.
Hanging out around the pool was of course a major activity. If a glass broke, the shards often just got swept into the water. McCollum strung a wire from the chimney on top of the house to a spot slightly lower on a telephone pole beyond the pool. With a pulley, he turned it into a zip line, so you could ride down the wire and, suspended over the pool, drop in with a massive splash.
One favorite party activity was Beirut, or beer pong, a beer-drinking game for teams of two or more players that involves throwing a Ping-Pong ball into a bunch of beer cups arrayed in a triangle at the other end of a table. If you get your ball into the opposing team’s cup, they have to drink that cup’s contents. Once all the losing team’s cups are eliminated, its members drink the remaining beer on the winning team’s side. The losers get really drunk.
Beirut was so popular at Thefacebook (and at Harvard) that six months later Zuckerberg and friends launched a national college Beirut tournament. Thefacebook planned to pit campus teams against one another, then each school’s winning team was to come to New York for the final to compete for a $10,000 prize. (The Stanford Daily asked Zuckerberg why Thefacebook would host an event it had to spend $10,000 on, and he replied “Because it’s cool.”) Thousands of students paid ten dollars each to register, but Thefacebook canceled the competition only four days after it launched, after being deluged with complaints from colleges.
The house felt like a dorm. They’d often grill hamburgers or steaks out by the pool, and eat, raucously, at an outdoor table. If the talking lasted too late at night, the neighbors would get peeved. If someone brought a girl back to his room, his roommate had to sleep downstairs on the couch or drag his mattress into another room. Some people—female and male—stopped by for days and just hung around.
One of them was a friend of Parker’s named Aaron Sittig. He had earlier helped create a version of Napster for the Macintosh, called Macster, which Napster bought. At this point he was working for a nascent music-oriented social network called Imeem, located a few blocks away in Palo Alto. Sittig is a quiet, self-effacing, blond surfer type who in addition to being a programmer is a superb graphic designer and typographer. But back then he was feeling burned-out and unmotivated. Parker brought him around because he thought he could help Thefacebook, especially with design.
But Sittig wasn’t showing a lot of initiative. “I kept explaining to Mark that Aaron was brilliant,” says Parker. “But Aaron would just sit on the couch and diddle around on his computer all day playing with fonts. Mark kept saying ‘Who is this guy? He’s worthless. He doesn’t do anything.’ Mark thought it was bad for the work ethic to have him hanging around seeming to do nothing.” (The following year, after re-enrolling at the University of California at Berkeley for a semester to study philosophy, Sittig did come to work at Thefacebook. He became one of Zuckerberg’s closest confidants.)
Oftentimes the coding, swordplay, and raucous meetings would go on well into the night, sometimes punctuated by breaks for drinking, movie-watching, and video-game playing. The Xbox got a workout, with the game Halo a particular favorite. Somehow Tom Cruise became a group obs
ession, and thus ensued a lengthy Tom Cruise movie marathon. They rented an entire stack of his DVDs. Why Tom Cruise? Sittig, who put down his laptop long enough to watch along with everyone else, explains: “Tom Cruise was funny because he’s not a very cool character. He’s not a cool guy.” It was camp.
Pretty soon they were naming the servers on which Thefacebook’s software was running after characters in Tom Cruise movies: “‘Where’s that script running?’ ‘It’s running on Maverick.’ ‘Well, run it instead on Iceman, I need Maverick to test this feature.’” (Maverick and Iceman were characters in Cruise’s 1986 film Top Gun.) The Ben Stiller movie Zoolander was another house favorite, watched to excess. It played over and over in the background while people were working. These guys found it funny to quote big chunks of the movie to one another. They may have been developing a revolutionary Internet service, but they were still really just college kids.
With a total of seven guys living in the house, they needed more than Parker’s BMW to get around, so Zuckerberg and company bought a car. They were planning to return to Harvard in the fall so expected to sell it again in three months. They spent a few hundred dollars on one they thought couldn’t depreciate further—a forest-green, twelve-year-old, manual-transmission Ford Explorer. It was so worn-out you could rotate the key halfway and turn off the engine, then remove it. To start it up again, you didn’t need a key at all. Just grab the ignition and twist. It was transportation well suited for a bunch of impatient guys who half the time couldn’t find the ignition key anyway.
But despite the horseplay and silliness, it was becoming apparent that Thefacebook was turning into a serious business. Zuckerberg knew he had to take more deliberate steps to keep it evolving both technologically and as a business. That summer the growth started to seem a bit scary. They didn’t add any new schools until midsummer, but membership kept steadily climbing all summer at the thirty-four colleges where Thefacebook was already operating. And everybody assumed the beginning of the school year would bring massive new demands. New users meant they needed more reliable software and more computing power.
The software and data for Thefacebook was running on servers at a shared facility in Santa Clara, twelve miles south. The guys had to drive down there frequently to unbox, install, and wire up more servers—an activity for which they often recruited friends to help.
They began assuming that Thefacebook was going to continue to keep growing. Every time the database was upgraded or the server array reconfigured, Zuckerberg tried to do it in a way that could accommodate ten times more users than Thefacebook had at that moment. This implicit optimism proved incredibly prescient. If Zuckerberg hadn’t had that confidence as early as the summer of 2004, his company might have easily suffered embarrassing and possibly catastrophic outages. But the specter of Friendster’s failure to manage its own growth loomed large. Zuckerberg was determined it would not happen to Thefacebook.
The twenty-year-old CEO became obsessed with how well Thefacebook was working technically. He knew that for a communications service like this, performance was key. If the speed with which it delivered new pages to users began to slow, that could be the kiss of death—the beginning of being “Friendstered.” There had already been a few frightening outages and slowdowns. He and Moskovitz inserted a timer in the software that discreetly showed on every page just how long the servers had taken to display it. He would argue with the others if they proposed a feature that might reduce that speed. Milliseconds mattered. In an article published around this time, Zuckerberg was quoted saying, “I need servers just as much as I need food. I could probably go a while without eating, but if we don’t have enough servers then the site is screwed.”
But there was an additional factor that helped spare Thefacebook from performance disaster in its early days, even as its users’ zeal and number continued to shock its founders. Zuckerberg and Moskovitz were able to deliberately pace Thefacebook’s growth. They did it by deciding when to turn on new schools. Traffic growth followed a clear pattern—launch at a new school and watch usage build steadily, then level off. Each time they added a campus, traffic surged. So if the systems were acting up, capacity was at the max, or they couldn’t yet afford new servers, they’d simply wait before launching at the next school. This was a rare asset in an underfinanced Web start-up. It allowed Thefacebook to grow methodically even though it was being run by a bunch of inexperienced kids. Says Zuckerberg: “We didn’t just go out and get a lot of investment and scale it. We kind of intentionally slowed it down in the beginning. We literally rolled it out school by school.”
Another key factor in Thefacebook’s early success was its use of open-source software. From the beginning its database was the open-source MySQL. It cost nothing, nor did PHP, the special programming language for website development that governed how Thefacebook’s pages worked. In fact, an up-from-the-bottom Web business like this without real backers could not have emerged much before this. Open-source Web operations software in 2004 had only recently achieved robustness and maturity. Without it, Zuckerberg would not have been able to create a fully featured website in his dorm room and pay for nothing other than the server to run it. Even with 100,000 users, the company’s only real costs were the servers and salaries.
Nonetheless, keeping it all running and buying new equipment as Thefacebook grew was starting to cost real money. Zuckerberg spent about $20,000 in the first couple of weeks his crew was in Palo Alto, mostly to add servers at the hosting facility. And more spending was clearly going to be necessary.
The money came out of the account Saverin had set up in Florida. In addition to the cash he and Zuckerberg had deposited, the account was augmented with a considerable amount of advertising income. But with school out, ad sales had pretty much stopped for the summer.
Parker and the new lawyer were trying to straighten out the company’s legal status. The limited-liability corporation Saverin had set up was not a sufficient formal structure. It lacked governing documents to define how the company operated. There were no contracts, no official employees, and no payroll. Outside investment would soon be needed, but to get it Thefacebook would have to be turned into a real company.
However, Saverin started to make that very difficult. By mid-July, Parker was starting to talk to investors about putting money into Thefacebook. But when Saverin got wind of these discussions, he wrote a letter to Zuckerberg saying that the original agreement between the partners was that he would have “control over the business,” and he wanted a contract to guarantee him that control. Says Parker: “It was so sophomoric. He fundamentally didn’t appreciate the importance of product design and technology in this picture. He had this idea that the business stuff was what was important and all this product design and user interface design and engineering and code—you just hire a bunch of engineers and put them in the engine room and they take care of that, you know?” The product as it is engineered and programmed and designed is the business for an Internet company, especially a nascent one. The slightest strategic error in advancing and operating those could mean there would be no more ads to sell.
Whether or not Saverin understood the essential mechanics of launching an Internet company, there were good reasons for him to feel frustrated with the Palo Alto crowd. He had invested his own money (or his family’s) and he was the guy working with Y2M and making the calls to bring in ads. Meanwhile, he felt his partner was blasé, to say the least, about revenue. When there was a request for some special treatment from an advertiser, Saverin would bring it to Zuckerberg and Moskovitz. He frequently met a brick wall. What was the chance his investment was ever going to amount to much if Thefacebook couldn’t be turned into a proper business? Zuckerberg seemed content that there merely be enough money to pay the bills and keep the site operating.
Saverin had a difficult job at Thefacebook. Advertisers demand responsiveness. They want recipients of their money to be available if they have a question or problem—usually immediate
ly. It was thus harder for Saverin to set his own hours as Zuckerberg and Moskovitz could. His job, unlike theirs, required interacting with customers. It wasn’t easy to do that and still keep up with his courses at Harvard.
But he did share one thing with Zuckerberg—ambivalence about Thefacebook’s likelihood of future success. He made no secret that Thefacebook was just one of his business activities. He planned to enroll in business school after graduation, so keeping his grades up mattered, despite whatever the company might want from him.
All this later led to a lawsuit. In a legal filing, Zuckerberg and company characterized Saverin’s position: “Until he had written authority to do what he wanted with the business, he would obstruct the efforts of the other shareholders and the advancement of the business itself. Saverin also stated that since he owned 30% of the business, he would make it impossible for the business to raise any financing until this matter was resolved.”
As their disagreements sharpened, Zuckerberg and Saverin had endless phone calls, which seldom ended with any clear resolution. The Palo Alto group took the view that Saverin was pushing so hard mostly because his father, the hard-driving, self-made Brazilian multimillionaire, was urging him to. “His father was telling him to play hardball,” says Parker, “but this is not somebody who should be playing hardball.” Parker reports that when pressed to make a decision about something, Saverin would often say either “I have to go talk to my dad” or “I can’t give you an answer now.” A day or two later he would predictably come back with a firm answer—one that was unyielding.
Despite his hardball, everybody still liked Saverin. He was charming and congenial and smart. But since he didn’t seem to be making a commitment to the company like the rest of them, his efforts to get more authority didn’t make sense. He was, in effect, demanding to be CEO of Thefacebook without even making a full-time commitment. The boys were inexperienced, but they were working hard, usually until all hours every night, doing whatever had to be done. Saverin appeared to be luxuriating in New York. He didn’t get it, they thought.
The Facebook Effect Page 7
