This past week, I’ve been reading David Kirkpatrick’s The Facebook Effect, the book that was based on in 2010’s Oscar-winning movie, The Social Network. Through the first couple of chapters, Kirkpatrick describes the early events in 2004 when Mark Zuckerberg and his fellow Harvard roommates launched Facebook from their dorm room. The service quickly gains traction as they expand across to other colleges in the country including Yale, Stanford, and Columbia. At the forefront of the team’s concerns however, was being able to scale, something that plagued fellow social network FriendFeed’s early days. With ad revenue barely covering the cost of keeping Facebook up and running, the team’s finances teetered at the brink of a major setback.
In Chapter 5’s Investors, we find the small group of Harvard undergrads teamed up with Sean Parker, of Napster fame, in their new Palo Alto digs. As the social network entered the new school year in the fall, the total user count exploded, reaching nearly 1 million users by December.
With investors in Silicon Valley clamoring to get a piece of the Facebook pie, Parker led the way to the eventual $12.7 million investment from Accel Partners at a $98 million valuation. This investment gave the firm a 15% stake in the company, 5% less than they had hoped for, but nonetheless, that investment today is now worth $12.75 billion. Not too shabby.
On that same day, Mark Zuckerberg became a millionaire, with the deal including $1 million bonuses for him as well as Parker and co-founder Dustin Moskovitz.
Which leads me to the point of this article. At the conclusion of the chapter, the author describes an interesting account that same evening after the deal had been signed with Accel. Here’s the excerpt:
Zuckerberg’s girlfriend at the time was a student at Berkeley. In the wee hours he headed there to see her. On the way he stopped in East Palo Alto to get gasoline for “the Warthog,” his shiny new black Infiniti. This neighborhood was much poorer than the rest of Palo Alto. The gas station was desolate. As he filled his tank a young man approached him, holding a gun. But he was so drunk or drugged he could barely stand. He had trouble speaking clearly enough to demand money. A terrified Zuckerberg took a calculated risk. He just got into his car and drove away. Nothing happened. “I feel like I’m pretty lucky,” he says. Though he referred to his escape from the gunman, it’s a good general observation about creating Thefacebook, and his new funding.
The Facebook Effect, pg. 127
Definitely a “no way!” story, considering how the course of events could’ve been turned upside down in a blink of an eye. For all we know, everyone could still be using Myspace. Thank you drunk guy for doing the right thing.