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The Battle For Facebook

Page 5 of 6

Stephen Haggerty, who had just finished his freshman year at Harvard, applied for an internship with Facebook that summer. "To call Facebook a company at that point was generous," says Haggerty, now a Ph.D. student at Berkeley. Most of the time, he recalls, everyone in the house would wake up late and stay up late, programming from noon until 5 a.m. "Did we do anything besides sit in front of our computers?" Haggerty says. "Mark had a girlfriend, but after a while she wasn't around. We invited some people to our parties through Facebook."

The roommates shopped at Costco and went to Home Depot, where they bought whiteboards to map code. One day, on a spontaneous urge, they spent $100 on a zip line, which they strung from the chimney of their house to a telephone pole, allowing them to plunge into the swimming pool below. They drank beer and listened to bands like Green Day and Infected Mushroom on the computer speakers. But things never got out of hand — mainly because Zuckerberg was more intent on fostering other people's social lives than developing his own.

"We were all Harvard kids, so we weren't like party kids," says Haggerty. "Mark is a big nerd. He spent a lot of time in front of his computer." When he wasn't programming, Zuckerberg watched epics like Gladiator and quoted frequently from one of his favorite movies, The Wedding Crashers. His parents sent him his fencing foils, and he spent a day happily thrusting them at his friends, like some crazed Jedi knight, until they banned swordplay in the house.

If there was any fun in the house, it was because of Sean Parker, a co-founder of Napster. A few months earlier, Parker had been visiting his girlfriend at Stanford when he noticed that she and all her friends were using a new site called Facebook. Parker says that he sensed the potential and arranged to meet Zuckerberg and Saverin in New York at a stylish Chinese restaurant. Saverin brought his girlfriend, and the four sat for a few hours while Parker regaled them with stories of raising big money in California.

Less than a month later, Parker was at his girlfriend's house in Palo Alto, unloading a car, when he saw some young guys walking toward him and recognized Zuckerberg. The Facebook crowd, it turned out, was living only two blocks away. It seemed like destiny. Parker, who had co-founded Napster at the age of 20, was exactly the kind of hot young entrepreneur that Zuckerberg aspired to become. Parker was soon living with the Facebook team and introducing Zuckerberg to investors in Silicon Valley.

Even then, moving among the world's biggest venture capitalists, Zuckerberg asserted his identity. "Mark showed up in his pajamas to meet with Sequoia Capital," Parker recalls. "He was trying to make a statement." Part of that statement was that Zuckerberg didn't plan on surrendering his identity. He wore his signature Adidas shower shoes and T‑shirts everywhere. Parker was proud of him for turning down offers to sell Facebook: "The last thing I wanted was for the company to be taken away from him."

Parker didn't need to worry — Zuckerberg wasn't going to let that happen. In July, Zuckerberg and Saverin had a mysterious falling out. Zuckerberg has filed a lawsuit, claiming Saverin jeopardized the company by freezing Facebook's bank accounts. Saverin countersued, claiming that Zuckerberg never matched his $20,000 in seed money and, further, used that money for personal expenses. That summer, Zuckerberg transferred all intellectual-property rights and membership interests to a new version of the company in Delaware. The value of Saverin's stock was unhinged from any further growth of Facebook, and Saverin was expunged as an employee.

Not long after the incident, Cameron Winklevoss ran into Saverin in a bar in New York. Saverin, Winklevoss said in a deposition, apologized to him.

"Sorry that he screwed you," Saverin allegedly said. "Mark screwed me, too."

The lesson to those around Zuckerberg was clear: Nobody, not even the college roommate who had once been his closest confidant, was going to stand in his way. "It seemed like in all his dealings, it was a big deal to him that he be the CEO when he got the first round of financing, and that he maintain control of the company," says Haggerty. "He knows where he wants to go: Facebook everywhere."

By December 2004, Facebook was well on its way to everywhere. Only 10 months after its launch, the site had 1 million users. Back at Harvard, Lawrence Summers told entering freshmen that he had gotten to know them through their profiles on Facebook. The student who had once been threatened with expulsion for posting pirated photos of fellow students had succeeded in altering Harvard's entire culture.

At the start of 2005, Zuckerberg appointed Sean Parker president of Facebook, hoping to bank on his friend's Silicon Valley connections. But once again, things fell apart between Zuckerberg and a friend. That October, after Parker was arrested at a party, he abruptly resigned. Although Parker was never charged and denies possessing any narcotics, Zuckerberg told a courtroom Parker was busted for cocaine possession and was lousy at running a business. "He freaked people out," Zuckerberg testified. Even the cofounder of Napster wasn't good enough for the upstart kid from Harvard.

Despite the management shake-ups, users still flocked to the site. In the spring of 2005, real money started flowing into Facebook: A venture-capital firm invested $12.7 million in the site. Facebook also opened itself up to high school students; within months, it was rewarded with 5.5 million users. But Zuckerberg, now one of the wealthiest twentysomethings in the world, continued to play the part of the college kid. He carried two business cards: a plain one with just his name and another that read "I'm CEO . . . Bitch." He insisted to anyone who would listen that he wasn't in it for the money. "I'm in this to build something cool," he told Fortune, "not to get bought."

But that didn't stop Zuckerberg from pursuing his vision of Facebook as a onestop social utility with global domination of the marketplace. Last November, he presented advertisers with a new program called Beacon that would enable large retailers to access a shopper's Facebook page. Suddenly, a purchase of budget furniture on Overstock.com would show up as part of a user's Facebook identity. For the first time, Zuckerberg told those assembled, advertising would become an integral part of social interaction online. His goal, he told them, was simple: to start a revolution.

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