Hacker. Dropout. CEO.

February 4th, 2014 is Facebook’s 10th anniversary. Read our 2007 cover story on Mark Zuckerberg, and the social network’s beginnings. This is Page 2 of 3.

Hacker. Dropout. CEO.

Ultimately, Zuckerberg did an end run around the administration. He set up the Facebook template and let students fill in their own information. The new project consumed so much of his time that by the end of the first semester, with just two days to go before his art-history final, he was in a serious jam: He needed to be able to discuss 500 images from the Augustan period. “This isn’t the kind of thing where you can just go in and figure out how to do it, like calculus or math,” he says, without a trace of irony. “You actually have to learn these things ahead of time.” So he pulled a Tom Sawyer: He built a Web site with one image per page and a place for comments. Then he emailed members of his class and invited them to share their notes, like a study group on cybersteroids. “Within two hours, all the images were populated with notes,” he says. “I did very well in that class. We all did.”

advertisement, as it was originally called, launched on February 4, 2004. Within two weeks, half the Harvard student body had signed up. Before long, it was up to two-thirds. Zuckerberg’s roommates, Moskovitz and Chris Hughes, joined in, helping to add features and run the site using a shared hosting service that cost $85 a month. Students from other colleges began approaching them, asking for online face books of their own. So the trio carved out new areas on the site for places like Stanford and Yale. By May, 30 schools were included, and banner- type ads for student events and college-oriented businesses had brought in a few thousand dollars.

“We just wanted to go to California for the summer.”

That’s how Zuckerberg describes his decision, at the end of sophomore year, to head out to Palo Alto with Moskovitz and Hughes. They sublet a house not far from the Stanford campus. And then fortune intervened.

Out on the street one evening, Zuckerberg bumped into Sean Parker, a cofounder of the file-sharing program Napster. The two had met briefly back East. It turned out Parker was moving to Palo Alto but didn’t yet have an apartment. “Basically we just let him crash with us,” Zuckerberg says.

Parker moved in, bringing with him an irrepressible spirit, lots of ideas, a killer Rolodex–and a car. Parker was also a walking, talking cautionary tale for what can happen to young entrepreneurs. After Napster was derailed by legal challenges from the music and movie industries, Parker had helped launch Plaxo, a site that updates contacts. But he told everyone he’d been pushed out by venture heavyweight Michael Moritz of Sequoia Capital, an early backer of Yahoo, Google, and YouTube. (Sequoia declined to comment.) Zuckerberg took it all in.

Within a few weeks, Parker introduced Zuckerberg to his first major investor, Peter Thiel, cofounder of PayPal, president of hedge fund Clarium Capital, and managing partner of the Founders Fund. After Zuckerberg’s 15-minute pitch on Facebook, Thiel was clearly interested. “Peter is a fast-talking, sort of intimidating guy,” says Matt Cohler, then a colleague of Thiel’s who was in the room. “But Mark stayed calm and got the information he needed.” By the end of the talk, he also got a commitment for $500,000 in seed money and an entrée into the exclusive social network of Silicon Valley.


Zuckerberg and his friends had caught the entrepreneurial bug. With the end of summer approaching, Zuckerberg thought back to a presentation he’d heard at Harvard from a well-known dropout. While taking a computer-science class, he recalls, “Bill Gates came and talked.” Gates encouraged the students to leave and go make something, since Harvard lets students take as much time off as they want. “If Microsoft ever falls through, I’m going back to Harvard,” he joked. With Thiel’s money to sustain them, Zuckerberg and Moskovitz decided to follow Gates’s advice.

Zuckerberg and a growing cadre of engineers managed the Facebook site from a series of sublets around Palo Alto, coding together in endless sessions on rickety furniture. “We never had any money,” he recalls with a laugh. “We actually bought a car on Craigslist. You didn’t need a key. You just had to turn the ignition.” In November 2004, Facebook passed the 1 million–users mark. Six months later, with the help of Thiel, Zuckerberg signed the papers for that $12.7 million in financing from Accel Partners. He hired a new fleet of engineers (including Steve Chen, who would leave a few months later to cofound YouTube). And he moved the company into real office space, on Palo Alto’s University Avenue. By the fall of 2005, there were 5 million active users, those who visit the site at least once a month.

Ask anyone who works there what Facebook is, and you will get pretty much the same answer: a social utility that lets people share information with the people in their world quickly and efficiently. Unlike MySpace, where anyone can trawl the site or take on a different persona, Facebook is based on real-world networks of people who share the same email domain and actually want to know more about one another. What you share–vacation photos, contact information, favorite movies, current whereabouts, upcoming events, whatever–is entirely up to you. This all made perfect sense for the college crowd, who show up at school hungry to meet the people around them. But Web 2.0 watchers wondered how Facebook could grow into something that would work for the rest of us. And it needed to do that, if for no other reason than that the original audience was growing up and getting jobs.

In September of 2005, Facebook was opened up to high school students, many of whom had older siblings already on the site. The following month, the site added a photo feature, and technical demands skyrocketed. “We’re one of the largest MySQL Web sites in production,” says chief operating officer Owen Van Natta, 37. MySQL, a popular open-source software, “has been a revolution for young entrepreneurs,” Van Natta explains, partly because it frees them from paying the licensing fees of, say, an Oracle. But with sophistication comes heat. Literally. “In computing, as things get smaller, they run hotter,” Van Natta says. When he first joined the company in late 2005, he recalls, it was growing so rapidly there was almost a meltdown. “We were trying to predict how many new users we’d get, how they would use the site, and what we’d need to serve that,” he says. There weren’t enough people to do all the analysis. “We were just trying to keep the wheels on the wagon.” When he went to check the data center, he was horrified. “There were little fans like this big”–holding up his hands to indicate the size of a grapefruit–“tucked between the servers. It was over 110 degrees in some aisles.” And the data-center guys were plugging in more servers and screwing them into racks, trying to keep up with the rapidly scaling site. The Plexiglas sides of the server racks were warping from the heat. “I was, like, Mayday!” he recalls. “We need to get on top of this!”

Growth continued. In June 2006, the site was opened to work networks. There are more than 20,000 networks of employees, from the Central Intelligence Agency and the Internal Revenue Service to Macy’s, McDonald’s, Time Inc., and the U.S. Marine Corps. Even MySpace, considered by many to be a Facebook rival, has a corporate network of 22 employees.

Then in September, Facebook announced what it called “open registration”: Anyone with a valid email address could join a regional network. It was an auspicious moment–until the Facebook community rose up and almost destroyed its creator. The problem was a new option called News Feed, which creates regular reports about the activity within a network or group of friends. It may have seemed like a good idea at the time, but it set off a revolt in the Facebook community. Users felt that their personal information was being broadcast all over the Web without their permission. Never mind that they had posted it all publicly themselves. Or that it went only to people who were friends or already in their networks. Facebook is a fast-moving, throw-it-up-and-see-if-it-works sort of place that typically adds a feature, watches how people use it, and, based on feedback, adds things such as extra privacy controls. But this time, Zuckerberg and his crew had made a mistake by not putting privacy features in place first.


Taking advantage of another new feature, which allowed individuals to start their own issue-oriented “global groups,” disgruntled users set up a group they called Students Against Facebook News Feed (Official Petition to Facebook). Ironically, the News Feed service itself then spread the campaign (“Your friend has just joined this group!”). In less than 48 hours, 700,000 people had joined the protest, and the blogosphere declared it the end of Facebook. News crews camped outside the Facebook offices, as if a bald Britney Spears were being held captive inside. “There was a hilarious email thread as we discussed what to do,” says Zuckerberg, who was stuck in New York fending off his own onslaught from the media. “Someone writes, ‘Okay, it’s like midnight, and we want to leave. But we can’t even look through the blinds because they’re videotaping us. I’ll pay someone $50 to go streaking.'”

From his New York hotel, Zuckerberg posted an open letter to users via the blog on the site. “We really messed this one up,” he wrote. “When we launched News Feed and Mini-Feed we were trying to provide you with a stream of information about your social world. Instead, we did a bad job of explaining what the new features were and an even worse job of giving you control of them.” His engineers worked around the clock for three days to add better privacy features.

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