Copyright 2006 The Conde Nast Publications, Inc.
All Rights Reserved
May 15, 2006
The New Yorker
FACT; The Online Life; Pg. 50 Vol. 82 No. 13LENGTH:
How hanging out on the Internet became big business.
August, 1995, when Netscape issued stock on the Nasdaq and became the
first major Internet company to go public, Mark Zuckerberg was about to
enter the sixth grade at a middle school in Ardsley, a small town in
Westchester County. He had a new desktop computer-a Quantex 486DX with
an Intel 486 processing chip-and had bought a book called "C++ for
Dummies," to teach himself how to write software. "I just liked making
things," he recalled recently. "Then I figured out I could make more
things if I learned to program." By the time he finished ninth grade,
at Ardsley High, he had designed a computer version of the board game
Risk, in which rival forces battle for global domination. Zuckerberg's
game was set in the Roman Empire, which he was studying in Latin class,
and featured a virtual general called Julius Caesar, who was such an
able military strategist that even Zuckerberg had trouble defeating
Two years later, his parents, a
dentist and a psychiatrist, sent him to Phillips Exeter Academy, in New
Hampshire, where, during the spring of his senior year, he and a
roommate, Adam D'Angelo, wrote some software for WinAmp, an MP3 player,
which chose songs from a user's digital library based on his previous
selections. If a user had been playing Garbage, or the Clash, the
program that Zuckerberg and D'Angelo created might pick a song by Green
Day. They called their program Synapse and posted it on the Web, where
it proved popular, especially after the technology site Slashdot.org
linked to it. Several software companies, including Microsoft,
approached Zuckerberg about acquiring it, but none made a formal offer.
"What they really wanted was for us to come and work for them,"
Zuckerberg told me. "We didn't want to do that."
the fall of 2002, Zuckerberg enrolled at Harvard, where he decided to
major in psychology. "I just think people are the most interesting
thing-other people," he said. "What it comes down to, for me, is that
people want to do what will make them happy, but in order to understand
that they really have to understand their world and what is going on
around them." Between classes, he continued to write programs,
including one called Coursematch, which enabled students to find out
who was enrolled in a particular class. Early in his sophomore year, he
built a Web site called Facemash, a Harvard version of HOTorNOT.com, a
site where people post sexy photographs of themselves that others rate
on a scale of one to ten. Most Harvard residential houses, including
Kirkland House, where Zuckerberg lived, had Web sites displaying
photographs from student I.D.s. Zuckerberg downloaded some of the
pictures-of men and women-and posted two at a time on a Web page,
inviting other students to vote on which person was more attractive.
The votes were then converted into a cuteness top-ten list for each
Within a few hours after he
posted the first photographs, about four hundred and fifty people had
visited the site, and more than twenty-two thousand votes had been
recorded. Then, without warning, the university blocked Zuckerberg's
Internet access; some students and professors had complained to Harvard
authorities that the site was offensive. Harvard's Administrative Board
summoned Zuckerberg to a hearing, accusing him of violating students'
privacy and of stealing the university's intellectual property by
downloading pictures without permission. The board could have suspended
Zuckerberg, or even expelled him. Instead, after he agreed to take down
the Web site, he escaped with a warning. That night, he and his
roommates celebrated with a bottle of champagne.
was acquiring a reputation on campus as a programming prodigy. Soon
after Facemash was shut down, he was invited to help write code for an
ambitious Web site conceived by three Harvard seniors: Tyler and
Cameron Winklevoss, twin brothers; and Divya Narendra. Since late 2002,
the Winklevosses and Narendra had been talking about creating a Web
site for Harvard students modelled on "social networking" sites like
Friendster and Tribe.net, which were just beginning to catch on. The
sites, which invited members to post a photograph and a few personal
details-a profile-and link to other members, exploited the peculiar
logic of networks, by which large numbers of people are connected
through a small number of intermediaries and become part of a vast
virtual community. By the fall of 2003, the Winklevosses and Narendra,
with the help of a couple of student programmers, had designed a
prototype, which they called HarvardConnection. At Narendra's
suggestion, the Winklevosses approached Zuckerberg about helping them
finish the site, which they hoped to launch before they graduated, the
following June. "We met Mark, and we talked to him, and we thought this
guy seems like a winner," Tyler Winklevoss said to me recently.
began working on HarvardConnection in November, 2003. At the same time,
he pursued his own projects. Like many other colleges, Harvard offers
every freshman a copy of the class directory, known as the "facebook,"
which features a photograph of each member, accompanied by a few
identifying facts, such as name, date of birth, home town, and high
school. For some time, Harvard had been planning to put the facebook
online; Zuckerberg decided to do the job himself. "I just thought that
being able to have access to different people's profiles would be
interesting," he recalled. "Obviously, there's no way you can get
access to that stuff unless people are throwing up profiles, so I
wanted to make an application that would allow people to do that, to
share as much information as they wanted while having control over what
they put up."
Zuckerberg discussed the
idea with two of his roommates, Chris Hughes and Dustin Moskovitz, who
agreed that it was a good one. In late January, 2004, during a weeklong
break between semesters, he remained in his dorm room, working through
the night on his site. "The challenge was to make it work," he said. "I
don't like to design things to look showy or cool. It wasn't like I was
looking at it and saying, 'This is sweet.' He paused, then added, "I
don't use the word 'sweet' anymore." In ten days, he had completed most
of the site, which he was determined to keep simple. Anybody with a
Harvard e-mail address could join and create a profile, which consisted
of a photograph and some personal information, such as the user's
major; club memberships; taste in films, books, and music; and favorite
quotes. There was a search box to help users call up other profiles,
and a "poking" button, which they could use to let other people know
that their profiles had been viewed. Users could also link to their
friends' profiles-a feature popularized by Friendster. To test the
site, Zuckerberg created three sample profiles, which looked pretty
good. Then he created profiles for himself and for Hughes and
Thefacebook.com went up on
Wednesday, February 4, 2004. "It was a normal night in the dorm,"
Moskovitz recalled. "When Mark finished the site, we told a couple of
friends. And then one of them suggested putting it on the Kirkland
House online mailing list, which was, like, three hundred people. And,
once they did that, several dozen people joined, and then they were
telling people at the other houses. By the end of the night, we were,
like, actively watching the registration process. Within twenty-four
hours, we had somewhere between twelve hundred and fifteen hundred
On February 9th, the Harvard Crimson
ran a story about Thefacebook.com, in which Zuckerberg referred to
Harvard's plan to put the facebook online. "I think it's kind of silly
that it would take the university a couple of years to get around to
it," he said. "I can do it better than they can, and I can do it in a
week." The popularity of Zuckerberg's site seemed to justify his
arrogance. "Within a week, it felt like the whole school had signed
up," Olivia Ma, a twenty-three-year-old Harvard senior who was the
fifty-first person to join Thefacebook.com, recalled. "Everyone was
talking about it." By the end of February, about three-quarters of the
undergraduates had signed up.
By luck or design, Zuckerberg had tapped into a powerful yearning: the desire
of hundreds of ambitious and impressionable young people to establish themselves
and make friends in an unfamiliar environment.
And unlike the users of sites
that are open to anyone, such as Friendster and MySpace, which launched in January,
2004, Facebook's members had a physical location, professors, and classes in
common. "I remember the buzz of excitement around the fact that that kid whose
profile you had checked out the night before might be sitting at the table next
to you in the dining hall the next morning at breakfast," Olivia Ma wrote in
a recent e-mail.
The site quickly became a
platform for self-promotion, a place to boast and preen and vie for
others' attention as much as for their companionship. "I remember
people competing to see how many 'friends' they could accumulate and
how quickly, and tracking how many 'friends' they shared in common with
other 'friends,' " Ma said. "The concept of 'Your Social Network,'
which in those early stages could be represented visually as a diagram
on your screen at the click of a button, was mind-blowing." Before
long, some students were listing hundreds of friends. Hilary Thorndike,
a schoolteacher who graduated from Harvard in 2005 and still uses
Facebook, has more than eight hundred friends on the site. "I always
find the competitive spirit in me wanting to up the number," she wrote
in an e-mail.
On Friendster, and
especially on MySpace, some users are playing roles: thirteen-year-olds
pretending to be nineteen, virgins pretending to be vixens,
forty-two-year-old F.B.I. agents pretending to be adolescent girls.
Because Facebook users were required to have a valid Harvard e-mail
address, most were students, and many were willing to post their e-mail
and home addresses, their cell-phone numbers, and even their sexual
orientation. Most users worried more about wasting time than about
security. "It was viewed as an addictive guilty pleasure-lots of
students using language like 'resisting' and 'holding out' when
describing their hesitation to join," recalled a Harvard graduate who
joined Facebook as a senior, in February, 2004. " 'Give in to the
temptation!' was the merry cry."
couple of weeks, students at other colleges were e-mailing Zuckerberg
to ask for access to Facebook. The site was easy to replicate-in the
jargon of the computer industry, it was "scalable"-and Zuckerberg
enlisted Moskovitz, who had a part-time job at a campus computer lab,
to help him expand it. He was confident that Facebook could be just as
successful at other colleges; the challenge was how to maintain the
site's clubby appeal while attracting more members.
most social-networking sites, a search box allows users to call up
profiles of people anywhere on the site. Zuckerberg decided that
Facebook members would be allowed to view only the profiles of other
students at their own colleges, with one exception. If they obtained
the permission of a student at another school, they could add that
person to their list of friends. In retrospect, this decision was
critical to Facebook's success, because it preserved the site's
At the end of February, 2004,
Thefacebook.com launched simultaneously at Columbia, Yale, and
Stanford, where it quickly became just as popular as it was at Harvard.
By the middle of June, when the academic year ended, the site had
expanded to forty schools, and it had a hundred and fifty thousand
registered users. Several venture capitalists had already approached
Zuckerberg about investing in the site. Zuckerberg rebuffed their
offers, deciding to finance Facebook with a substantial investment from
another Harvard student, some money of his own, and revenue from
advertisements, which he had begun to sell. Fortunately, his operating
costs were low. Moskovitz worked for nothing. (Zuckerberg eventually
gave him an ownership stake.) The biggest expense was an
eighty-five-dollar monthly fee for renting space on a server.
June, 2004, Zuckerberg, Moskovitz, and another friend from Harvard,
Andrew McCollum, moved for the summer to Silicon Valley, where they
rented a house in Palo Alto, with four bedrooms and a pool, and called
it Casa Facebook. Although many colleges were closed for the summer,
traffic on the site was still growing rapidly, and there was a lot of
maintenance work. "We were doing fourteen- or sixteen-hour days,"
Moskovitz said. "We had, like, a kitchen table, which we sat around. We
had our laptops there, and we, like, hammered away."
September, Thefacebook.com had a quarter of a million users, and
Zuckerberg and Moskovitz decided not to return to Harvard. They wanted
to expand the site to several hundred more schools that fall, and they
needed money to buy servers. (Renting server space was no longer
practical.) Zuckerberg began to meet with local venture capitalists and
entrepreneurs, including Peter Thiel, the co-founder of PayPal, the
online payments company. Matt Cohler, a former business associate of
Thiel's, who now works for Facebook (the site dropped the "the" from
its name last fall), recalled the meeting: "He started telling us the
Facebook story. It was pretty quickly apparent that this business was
taking on aspects of an eBay or a Google, something with just an
extraordinary growth rate. About eight minutes into the talk, it was
clear to me that Peter was going to invest.''
lent Facebook five hundred thousand dollars in return for a seat on its
board and an option to purchase an undisclosed ownership stake at a
future date, an arrangement that could well prove lucrative. According
to comScore Media Metrix, a company that tracks online traffic, in 2005
Facebook was the second-fastest-growing major site on the Internet.
Only MySpace, which has seventy-five million users, a population
ranging from teen-agers to senior citizens, grew faster. Today,
Facebook has about seven and a half million registered members, most of
whom attend one of the more than two thousand U.S. colleges where the
site is accessible, though it has recently expanded to universities in
the United Kingdom, Mexico, and Australia. In terms of total page
views, it is now the seventh-most-popular site on the Web, according to
comScore Media Metrix.
Early in 2005,
Zuckerberg and his colleagues moved the company from Casa Facebook to
an airy suite of offices on University Avenue, a couple of blocks from
the Stanford campus. When I visited, in March, workmen were cleaning a
space recently vacated by another firm, so that Facebook could expand
into it; there are now more than a hundred people on the company's
payroll. Zuckerberg, whose title is C.E.O., works on the second floor,
surrounded by programmers. On the third floor are most of the "adults"
Zuckerberg has hired: advertising-sales staff, customer-service
representatives, and senior executives. On a whiteboard next to the
customer-service department, somebody had copied a message from a user:
"My grandma was wondering if there would possibly be a Facebook for
nursing homes in the near future. She thinks it's a good idea to stay
in contact with her old college friends. She would love it. Thank you."
In a conference room on the third floor, I met with Jim Breyer, a well-known
Silicon Valley venture capitalist, whose company, Accel Partners, has invested
about fifteen million dollars in Facebook, in the belief that eventually it
will make a lot of money, partly through advertising sales.
the online ad market has expanded by more than fifty per cent, while advertising
in magazines and newspapers has hardly grown at all. Some sites that carry a
lot of online advertising, like Google and Yahoo, are highly profitable. "Clearly,
there are some fundamental characteristics of the media business that are forever
changed," Breyer said. "It's not that the Googles and Facebooks are going to
suddenly make the old-media companies obsolete. However, three to five years
from now, the very best media companies will have Facebook- and Google-like
in the past eighteen months, the New York Times Company paid more than
four hundred million dollars for About.com, a site that offers
information on health care, personal finance, and travel, among other
topics; NBC Universal paid six hundred million dollars for
iVillage.com, a site aimed at women; and Rupert Murdoch's News
Corporation purchased the company that owns MySpace for five hundred
and eighty million dollars. None of these Web sites have made much
money, but their new owners are gambling that they will.
arrived late to our meeting. He often maintains a hacker's schedule,
working late into the night. He was wearing a white T-shirt, a hooded
fleece sweatshirt, and a pair of new Adidas slides, which he complained
hurt his feet. He removed his shoes and sat down on a couch, folding
his legs beneath him, lotus style. On his Facebook profile, Zuckerberg
says that one of his interests is meditation. The others are
information flow, exponential growth, minimalism, driving, making
things, social dynamics, and domination.
and bony, of medium height, Zuckerberg is twenty-one but looks younger.
He has curly light-brown hair, blue eyes, a prominent nose, and pale
skin. Under each of his eyes is a faint purple patch from lack of
sleep. For ten minutes or so, he responded to my questions
monosyllabically, allowing lengthy pauses between his answers.
Gradually, though, he relaxed, and tried to explain what distinguished
Facebook from other sites. "I mean, one way to look at the goal of the
site is to increase people's understanding of the world around them, to
increase their information supply," he said. "The way you do that best
is by having people share as much information as they are comfortable
with. The way you make people comfortable is by giving them control
over exactly who can see what."
control may turn out to be Facebook's most important asset. During the
past few months, the newspapers have been full of stories about sexual
predators using social-networking sites to find victims. In February,
the attorney general of Connecticut, Richard Blumenthal, began an
investigation of minors' access to pornography on MySpace, and local
police announced that as many as seven teen-agers in the state may have
been assaulted by men they had met through the site. In April, the
company hired a former federal prosecutor to be its first chief
security officer. Facebook has also received some negative publicity.
There have been numerous reports of campus police shutting down keg
parties that were announced on the site, and last year a student at
Fisher College, in Boston, was expelled after writing in his Facebook
profile that a police officer at the school "needs to be eliminated."
general, though, Facebook's membership restrictions and privacy
features have protected users. By altering the settings on their
profiles, they can choose to make them visible solely to their friends,
to other undergraduates, or to everybody at the university. By entering
names into a box, users can deny particular individuals access to their
profiles. "The problem Facebook is solving is this one paradox,"
Zuckerberg said. "People want access to all the information around
them, but they also want complete control over their own information.
Those two things are at odds with each other. Technologically, we could
put all the information out there for everyone, but people wouldn't
want that because they want to control their information."
on, Zuckerberg enabled users to send and receive messages. A few months
later, he permitted them to create user groups. Harvard Facebook
members belong to more than ten thousand, many of which exist only
online. The appeal of such groups-including Harvard People for the
Eating of Tasty Animals (forty members), I Went to a Public School . .
. Bitch (twenty-five hundred members), Jews Who Love Booze (fifteen
members), and The We Need to Have Sex in Widener Before We Graduate
Interest Group (a hundred and forty members)-is that they allow
students to promote different aspects of their identities while showing
off their collegiate wit. "It may look like dog food," says the home
page of the group Cracklin' Oat Bran Is the Shit (eighty-four members).
"But we all know that cracklin' oat bran is an amazing cereal. We don't
just eat it for breakfast, either. We eat it for every meal of the day.
Cracklin' oat bran isn't just a cereal; it's a way of life."
fall, Facebook launched a new photo application, which allows users to
attach to their profile as many digital pictures as they want. Every
day, more than a million and a half pictures are uploaded to the site,
making Facebook the biggest photo site on the Web, according to some
measures. The pictures tend to be less racy than those on MySpace, but
Ivy League co-eds aren't above posting pictures of themselves in their
bras. (Nudity is forbidden.) Another recent addition, Pulse, generates
top-ten lists of bands and books based on preferences in member
Two-thirds of Facebook members
log on at least once every twenty-four hours, and the typical user
spends twenty minutes a day on the site. This is an average figure:
some students log on to Facebook rarely; some use it obsessively. One
female student e-mailed the site: "I HATE YOU, FACEBOOK. I CAN'T QUIT."
According to Metcalfe's law, which was
formulated by Robert Metcalfe, the computer scientist who founded 3Com,
the usefulness of a network (the value it provides in terms of
facilitating communication) increases in proportion to the square of
the number of nodes (or people) attached to it: a network of twenty
people is not just twice as useful as a network of ten; it is four
times as useful. Under Metcalfe's law, Facebook is vastly less useful
than MySpace. But Zuckerberg argues that on social-networking sites it
isn't the size of the over-all network that matters but the way people
organize themselves into subnetworks and exchange information within
those subnetworks. "If your site is open, and you let everyone read
everything, then the stuff they put up is going to be less personal,"
he said. "The stuff that people want to share with just their friends
is the most important stuff: photo albums that you only want your
friends to see, contact information, that kind of thing."
he went on, that 1,300 of Harvard's approximately 6,500 undergraduates
post a new piece of information on their profiles-an e-mail address,
say-and this information is made available to everyone at the school.
The number of opportunities for people at Harvard to access the new
information is 1,300 multiplied by 6,500, which yields more than eight
million. But most students aren't interested in the addresses of people
they don't know, and won't bother looking at the new information. Now
assume that 2,600 Harvard students post their e-mail addresses on
Facebook, but each allows just a hundred friends to see it. The number
of opportunities to access new information is 2,600 multiplied by a
hundred, which is 260,000-far fewer than eight million. However, since
all involved are friends, more addresses might end up being exchanged.
"It's a much smaller number of people getting the information, but it's
more valuable," Zuckerberg said. "The information is going to the right
people. So giving people control over who sees what helps to increase
over-all information flow."
members invariably cite its usefulness for keeping up with friends, but
clearly one of the reasons that the site is so popular is that it
enables users to forgo the exertion that real relationships entail.
"It's a way of maintaining a friendship without having to make any
effort whatsoever," a recent Harvard graduate who uses Facebook to stay
in touch with her classmates wrote to me recently. "And the interface
provides all the information you need to do that: birthdays, pictures,
message boards, contact info, etc."
its emphasis on user-generated content, the site is part of a larger
online phenomenon that goes under various names, including "peer
production," "Web 2.0," "micro media," and, most tellingly, "Me Media."
"On Facebook, you get to fashion yourself in a new way in a new space,"
said Chris Hughes, who was described on the site as the company's
"empath," when I spoke with him at the Facebook offices. "It's not
about changing who you are. It's about emphasizing different aspects of
According to a recent study by the Pew Internet & American Life Project,
eighty-seven per cent of Americans between twelve and seventeen years old are
online, and more than half of them have created some form of digital content
and uploaded it to the Internet: a home page, a blog, a photo album, or a video
"The Internet generation has grown up, and there are just a lot more
people who are comfortable putting their lives online, conversing on the Internet,
and writing blogs," Chris DeWolfe, one of the founders of MySpace, told me.
"This generation grew up with Napster and the iPod. We are just trying to exploit
those macro trends."
eagerness to parade in public on the Internet still surprises many
people. Duncan Watts, a sociologist at Columbia who has been studying
social networks for a decade, says that the growth of sites like
Facebook and MySpace reflects a dramatic shift in how young people view
the Internet. "Now everyone is used to the idea that we are connected,
and that's not so interesting," he told me. "If I had to guess why
sites like Facebook are so popular, I would say it doesn't have
anything to do with networking at all. It's voyeurism and
exhibitionism. People like to express themselves, and they are curious
about other people."
Watts later e-mailed
me to say that he had concluded that the best analogy for sites like
MySpace and Facebook was hanging out at the mall or lounging on the
quad. "Like cruising around on Facebook/MySpace, there's a certain lack
of purpose to just hanging out in public, and it's hard to justify if
you don't have a lot of free time," Watts wrote. "But it serves the
essential purpose (for young people without jobs, families, and other
social responsibilities) of seeing and being seen. You're with your
friends, but you're also creating the possibility that you'll bump into
someone else, in which case you might meet them, or at least be noticed
by them. So it's not about networking (which is more instrumental), or
even about dating (which is far more specific), so much as it is about
just mingling. That's not to say it isn't a powerful idea. Given the
apparently timeless appeal to young people of just 'hanging out' . . .
that might be all the business model you need."
though, the success of sites like MySpace and Facebook may have less to
do with the opportunities they provide for self-expression than with
peer pressure. Once Facebook is available, many students feel compelled
to join simply because everybody else is using it. "I tried to hold out
and go against the flow," Cal Nannes, a junior at Davidson College, in
North Carolina, said. "But so many of my friends were members that I
finally gave in." Many Facebook users also admit that they tailor their
profiles to win the approval of their peers. "I want to seem
self-aware, but not a pretentious asshole," Matt Morello, a Yale
graduate who logs on to Facebook about a dozen times a day, wrote in an
e-mail. He described how simply listing his favorite music became an
agonizing task: "I never used to update this, thinking it was just too
fraught a category (like Favorite Books still is, unless there's some
joke to make). I'm a musician: what I play and listen to has always
been an important part of my identity, and it's only fairly recently
that I've developed the confidence to say, you know, I like this, and I
don't really care if you don't. So what's there now? Albums by
Babyshambles, Lady Sovereign, Marxy, and My Bloody Valentine,
respectively an indie rock thing, a grime thing, a twenty-minute album
released on my friend's record label that's brilliant and heard by
practically no one, and a canonic album from the late 80s."
the photograph that accompanies Morello's profile, he appears with his
eyes closed and his mouth stuffed with cookies. "I think it's something
of an achievement to fit six Oreos in one's mouth, and, more to the
point, it relieves me of having to put up a picture with which I'm
actually trying to convince people that I look good," he explained. "In
short, I wouldn't put anything up that I wouldn't want everyone to see,
and I want certain people to get much more out of it than others, and
for those certains to be impressed by my cleverness tempered by
understand the site's power to confer social standing. "If you don't
have a Facebook profile, you don't have an online identity," Chris
Hughes said to me. "It doesn't mean that you are antisocial, or you are
a bad person, but where are the traces of your existence in this
college community? You don't exist-online, at least. That's why we get
so many people to join up. You need to be on it."
communities have existed since the dawn of the Internet era, and so has
the desire to make them profitable. After Netscape went public, and
surfing the Web became easy, a number of companies emerged to help
people build Web pages, where they could post pictures and text. One of
the first was theglobe.com, which two Cornell undergraduates, Stephen
Paternot and Todd Krizelman, started in their dorm room in 1994. Within
a year, theglobe.com had roughly two hundred and fifty thousand
registered users, and it was generating about fourteen million page
views a month. Using the slogan "A Whole New Life Awaits You," the site
advertised on MTV and on the sides of buses. In contrast to other
home-page companies, such as GeoCities, theglobe.com encouraged its
users to send messages to one another. "Our philosophy was more about
people interacting with other people," Paternot wrote in his 2001
memoir, "A Very Public Offering." "Very quickly, everyone started using
the term community. Everyone jumped on the bandwagon. Everyone became
On November 13, 1998,
theglobe-.com issued three million shares through the investment bank
Bear Stearns, at a price of nine dollars each. By the end of the first
day of trading, the stock price had jumped to $63.50. On paper, at
least, Paternot and Krizelman were worth more than sixty million
dollars each. Less than two years later, theglobe.com's stock was
trading at two dollars, and Paternot stepped down as co-chief executive.
are different this time, people in Silicon Valley and on Wall Street
claim. In the nineties, Internet firms couldn't sell enough ads to
cover their costs. But the combination of broadband, rich digital
media, better search technology, and more users has transformed
Internet advertising. Eighteen months ago, the going rate for a banner
ad on social-networking sites was pennies per thousand page viewings.
Today the rate on MySpace is about ten cents, and Facebook, with its
upscale demographic and unobjectionable content, can charge more-as
much as four dollars per thousand page views. "What was clear all along
was that Facebook had captured the attention and enthusiasm of the
upper end of the socio-economic spectrum of the
eighteen-to-twenty-four-year-old age group," Matt Cohler, who is now
Facebook's vice-president for strategy and business operations, said
over lunch in a restaurant on University Avenue. "That is a lucrative
market for advertisers, and a very difficult-to-reach market. In the
next thirty days, we'll do about ten billion page views. That's a
pretty astonishing number. It would not be difficult to just sell a
bunch of ads and make a bunch of money quickly, but that is not how we
look at it."
Facebook doesn't allow pop-up
ads, and its banner ads are relatively unobtrusive. The company claims
that the ads are particularly effective because it uses information in
members' profiles to serve them with ads related to their interests.
"If you say you are a U2 fan, you might find an ad for the new album in
your profile," Chris Kelly, Facebook's chief privacy officer and
director of corporate development, told me. Facebook also allows
advertisers to sponsor user groups, such as the Nike group, the
Abercrombie & Fitch group, and the Apple group, where members can
discuss a company's products. Some of these groups are surprisingly
popular with students, who evidently are less suspicious of American
corporations than were previous generations of college kids. "At
Harvard, there's a group called Not a Corporate Whore," Chris Hughes
told me, "but a lot of those people are also in the Apple group."
April, 2005, when Accel Partners invested in Facebook, the company was
valued at about a hundred million dollars, a figure some media experts
considered excessive. Today it could be sold for a lot more than that.
During the past year or so, Zuckerberg has received half a dozen offers
for Facebook, all of which he has turned down. At the end of March, Business Week
published an article on its Web site claiming that Facebook's owners
had put the site up for sale and hoped to receive as much as two
billion dollars. Facebook denied the story, and Zuckerberg told me that
he wasn't interested in selling. "I'm not bored yet," he said. Last
month, Facebook announced that it had secured another twenty-five
million dollars in funding from a group of venture capitalists,
including Greylock Partners, Meritech Capital Partners, Accel Partners,
and Peter Thiel.
The deal put a
valuation on Facebook of about five hundred million dollars, and Jim
Breyer told me that he believes it can eventually become a
billion-dollar business. "It cannot be bracketed: that is its power,"
he said. "When I sit down with Donald Graham"-the chairman of the
Washington Post Company-"as I did recently, he thinks of Facebook as a
next-generation media business. When I sit down in Arkansas with
Wal-Mart executives and show them Facebook, they think of it as a
phenomenal e-commerce opportunity. And when I sit down with people from
Apple Computer and RealNetworks they think of it as an entertainment
Breyer said that Facebook hopes
eventually to become a public company. A successful initial public
offering would allow the firm to repay its financial backers;
Zuckerberg could retain control of the firm, just as Bill Gates retains
control of Microsoft. Still, remaining an independent company in the
hope of eventually doing an I.P.O. is far riskier than selling to
Viacom or Google, both of which are rumored to be interested. Young
Internet users are notoriously fickle. In 2003, Friendster, which is
aimed at educated twenty-somethings, was the most popular
social-networking site. Today, it gets less than a tenth of the traffic
that MySpace gets, while new sites like YouTube, which allows users to
share videos, are showing astonishing growth.
order to sell stock to the public, Facebook will have to demonstrate
that it can continue to grow. This may be difficult, because its core
market appears to be approaching saturation, at least in the United
States. In March, according to comScore Media Metrix, the site had 12.9
million unique visitors, only slightly more than the 12.4 million
visitors it had in December, 2005. During the same period, MySpace's
audience grew from about forty million to sixty million. Melanie
Deitch, Facebook's marketing director, acknowledged a slowdown, but
described it as temporary. "Even though we have one hundred per cent of
the four-year colleges and universities, we don't even come close to
capturing all of the junior colleges and community colleges," Deitch
In the past six months, Facebook
has expanded into high schools, where it is competing with MySpace. So
far, only about a million high-school students have signed up. "High
school in no way has been an initial failure, but it has not been the
resounding success that perhaps it could have been," Jim Breyer
acknowledged. Verifying that high-school users are at least thirteen
(the minimum age for a Facebook user) has been difficult. Since not
many high schools give their students e-mail addresses, Facebook has
had to rely mainly on tipoffs from users. At some schools, there have
been instances of students setting up hate groups targeting individual
teachers or pupils. "There is no doubt about it," Breyer said. "The
high-school experience is fundamentally different from the college
In February, Facebook merged
its high-school and college networks, allowing all its users to send
friend requests back and forth and, subsequently, to view one another's
profiles. Older users immediately objected. At Harvard, some students
started a group called Advocates for the Return of Facebook to
College-Only Exclusivity. At Cornell, Lindy Robinson, a freshman,
created a group called You're Still in High School and You're Friending
Me? That's Awkward . . . Now Go Away. On the group's home page,
Robinson wrote: "Do you still have a curfew? Go to school dances which
end at 10pm and are located in the gym? Have your mom call you in sick?
Sneak alcohol from your parents' liquor cabinet? Oh . . . that's funny
. . . we don't. Yeah, we're in college, and we earned facebook. We
stood by, looking the other way, as facebook for high schools was
created. But no longer. Now that you can friend us, we cannot ignore
this mockery of facebook."
against high-school users is part of a larger problem. To compete with
MySpace, Zuckerberg has been forced to make his site more open by
removing some of the walls between users. But to do so undercuts his
founding philosophy and, in the view of some of Facebook's members, its
distinctive appeal: guaranteeing members privacy and control over the
information they post. Consider Facebook's photo application. With just
a few clicks, a user can post a picture of a group of friends at a
party, say, and "tag" the image with their names for others to see. If
a Facebook member in the picture objects, he can remove the link to his
profile, but he can't get the picture taken down.
launching the photo feature and creating the system of easy linkages
and tagging, you guys have dramatically changed social interactions,"
one former Harvard student wrote in an e-mail to Chris Hughes. "Some
people envision an upcoming era of 'no camera' policies at parties and
a growing sense of paranoia among college students worried that all
their actions on Friday night appear online just hours later,
accessible to hundreds or thousands of users (e.g., I can see Betty
getting wasted at the Pudding even if I can't access Betty's profile).
A single user with low privacy restrictions 'overcomes/ruins' all the
protective and restrictive steps taken by peers." Facebook users aren't
the only ones who question Zuckerberg's commitment to protecting
people's private information. In a lawsuit filed in a Massachusetts
federal court in September, 2004, the three founders of
HarvardConnection, which is now called ConnectU, allege that Zuckerberg
stole their idea and connived to delay the site's launch so that he
could complete Facebook first. Zuckerberg denies any wrongdoing, and in
November, 2004, Facebook filed a countersuit, charging ConnectU with
defamation. The case could go to trial next year.
sides agree on some facts, including that in November, 2003, Zuckerberg
agreed to work on ConnectU. He says that the programming he was asked
to do was more complicated than he had expected, and that he got caught
up in academic work. ConnectU's founders, the Winklevoss brothers and
Divya Narendra, claim that Zuckerberg deliberately procrastinated. To
support their case, they showed me a series of e-mails that they have
filed with the court.
On December 4th, in
a message to Cameron Winklevoss, Zuckerberg wrote, "Sorry I was
unreachable tonight. I just got about three of your missed calls. I was
working on a problem set." Thirteen days later, he wrote again: "Sorry
I have not been reachable for the past few days. I've basically been in
the lab the whole time working on a cs problem set which I'm still not
finished with." Then, on January 8, 2004, he wrote, "I'm completely
swamped with work this week. I have three programming projects and a
final paper due by Monday, as well as a couple of problem sets due
On January 14th, the Winklevosses
and Narendra met with Zuckerberg to discuss the delays. According to
Tyler Winklevoss, Zuckerberg mentioned that he had been busy with other
projects, which he did not identify. Three days earlier, however,
Zuckerberg had registered the domain name Thefacebook.com. "He didn't
mention it at all," Tyler Winklevoss told me. "He didn't say he was
working on anything similar to our site. It just seems like the way he
acted was very duplicitous." It wasn't until February 9th that
ConnectU's founders learned about Facebook by reading the article in
launched, in May, 2004, and shares many of Facebook's features:
profiles, messaging, and groups. Today, however, it has only about half
a million users at more than five hundred colleges, making it about a
fifteenth the size of Facebook. In the lawsuit, ConnectU made nine
claims against Zuckerberg, including copyright infringement,
misappropriation of trade secrets, and breach of contract. "He said he
was working for us; he led us on; he took unfair advantage of us,"
Tyler Winklevoss said. "He's just not a fully formed individual, from
an ethical standpoint. He's an egomaniac. He just couldn't stand not
being the guy who launched the site."
I asked Zuckerberg about the charges, he said, "I don't really spend
much time worrying about this. There is a lawsuit going on, but, like,
we know that we didn't take anything from them. There is really good
documentation of this: our code base versus theirs. At some point, that
will come out in court, and they'll compare the two."
public statements and in court, Facebook has pointed out that
Zuckerberg didn't have a contract with ConnectU, and that he wasn't
paid for the work he did. "An oral contract is just as sacred as a
written contract," Tyler Winklevoss said. "It is sometimes more
difficult to prove its existence, but there is an extensive written
record: fifty-two e-mails between us and Mark. I believe the jury will
look at them and say an oral contract existed." When Tyler Winklevoss
read that Facebook was for sale, he was elated. "This asset is now
incredibly valuable, and I'm not going to pretend that's not very
exciting," he said. "I don't want more than I deserve, but I want what
I deserve."In mid-March, Zuckerberg went to La Costa, a resort just
north of San Diego, to attend PC Forum, an annual conference for
computer-industry executives, entrepreneurs, and venture capitalists.
"We are going to hear about reputation and trust," Zuckerberg said to
me on his way into a session called Me Media. "It's going to be sweet."
Facebook was hardly mentioned, however; the founders of YouTube, Chad
Hurley and Steve Chen, were in the audience, and attendees besieged
them with questions about online videos. Zuckerberg sat quietly at the
back of the room. After the session ended, I sat with him on a veranda
and asked him whether Facebook would eventually allow its users to post
videos on their profiles. "It's not a huge priority at the moment, but
I wouldn't say we would never do it," he replied.
has introduced a new feature that allows users to create a second
profile that omits some of the content of their original one. "Would
you prefer that your vegan friends don't see the photo of you eating
that giant steak?" a description on the site read. "You can establish a
Limited Profile that will create a limited view of your Facebook
profile for selected people. These individuals will not be informed
that they are not able to see certain profile features." The
introduction of limited profiles was clearly intended to address
concerns about the erosion of privacy on the site. Nevertheless, the
controversial photo-tagging system hasn't been changed, and Facebook
recently added a search box that allows users to call up members' names
from anywhere on the site and contact them-a feature that it shares
with MySpace and Xanga, a site specializing in online diaries. Still,
Zuckerberg insisted that he hasn't compromised his original vision. "I
think that where we come out is that you always want to give people
control of anything," he said.
At PC Forum, Zuckerberg was more eager to talk about Facebook's prospects
for growth. He cited a deal the company recently made with Cingular, Sprint,
and Verizon, which allows users to access the site from their cell phones.
month, Facebook took a radical step by allowing adults to sign up for the site
using their work e-mail addresses-a move apparently aimed at creating workplace
networks based on the campus model. "Everybody asks us how we are going to grow,"
Melanie Deitch said to me. "This answers that question."
the Forum's closing dinner, Zuckerberg appeared on a panel, alongside
Reid Hoffman, the chief executive of LinkedIn, a networking site for
businesspeople, and Helen Cheng, a young Stanford graduate who is an
expert in online games. Esther Dyson, the impresario behind PC Forum,
introduced Zuckerberg as "the technology entrepreneur of the year,"
which prompted the investor sitting next to me to whisper, "I hear that
he was offered seven hundred and fifty million dollars by News
Corporation, and he turned it down."
"What are we missing, us old guys?" Dyson asked the panel.
think that understanding that there might not be any difference between
what people are doing online and offline is something really
important," Zuckerberg said firmly. "People are online because it is a
more efficient way of doing things." A man in the audience asked
Zuckerberg about some pictures of students drinking at an East Coast
college, which, he claimed, had appeared on Facebook and had led to the
expulsion of several students. "First of all, it's pretty stupid if you
put up pictures of you doing drugs on Facebook," Zuckerberg said. "I
think that that's just sort of the deviant behavior on the very far end
of the distribution. . . . I bet that those kids do not post pictures
of them doing drugs on Facebook anymore." He went on, "Obviously that's
a pretty shitty way to learn that, like, you're not supposed to post
pictures like that on Facebook, but, I mean, the fact that everyone
here hears this and is kind of shocked means that more than just those
few people learn from that mistake, right? And the system is going to
reach an equilibrium that makes sense."
an awkward silence, two other panelists spoke. Then Daphne Kis, Esther
Dyson's business partner, stood up to defend Zuckerberg. She described
Facebook's privacy features, arguing that they distinguished the site
from MySpace, and added that she was comfortable allowing her teen-age
daughter to use Facebook. Then she turned to Zuckerberg and said, "Is
that right?" Zuckerberg looked at Kis for a few moments. Finally, he
said, "Sure." Laughter broke out around the room. "That was a very
child-to-parent answer," Kis said.
May 15, 2006