Facebook is not a punk’s drama
By John Gapper
Published: September 29 2010 20:15 | Last updated: September 29 2010 20:15
Punk. Billionaire. Genius. That is the three-word description of Mark Zuckerberg, the founder of Facebook, in the film account of how he took a social networking site from a Harvard dormitory to a valuation of $30bn in seven years.
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The Social Network, the Aaron Sorkin-scripted film that opened this week to critical acclaim, tells the story of how he fell out with the Winklevoss twins, two fellow students who believed he had stolen the idea for Facebook from them, and later squeezed out Eduardo Saverin, his co-founder.
The film does not reach a neat conclusion about the dispute, although it portrays his expansion of Facebook as driven by desperation to make the girlfriend who has ditched him regret it. But it does pose a disturbing question about entrepreneurs. Must they be “punks” and “assholes”, as she calls him in the first scene, to succeed?
The Zuckerberg of the film is captivated by the Sun Tzu-like tactics of the Silicon Valley venture capitalists, with Sean Parker, the rapscallion co-founder of Napster, as his tempter. “If you guys were the inventors of Facebook, you’d have invented Facebook,” he tells the Winklevosses (or “Winklevi” as his character refers to them). In reality, they settled for $65m compensation, a figure they are now disputing.
It all makes for a high class drama, but is it any better a guide to how entrepreneurs succeed than King Lear is to monarchs? Surely not. Some entrepreneurs can be ruthless but so can some corporate executives when they jostle for advancement – amorality is not their distinguishing feature.
“They need to be persistent, persuasive, assertive and to have charisma, but most are not ruthless or conniving,” says Vivek Wadwha, an adjunct professor at Duke University, who has studied entrepreneurs’ backgrounds and motivations. “The difference between them and regular people is determination.”
Understandably, since Mr Zuckerberg is the richest Harvard dropout since Bill Gates of Microsoft (and has just made a $100m donation of Facebook shares to help schools in Newark, New Jersey) the film hints he was led astray by money. “A million dollars isn’t cool. You know what’s cool? A billion dollars,” the Parker character tells him.
That too is misleading. “The primary drive for most entrepreneurs is to build something, to solve problems. They want to get past some hurdle in their lives, to do something exciting, to break away. It is difficult to get many of them to talk about money,” says Edward Roberts, chairman of the Massachusetts Institute of Technology entrepreneurship centre.
This is not to say that entrepreneurs are sweet, easy people to get along with. They are driven and impatient and have a clear view of how the company should be built. Co-founders often fall out in the early stages when one thinks another is not working hard enough or has bad ideas.
The Social Network graphically portrays that moment in the early life of Facebook. The 30 per cent stake held by Mr Saverin, with whom Mr Zuckerberg had become disillusioned, was heavily diluted when venture capital was brought in and Mr Saverin then sued. He settled for 5 per cent of Facebook, which is not too shabby.
Human nature dictates that people tend to be at their worst when there is a sharing out of the spoils (see King Lear). That moment occurs early on in the lives of growth companies but regularly in big corporations – when, for example, there is a contest to become the next chief executive.
The incentive to be ruthless actually tends to be lesser in growth companies because so much of the value is about building something, not in dividing up what already exists. If the pie is large enough, as Facebook shows, then a small slice is plenty. In the film, the Zuckerberg character assails the Winklevosses’ lawyer for requesting his full attention during a deposition: “The rest of my attention is back at the offices of Facebook, where my employees and I are doing things that no one in this room, including and especially your clients, are intellectually or creatively capable of doing.”
Amid all of the drama of betrayal and rivalry, that is the essential point. Facebook is not worth $30bn because Mr Zuckerberg stole the notion for a social network from the Winklevosses (Friendster already existed, after all) or expelled a co-founder. If so, he would now own 100 per cent of nothing.
Instead, he executed the idea brilliantly, and adapted as he went along, gaining investors through Mr Parker, building a cadre of talent around him, and ending up at the helm of a global enterprise.
I have criticised Mr Zuckerberg for his attitude to privacy, but to ascribe his success to being a punk renegade would be ridiculous. More generally, entrepreneurs do not create large companies by being lone, ruthless geniuses but by having the personal and organisational talents to deploy the skills of others.
The entrepreneur’s ability to work in a team is a key factor for success. Research shows that a start-up with two co-founders is more likely to gain $100m in revenues than a lone effort, says Prof Roberts. The chances increase further with three co-founders, and further still with four. That does not make for great drama, which The Social Network provides. It is, however, the reality.
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