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Zuckerbergs Ethics

Discussion in 'FaceBook' started by Bugalugs, Jan 5, 2011.

  1. Bugalugs

    Bugalugs Regular Member

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    This came as an email to me. It is a quote from the well known Michael Masterson the founder of that great daily email Early To Rise.
    This is from his newsletter on how he felt about the movie.What follows is his critque.
    From others I gather that his opinion is not alone on the ethics of the Facebook founder.


    Code:
    "Quote
    
    I recommend you take the time and go and see The Social Network in a theatre as you will not only get the experience of the movie but you will feel the reaction of the younger people in the audience who think it is "so cool."
    
    Let me know what you think.
    
    "I finally got around to seeing Social Network, the surprise hit movie about the founding of Facebook.
    
    The movie depicts the founder, Mark Zuckerberg, as an unethical opportunist who stole the original idea from three fellow students -- and then, after the business was successful, screwed Eduardo Saverin, his best friend, out of Eduardo's share of the business.
    
    The first breach of ethics is debatable. Zuckerberg was hired by his three fellow students to work on a business they were developing -- an Internet dating site restricted to Harvard students. They explained to Zuckerberg that they believed the exclusivity of Harvard would give the service panache.
    
    Zuckerberg agreed to work for them but didn't. Instead, he furtively developed a similar website using their core concept of exclusivity but not using any of their programming or other intellectual property. After the three students discovered what Zuckerberg had done, they tried to stop him but were unable to get him to desist. Finally, they sued him and won $64 million.
    
    Zuckerberg settled the case not because it was clear that he had broken any laws but because his attorneys no doubt persuaded him that though he was technically clean a jury might think what he had done was wrong. 
    But what he did to Eduardo Saverin, his best friend, was indisputably unconscionable.
    
    Eduardo was there with Mark from the moment Mark came back with his half-stolen idea. He gave him ideas and moral support. He also financed the business, for which he and Mark agreed he'd get a 30% stake.
    
    As the business grew, the two had disagreements about whether they should take advertising (Zuckerberg didn't want to) and later about whether they should take on Sean Parker, the co-founder of Napster, as a partner. (Zuckerberg wanted to; Saverin didn't.)
    
    Zuckerberg's view held sway, but the disagreement over Parker continued to be a source of irritation. The relationship really started to break down when Zuckerberg and Parker moved the operation from Harvard to Southern California and began to run the business like a bordello.
    
    Saverin didn't like Parker's influence on Zuckerberg, and he didn't trust him to contribute to the business. At one point, he froze the company's bank account to try to bring Zuckerberg to his senses.
    Zuckerberg was infuriated, but the two friends resolved the situation and agreed to work together. Meanwhile, Parker secured half a million dollars in seed capital, which allowed them to rent a large office and hire some employees. The business was growing now at a rapid pace. Before long, they had a million members, then five million, then 10 million.
    
    At one point, Zuckerberg and Parker had Saverin sign some "routine" papers that turned out to be documents that degraded Saverin's shares. The net result was that, at the next funding, Saverin's shares were diluted by 99% while none of the others were affected.
    Zuckerberg had essentially stolen his friend's equity.
    
    I don't know for sure what the real story is, but it wouldn't surprise me to learn that it was not much different from the movie. If so, these are my thoughts:
    
    - Money changes small people and big money changes small people in a big way.
    
    - Businesses are sometimes complicated and complications create changes in duties and   responsibilities. 
    
    - Normally, these changes can be dealt with by making compensatory adjustments. If one partner is working more than another, you can pay him more. If one partner decides he doesn't want to work at all, you can dock his compensation.
    
    - But the one thing you can never adjust unilaterally is equity. Equity -- the stake each partner has in the business when the business is established -- is sacred. 
    
    What Zuckerberg did in "stealing" the core business idea is one thing. But what he did to Saverin is egregious. He connived to steal his friend's equity.
    
    If a person is willing to unilaterally change the equity situation in a partnership, he is capable of anything. 
    
    Here are the takeaways...
    Before you do business with anyone, make sure they understand the sacredness of equity. If they don't -- if they think that equity is dependent on anything other than ownership -- don't make a deal with them.
    
    Before you make a deal, think carefully about the equity distribution. Understand that during the course of the business's life things will change, sometimes dramatically. And the contributions that are made in the beginning will change too. Some partners will become less valuable and some will become more. But the equity distributed in the beginning cannot be dependent on those contributions. 
    
    When you have a partner who isn't living up to your idea of his end of the bargain, you are free to try to buy out his share of the business, but he does not have to let you do it. You are also free to negotiate his salary if he is drawing a salary from the business. 
    
    But the one thing you can't do -- that you can never do -- is adjust his equity downward. You can only buy his share of the business at face value. Once equity interest is vested, it is not dependent on performance. It represents a feeling the partners had about what was fair and equitable at a certain moment in time. And that is that."
     
  2. khirad

    khirad BANNED BANNED

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    Correction He is Mark FukerBerg not ZikerBerg
     
  3. ForceTask

    ForceTask Newbie

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    ENVY³ ?

    Correction = He´s doing it right and others get jealousy, right?

    Who cares about Zuckerbergs Ethics ?
    He got his cash and don´t need to care what you two guys think about his Ehtics.

    50Mill. Yearly private income, what do both have to offer except of envy ?
     
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  4. saxgod

    saxgod Regular Member

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    Get into zuckerbergs mindset if you really want to make money.
    If you believe the movie he also started out blackhat, scraping the facebook sites of the dorms and publishing this on a hot-or-not type of website (facemash). After this took of and he saw how much traffic it generated he started pondering about how to build something whitehat that would get as much traffic. he didn't want to create a clone like myspace or friendster so he 'stole' the unique idear of making it exclusive to harvard students and so he gave a 'twist to the social network method' :)

    even when he hires new employees he has them hacking a python server to see how good they are.. hacking into any system are essentially blackhat skills. A whitehat might know about the techniques used and know how to secure himself against these attacks but that doesnt mean you know how to do them yourselve while drunk :p

    so if you are on this forum to make money, get into his mindset. screw the public, steal ideas, be the biggest, trust no one..
    One of the most inspiring quotes for me comes from the movie Hackers: We are Samurai... the Keyboard Cowboys... and all those other people who have no idea what's going on are the cattle... Moooo.

    just my thought
     
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  5. imperial109

    imperial109 Regular Member

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    Not to bash the OP or the emailer, but DUH. If you've invested your time into a business, and then, you have a so called partner who is wishy washy about his feelings toward actions to move your company forward, then I would give him the boot as well.

    If you have an opportunity to make serious money, you don't wait for your "friend" to catch up. If you don't make a big hit at first, then you're looking at a large loss in profits from competitors. Think about it, if big Z would have waited to expand when his roommate (and this is from the movie's perspective) was ready, then it would not take much for those 3 rich kids with the original idea to come in and pay someone to do something similar. From the start you would have competition between the two, and if Z didn't push it forward from the beginning, then who knows, maybe MySpace would still be on top, and we would not have so many people making money from FB.

    Just my 2c
     
  6. nambooooo

    nambooooo Regular Member

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    With an outcome like that, no matter the means.
    He gave the world Facebook. If he worked for the brothers, the project might of stayed local. I honestly don't give a crap about his ethics, actually his ethics are about right if you wanna be successful and I'm not saying that because we're on a BH forum or because I have a BH mindset. Mark had the guts to do it, that's it.
     
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  7. cookie48

    cookie48 Jr. VIP Jr. VIP Premium Member

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    Dont be naive, its all about money. It always was. There is no such thing as ethics in business.
     
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  8. raidel21

    raidel21 Regular Member

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    lol..

    I think its a bunch of bullshit.

    Im as ruthless as the next blackhatter, but you need to draw the line somewhere.

    My friends? My Blackhat JV friends?

    Hell naw, No way I would screw them over..Not me.

    Anyway, this shows who can be trusted among US anyway so expose yourselves
    some more, Tell me how Ethics sucks and how you would take my money..

    If you steal from a friend/partner , you suck.

    F*** MARK and Facebook....
     
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    Last edited: Jan 5, 2011
  9. MisterGemini

    MisterGemini Senior Member

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    Thank you very much... now I know exactly who NOT to do business with. Mindset like that I can't trust to do business with.

    Thank you for outing yourself as someone to avoid any transactions with. :)
     
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  10. Longover

    Longover Power Member

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    Yeah, I wouldn't be able to steal from a close friend. Mark probably lost
    a little bit of himself as Facebook grew.
     
  11. MisterGemini

    MisterGemini Senior Member

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    Yes there is.

    Those that have little business just don't know it. They will always be two bit hustlers who go nowhere in their mommies basement telling all their friends how they are going to be the next big online millionaire. Meanwhile those who really have money and will do business think you are a joke and want you to just shutup and go away.
     
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  12. MisterGemini

    MisterGemini Senior Member

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    Outcome like that? Do you want to compare all the dotcom bombs because of stupid shit like this to just one single success?

    Off the top of my head.. I can name half a dozen projects I have had some connections with that were funded from the get go to the tune of tens of millions. Today they are dust... in every single instance.. it was because the people operating it did really bad crap to others... everything from gay lover hissy fits to just stealing money from customers and not delivering what they paid for.

    Everyone has to be aware that facebooks value is largely based on the same premise that caused the entire economy to collapse just a few years ago... don't think that the way a company operates can't come back to bite it in the ass. Karma is a bitch when you are on the wrong end of it.. and there is no escaping the universe.
     
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  13. Mises

    Mises Junior Member

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    1) The movie isn't completely true
    2) Zuckerberg "stealing" the idea is arguable and after the lawsuits that was dealt with
    3) Zuckerberg did the hard work in coding the bulk of Facebook with his team- Saverin did not, so let's not pretend that without Zuckerberg FB would have even happened.
    4) Zuckerberg's defense was that he acted within the confines of the contract. If that was the case, then everything he did with Saverin was legal. Saverin of course disagreed and sued- the two parties settled for an undisclosed amount. Saverin is currently worth over $2 billion. At this point all is settled and let's not pretend Saverin got robbed here- the settlement was clearly for a good amount and after all, he did agree to it.
     
  14. MisterGemini

    MisterGemini Senior Member

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    I was in a similar situation in a business where I had a partner.. wasn't my best friend either.. it was family. It ended up the whole operation was on my shoulders and he just wasn't around anymore. I bought him out through negotiations and that was that.

    This whole idea that you can just take someones share of the business if they are not this or that is total bullshit. It's not for YOU to decide.. that's like saying a child has only one parent because mommy spent more time raising him/her than the daddy.. so bye bye daddy.. you lost your share.. geez.. has this generation gotten that fucked up?
     
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  15. tacopalypse

    tacopalypse Executive VIP Jr. VIP Premium Member

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    facebook got to exactly where it is today because of every single one of the decisions that were made along the way, big and small, good and bad.

    had the decisions been different, then the outcome would have been different as well.
     
  16. alessio99

    alessio99 Newbie

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    :(

    If you had money you'd probably know this is a wrong assumption...
     
  17. imperial109

    imperial109 Regular Member

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    MisterGemini is right, don't do business with those with a mindset like Zuckerberg's. Zuckerberg is portrayed as a backstabber and a douche, and with a public image like that, who would want to do business with him? Fortunately for him, no matter what the media portrays him as, he is still a good businessman, and that's the message most of you are missing.

    Ethics are also probably the most important part of doing business, and if you don't have respect for your partners, then don't expect to be showered with gold. Especially in the online world where everyone hides behind their alias.
     
  18. Galanoid

    Galanoid Newbie

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    Me too, I couldn't let a friend down just for money. But unfortunately, this is how the world works nowadays.

    Money it's ok, afterall, we're all here for that.

    But there are certain things that money can't buy. An example could be friendship.

    Sure, you can have all the money in the world. But if you're alone, it won't make you happy at all.
     
  19. boo blizzi

    boo blizzi Regular Member

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    Well I personally have been fascinated by Zuckerberg since the movie dropped...I also read a book called the facebook effect...while i dont agreee with shafting a business partner...i do believe in constant elevation and progress when its clear the business is working and if any partner isnt moving with the movement then he gets moved on...Saverin froze the bank accounts before his shares were diluted at a very critical time in FB's initial growth period...Mark was not too business savvy so he let that shit ride and tried to fund the growth outta his own pocket (something the movie doesnt show)...but Shawn Parker was sharp and he wasnt trying to let it go...he hinted to Mark that Eduardo was trying to crush the company by freezing the accounts...so he would make sure that that couldnt happen again and went on to secure funding from Peter Thiel (Paypal dude and one of the most successful venture capitalist in the world) Mark Pinkus (Zynga dude) the dude that founded LinkedIn (cant remember his name right now) and some other company that gave them a 300k line of revolving credit and a 25k equity investment so they could keep buying servers...Now u think about it...if u meet a dude that u kinda admire (Mark<Shawn) and he saves ur ass and company from financial failure as well as provide you a fool proof way to stay in control of ur company (Mark controls 3 seats on FB board thanx to Shawn's structuring) as well as technical input (Shawn helped code some ideas), also makes it so that ur social network idea is some what protected (Mark Pinkus and the LinkedIn dude own a patent that defines what a social network is and because they are investors in FB are not likely to enforce it), and does a ton of other shit for you that has all turned out positive...u wouldnt listen to this same influential dude when he tells u that the nature of business dictates that we dilute the shares of the douche that tried to crush us in order to bring on new investors while still maintaining OUR equity stake? I think all of us would have made that choice/business decision/mistake/shady move/strategic decision/(insert your opinion). I hear alot of Zuckerberg bashing on this board and while u are entitled to think as u wish...I would suggest u dudes study him and the way he thinks...he's brilliant yet naive enough to become a threat to G00gle without even flinching...he's not tryna compete in their world...he went around them and created one for himself to dominate...and with that open graph shit it's only a matter of time before he accomplishes it...he views faceb00k as a utility like the gas or electric company...he wants it to become integrated with the web to the point where u dont even realize ur using it anymore...u just do!!

    sorry for the long post...im inspired by the lil fucker and his ilk (google dudes, zynga dude, zappos dude, amazon dude, larry ellison, bill gates, and steve jobs...ooohhh and this dude Bill Gross...g00gle stole the idea for adwords from him)
     
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    Last edited: Jan 5, 2011
  20. Cnotey

    Cnotey Power Member

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    THIS RIGHT HERE is what is wrong with the fucking world. Attitudes like this. I wish I could find this kid and remove him from the population. It's called greed young man, and if you cannot hold a code of ethics which will combat greed and evil, then you yourself become evil.

    If you do not have a code of ethics, you cannot call yourself a man. As ethics and morals are all that separate us from the terrorists, monkeys and cavemen.
     
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    Last edited: Jan 5, 2011