Saturday, May 19, 2012

"How Mark Zuckerberg Hacked the Valley" (FB)

From BusinessWeek:
In 2006, when he was 22, Mark Zuckerberg gave up writing computer code to focus on managing his rapidly growing startup. Like Jim Brown retiring from football at 29 or E.M. Forster abandoning the novel in his forties, the prodigy who programmed the very first version of Facebook was walking away from his transcendent talent. Or so it seemed. A few years later, Zuckerberg began setting annual tests of discipline for himself, vowing to wear a tie to work every day in 2009, learn Mandarin in 2010, and personally kill any animal he ate in 2011. Earlier this year, unbeknown to all but a few friends and co-workers, he gave himself a new challenge with unknown ramifications for what is soon to be Silicon Valley’s newest public company. Mark Zuckerberg pledged to return to his roots and spend time programming each day.

Zuckerberg’s true skill has always been a facility for hacking. That’s a foundational verb at Facebook, to hack. In its offering prospectus, Facebook repeatedly describes its corporate culture as “the hacker way”; on its new campus, a 57-acre office park abutting San Francisco Bay in Menlo Park, Calif., there’s a building with a big sign that reads “The Hacker Company.” Those slogans don’t mean Facebook is teaming up with Anonymous or breaking into NORAD. They’re talking about achieving a goal in an unconventional way.

Zuckerberg and his crew have made a series of high-risk moves—five hacks that have changed Silicon Valley forever—that were far more daring than wearing a hoodie to an IPO roadshow. Instead of allowing himself to be replaced by a more seasoned chief executive officer early on, Zuckerberg consolidated his authority with bylaws that gave him an incontestable voting majority on the company’s board. He preserved that power by rebuffing repeated acquisition offers. Instead of rushing to go public, Facebook delayed its offering well past the usual ripening date of other successful startups. Even conventional hacking—manipulation of computer code—is executed in an unusual way at Facebook.
Every Zuckerberg hack is in the service of an overarching vision: that technology and online authenticity can bring people together. And the easier it is for people to find one another, the more time they’ll spend online, sharing photos of their kids, their moods, what they read, who they date, and on and on with all the people they have met in their life (or, if they neglect their privacy settings, with the whole world). Neither Zuckerberg nor other Facebook executives would comment for this story because of the quiet period mandated by the Securities and Exchange Commission before going public. But just as Jobs evangelized for simple, elegant devices, and Gates extolled the productivity-enhancing power of software, Zuckerberg has long argued his case to an often skeptical audience. “I think Mark Zuckerberg is ‘The One,’ ” says Roger McNamee, a longtime Valley venture capitalist whose firm, Elevation Partners, is an investor in Facebook. “Like Bill Gates and Steve Jobs, he has set a tone that everyone else has lined up behind.”

Hack #1
Friend the enemy of your enemy, even if that means hooking up with Microsoft

On April 9, Facebook acquired the mobile-photography startup Instagram for $1 billion in cash and stock. The acquisition, an attempt by the social network to strengthen its presence on smartphones, was unusual for a number of reasons, among them that it occurred during a quiet period. It was also notable in that Zuckerberg conducted the negotiations himself with Kevin Systrom, co-founder of the rapidly growing San Francisco startup, before bringing the deal before the Facebook board.

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Systrom, a clever technologist who once worked at Google (GOOG), sensibly took the payout while joining forces with his most powerful competitor. Over the years, the founders of promising startups such as Flickr and Skype have done the same. During Facebook’s formative stages, Zuckerberg confronted a similar situation. Unlike Systrom, he refused to sell.

In 2006, Yahoo! (YHOO) was far more formidable than the wounded portal now churning through CEOs, and early that summer it tempted several Facebook executives and board members with a buyout proposal of the same amount: $1 billion. Zuckerberg had rejected an earlier acquisition offer from Viacom (VIAB), but he tentatively agreed to the Yahoo deal although he never gave his final approval, according to several people at both companies who recall the discussions. McNamee, the venture capitalist, remembers talking to Zuckerberg at the time and seeing the anguish on his face as he worried about contravening the wishes of several members of his board.

When Yahoo’s stock fell more than 20 percent after a disappointing earnings report on July 19, Zuckerberg’s decision became easier. Terry Semel, then Yahoo’s CEO, cut his offer to $850 million, according to executives on both sides of the deal, yet tried to entice Zuckerberg with a personal payout that remained the same as the earlier offer. Facebook rejected the deal and Zuckerberg celebrated his renewed independence by slapping high fives with colleagues, according to an account in The Facebook Effect by David Kirkpatrick....MORE