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HomePageTurnerBook ExcerptsMark Zuckerberg once said yes to selling Facebook. This is what followed

Mark Zuckerberg once said yes to selling Facebook. This is what followed

In Facebook: The Inside Story, author Steven Levy writes about the meeting where Zuckerberg met Yahoo’s president and decided against selling Facebook.

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Zuckerberg’s hand was weakened by a disturbing development. In mid- 2006, Facebook had stopped growing. The dashboards told the story: user numbers had stopped going up. College students were already on board. Facebook wasn’t finding the same instant success in high schools. Workplace networks was a failure.

“We had tried something with high schools that didn’t work out— it wasn’t growing that quickly,” Zuckerberg recalls. The News Feed hadn’t launched. Soon Facebook would open its gates to all comers— but some people in the company were warning that Open Reg might be the biggest risk of all. Some thought Facebook should double down on colleges and build other services on top of that market. Own that market! But Zuckerberg was committed to playing his real- world version of Risk. Colleges were a tiny square on his game board.

“It was very clear from the beginning that this was a utility for everyone on the planet,” says Cohler. “He felt, No, I’m not going to go deep in university, I’m going to go broad to the world.”


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Zuckerberg tried to stall Yahoo! Semel complained in one meeting that the Facebook team wasn’t moving fast enough, that they were too inexperienced to make a deal. Indeed, throughout the meeting, Zuckerberg went into his coma routine. Finally, when it was apparent that everyone in the room was desperate for him to say something, Zuckerberg spoke

“Well,” he said, “we think that companies suck.”

Yahoo!’s president, Dan Rosensweig, broke the tension with a quip. “At Yahoo!, we like to think we suck less.” Everyone had a good laugh. But the stalemate continued. “Terry’s Hollywood approach to negotiations definitely wasn’t working with Mark,” says Facebook’s general counsel at the time, Chris Kelly.

Kelly was among the few who supported Zuckerberg’s stance. He knew that his boss’s resolve might be faltering, and felt it might help to put him in touch with someone with a lot of experience in the Valley who might give some contrarian perspective. Kelly knew a well- known investor named Roger McNamee, and arranged a meeting between the two. Before Zuckerberg said a word, McNamee correctly analyzed the situation. Zuckerberg didn’t talk for a long time, and finally blurted out that he didn’t want to sell, but wondered if he should. “I don’t want to disappoint everybody,” he said. McNamee endeared himself to Zuckerberg by telling him that he should feel free to follow his heart.


Also Read: Mark Zuckerberg doesn’t care anymore if you like Facebook or not


The pressure was enormous. Owen Van Natta was a strong believer in selling. One night he and Zuckerberg were heatedly arguing the issue in the office. It went on past one in the morning. “If you don’t sell the company,” Zuckerberg recalls him saying, “you’re going to regret the decision for the rest of your life!”

Zuckerberg knew he’d have regrets if he did sell it. But he wasn’t sure how to deal with the enormity of the offer. Could you really turn down something that big? He had no framework on how to value his company. “It was very hard for him,” says Chris Kelly. “He was a very nervous person at that point and was sometimes kind of paralyzed as he ran through things.”

Indeed, Zuckerberg himself had trepidations. Ever since Thefacebook had exploded at Harvard, and each step of the way in its journey, he had been opportunistic and ambitious. But he also felt the doubts that anyone in his early twenties might feel when suddenly tossed into the deep waters of high finance and monumental decision- making. Would things really work out? Who was he to do this? “I definitely had this imposter syndrome,” he says. “I’d surrounded myself with people who I respected as executives and I felt like they understood some things about building a company. They basically convinced me that I needed to entertain the offer.”

Zuckerberg actually did crumble at one point and tentatively agreed to take the money. But Semel overplayed his hand. In the future, when Facebook would make its own huge acquisitions, it employed shock and awe to get founders to sign away their companies before they knew what hit them. That wasn’t Semel’s style. Instead of locking down Zuckerberg in his lawyer’s office and not letting him leave until the deal was done, he reopened the negotiations, believing that he now had an advantage to press. He noted that since Yahoo!’s share price had fallen about 20 percent since negotiations began, the deal should be for the same percentage of Yahoo! as it was before the drop, thus yielding less than a billion for Facebook.


Also Read: Facebook’s content oversight board may take months to decide on controversial user posts


Zuckerberg used this as an excuse to reverse course. “Yahoo! made it easier because they kept reneging on their offer,” he says. “And at each step along the way the team was just so spooked and was like, Look, we should just take it. I was like, Can we at least all agree that if they renege on this that we can be done?” He gathered his resolve and made a final call. He would not sell. Cohler now supported him. Thiel, as always, respected a founder’s wish. Moskovitz had been with Zuckerberg all along. The rest would have to live with it.

On a late August afternoon, Zuckerberg showed up at the house that the company was renting. Facebookers were hanging out around the pool, beers and conversation, just one more day in the perpetual office party that was Facebook. For weeks it had been a question whether Facebook would continue on its dramatic trajectory or cash out and become part of Yahoo!, which by 2006 was already a company past its prime, with a low probability of empowering its new acquisition to fulfill its destiny. Though negotiations had been handled off- site, and only a few knew exactly what was happening, the possibility of a Yahoo! Takeover had loomed over the company. Now Zuckerberg told them it was over: no sale.

 On one hand, ending the drama was a relief to Facebookers. After all, they did believe in the Facebook mission. All those all- hands meetings with Zuckerberg’s ranting had been like imbibing some potent Kool- Aid. Furthermore, going to Yahoo! would have meant the end of the dream as well as the end of a period of their lives that would never be matched: working like crazy on a project that millions of people loved while being involved in a daily geek spring break of office romances, video games, and gonzo coding binges. No one was excited about becoming part of Yahoo! “It was obvious,” says Kate Losse, employee number 51. “Yahoo! was already not cool. And Facebook was very cool at the time.”

This excerpt from Facebook: The Inside Story by Steven Levy has been published with permission from Penguin Random House India.

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