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Facebook's Dirty Tricks

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The more dirt we get on on Mark Zuckerberg—the Facebook founder and, now, bonafide Hollywood character—the more it seems like his greatest sin is a propensity to write indelicate instant messages.

That's the upshot of the latest leak published by Business Insider, which details Zuckerberg's falling out with co-founder Eduardo Saverin, who was the company's initial investor and the purported source for the forthcoming film, the Social Network. I haven't seen the movie, but it supposedly makes Zuckerberg like an evil version of the kid in The Skulls. Business Insider's post argues that Facebook calls the Facebook film an act of "cold-blooded revenge" on the part of Saverin, who Zuckerberg froze out of Facebook using tactics unspecified "dirty tricks." (Kudos to Business Insider for doing some great reporting, by the way.)

Here's what happened: Zuckerberg, apparently under guidance from his investors, created a Delaware corporation, purchased Facebook, then a Florida LLC, and then diluted Saverin's substantial equity stake on the sly. The reason? Saverin, who was living in New York, was slow to respond to Zuckerberg's requests for approval to raise additional funding. As Business Insider writes, "The situation soon became critical, because without financing, TheFacebook.com would end up running on Zuckerberg family loans.Eventually, Mark decided to solve the problem by cutting Eduardo out of the company."

From an email written by Zuckerberg:

Eduardo is refusing to co-operate at all…We basically now need to sign over our intellectual property to a new company and just take the lawsuit…I'm just going to cut him out and then settle with him. And he'll get something I'm sure, but he deserves something…He has to sign stuff for investments and he's lagging and I can't take the lag.

The idea that Zuckerberg would intentionally "cut out" a co-founder, sounds bad, but one can sympathize with his rationale. Zuckerberg seems cold, but it sounds like he didn't have much choice and the settlement seems to have been quite generous. Saverin walked away with stock that is worth about $1 billion today.




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