In 2010, Mark Zuckerberg, the 26-year-old originator of Facebook, was Time magazine’s 2010 Person of the Year, was number one on Vanity Fair’s list of the Top 100 “most influential people of the Information Age,” and was number sixteen in New Statesman’s annual survey of the world’s 50 most influential figures.
Zuckerberg launched Facebook from his Harvard dormitory room on February 4, 2004. He may have been inspired by the student directory published at Phillips Exeter Academy, the prep school from which he graduated in 2002. Named “The Photo Address Book,” it was referred to by students as “The Facebook.”
Once at college, Zuckerberg’s Facebook started off as just a “Harvard thing” until Zuckerberg decided to spread it to other schools, enlisting the help of roommate Dustin Moskovitz. They first started it at Stanford, Dartmouth, Columbia, New York University, Cornell, Brown, and Yale, and then at other schools that had social contacts with Harvard.
Zuckerberg, Moskovitz and some friends moved to Palo Alto, California, leasing a small house that served as an office. Over the summer, Zuckerberg met Peter Thiel who invested in the company. They got their first office in mid-2004. According to Zuckerberg, the group planned to return to Harvard but eventually decided to remain in California. They had already turned down offers by major corporations to buy out Facebook. In an interview in 2007, he explained his reasoning:
“It’s not because of the amount of money. For me and my colleagues, the most important thing is that we create an open information flow for people. Having media corporations owned by conglomerates is just not an attractive idea to me.”
On July 21, 2010, Zuckerberg reported that the company reached the 500 million-user mark. When asked whether Facebook could earn more income from advertising as a result of its phenomenal growth, he explained:
“I guess we could. If you look at how much of our page is taken up with ads compared to the average search query. The average for us is a little less than 10 percent of the pages and the average for search is about 20 percent taken up with ads. That’s the simplest thing we could do. But we aren’t like that. We make enough money. Right, I mean, we are keeping things running; we are growing at the rate we want to.”
Facebook’s journey from Harvard to the world has not been problem free. Fellow Harvard students Cameron Winklevoss, Tyler Winklevoss, and Divya Narendra accused Zuckerberg of intentionally making them believe he would help them build a social network called HarvardConnection.com (later called ConnectU). They filed a lawsuit in 2004 but it was dismissed on a technicality on March 28, 2007. It was refiled in federal court in Boston. Facebook counter sued in regards to Social Butterfly, a project put out by The Winklevoss Chang Group, an alleged partnership between ConnectU and i2hub. On June 25, 2008, the case was settled and Facebook agreed to transfer over 1.2 million common shares and pay $20 million in cash.
Facebook's days as a private company may be numbered. By early 2012, it plans to either hold an initial public offering or begin disclosing its financial results, according to news reports.
Facebook has reported that it intends to pass the key 500 shareholder mark during 2011, according to the Wall Street Journal. Once a private company has 500 shareholders the SEC requires it to publicly disclose financial information, even if they choose to remain private. Companies have about four months after exceeding the 500 shareholder threshold to start publicly reporting financial information.