What it takes to build Facebook

To continue our series of weekend videos, here is a nice one from Y Combinator in which Mark Zuckerberg talks about early days in Facebook. Highly recommended to watch. For those who don’t have time for a 36-min. piece, here are our favorite lessons-to-learn from the video:

– On motivation: Stay inspired by what you are doing. There will always be skeptics saying that your thing can’t be a business. Just care about what you are doing, and that’ll drive you forward.

– On hiring great people: The only way to determine whether a person you are hiring is really good is to realize if you would want to work for that person.

– On making decisions: Out of a hundred things that you can potentially go do, pick up the one that actually matters.

– More on motivation: In the early days Facebook had a serious competitor called “College Facebook”. Every time the competitor would launch at a new school, the whole Facebook team would literally not leave the house and work until they address the problem. They still have this concept of “lock-down” at the company and many teams do it themselves.

– On founder equity (we couldn’t miss this one!): All founders must be on vesting schedule. Mark heard nothing about vesting at the time when they started the company. They just divided equity, and then his co-founder Eduardo left. “That mistake probably costed me billions of dollars” – says Mark. But even when things like this happen, it’s important to move forward.

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The Facebook effect

Do you know how Mark Zuckerberg split equity with his co-founders in the early days of Facebook? Bear with me and read this post to the end, as this story teaches the importance of dividing equity fairly – which almost never means equally.

Zuckerberg was from the very beginning a true leader of the project destined to become Facebook. He was the “idea guy”. He gathered the team around himself and inspired them. He wasn’t focused on money, but “content to make something cool”. His idea and execution attracted great mentors and investors.

Zuckerberg’s early team included Eduardo Severin, who knew business stuff and who gave Mark Zuckerberg $15,000 to pay for the servers needed to run Facebook site, and Dustin Moskovitz, Facebook’s first CTO.

At the beginning Facebook shares were split between them, with Zuckerberg owning 65%, Severin owning 30% and Moskovitz owning 5%.

If you watched the “The Social Network” movie, you should be familiar with the rest of the story. Severin made some false steps failing to perform his duties at the company and even trying to promote his side-startup at the expense of Facebook. Luckily, his share was smaller and Mark Zuckerberg had enough control to do things his way and fix the problem.

What would happen if their team had divided shares equally at the start, with each of them owning 33,3%? Zuckerberg then wouldn’t own the majority of shares and wouldn’t be able to force Severin out of the company. And Facebook would probably never become the successful giant we know today.

Now, think again in the light of this story – will equal split be good for your startup?

This story is based on a much longer, but insightful article from BusinessInsider.com