Harvard graduates Cameron Winklevoss, Tyler Winklevoss, and Divya Narendra say Facebook cofounder Mark Zuckerberg stole their idea. David Kirkpatrick, author of The Facebook Effect, doesn't buy it.
Don't Miss...
At Last -- The Full Story Of How Facebook Was Founded
Produced By: Kamelia Angelova & William Wei
More Video: CLICK HERE >
We've published a series of stories detailing some of Facebook CEO Mark Zuckerberg's youthful foibles around the time he founded the company.
The lowlights:
Last week at the D8 conference, Mark himself finally addressed these reports. He said:
"I did a lot of stupid things right when I was in college. I don't want to make an excuse for that. I'm really sorry I did that…Some of the things people accuse me of are true. Some of them aren't…Some IMs have been printed, there are pranks, there are blogs…There's been a lot of space between that early stuff and where we are now. If I knew what I knew now, then, then I hope I wouldn't have made those mistakes. But I can't go back and change the past. I can only do what I think is the right thing going forward."
Here's the relevant 3-minute bit from All Things D's hour-long video (also a must watch). Watch:
Cameron and Tyler Winklevoss are entrepreneurs, twins, Olympic rowers, and Harvard graduates. They are best known, however, for alleging that Facebook founder Mark Zuckerberg stole the idea for Facebook from them back in early 2004.
The brothers sued Zuckerberg and Facebook in the fall of 2004. After many years of legal back-and-forth, the Winklevosses won a settlement from Facebook estimated to be worth $50 million or more.
The Winklevoss's allegations helped fuel an image of Facebook CEO Zuckerberg as a sleazy, untrustworthy punk--an image that the forthcoming Facebook movie, The Social Network, apparently hammers home.
The Winklevoss brothers, meanwhile, have been cast as victims--honorable, clean-cut, scholar-athletes who fell for the charms of a gifted but morally compromised Zuckerberg.
Well, it turns out the Winklevosses had some legal troubles of their own.
In the spring of 2005, after graduating from Harvard, the brothers were allegedly evicted by their landlord from a $4,600 per month apartment they had rented in Cambridge.
Their alleged transgressions?
Failure to pay rent, a series of complaints about partying and noise, and an arrest after a fight in which Cameron allegedly attacked Tyler with a hammer.
Months after the eviction, moreover, the owners of the apartment complex that booted the brothers out, the Regatta Riverview, sued them for intentionally attempting to damage its reputation.
The suit, obtained by Business Insider, alleges that, after their eviction, Cameron and Tyler took revenge on the Regatta Riverview by acquiring several Web domains that resembled Regatta's – including regattaboston.org and regattaboston.net – and posting "false, misleading, and defamatory" statements about the apartment complex on those sites.
The suit also alleges that the brothers bought ads from Google and other search companies to direct traffic to these sites.
Two days after Regatta filed the lawsuit, the Winklevosses settled it. The terms of the settlement were not disclosed.
Cameron and Tyler Winklevoss declined to comment for this article.
It's not news that college students and recent grads – including Mark Zuckerberg – act stupidly sometimes. But it's now harder for the Winklevosses to lay claim to the moral high ground.
We've excerpted some details from Regatta's lawsuit below. Obviously this document only represents one side of the story.
The Social Network– the movie about the founding of Facebook coming out October 1– ends by suggesting that Facebook paid Harvard grads Cameron and Tyler Winklevoss $65 million to stop sayingMark Zuckerberg stole their idea for Facebook. (Back story here.)
According to documents viewed by Business Insider, this figure is wrong – by half.
When Facebook settled with the Winklevoss brothers, their father, and business partner Divvya Narendra back in February 2008, it handed them $20 million in cash and 1.253 million shares in Facebook common stock.
On Sharespost, a market for private company stock, investors are currently bidding ~$75 per share for Facebook common stock. That price suggests the settlement is currently worth around $120 million.
Even that sum isn't enough for the Winklevoss brothers, however.
Alleging that Facebook misled them on the valuation of the company during settlement talks, the pair plan to sue Facebook again. If they win that suit, securities law dictates that Facebook will have to quadruple its payout – to an astounding $475 million.
Facebook declined to comment on this story.
Don't miss our huge scoops on Facebook's founding:
David Fincher's The Social Network, coming out October 1, is supposed to be the true story of Facebook's founding.
But how closely does it stick to the facts?
Find out for yourself by reading our exclusive coverage of the Zuckerberg-Winklevoss battle over Facebook's founding, the origins of the movie itself, and more…
The Social Network– still number one at the box office – tells a tale of Facebook's founding that is slanted against the company's founder and CEO, Mark Zuckerberg.
But even so, the movie is missing at least one minor scandal.
During the summer of 2004, months after the Winklevoss brothers first accused Mark of stealing their idea for a social network, Mark Zuckerberg hacked into – or at least, bragged about hacking into – the Winklevosses' answer to Facebook, a social network called ConnectU.
Once inside, Mark exploited a flaw in ConnectU's code to create a fake profile for one of the brothers, tampered with real user accounts, and deleted some accounts entirely.
We've told parts of this story before, but this version includes new details.
"ConnectU," you may recall, was the social network that the Winklevoss brothers hired Mark Zuckerberg to build in the fall of 2003. While telling the brothers he was working on the project, Mark immediately set about building Facebook instead. When Mark launched Facebook in January, 2004, he had a several-month headstart over the Winklevosses. The brothers did not manage to launch their own social network, ConnectU, until later that spring.
At one point during the summer of 2004, according to documents viewed by Business Insider, Mark told friends he had exploited a flaw in ConnectU's account verification process to create a fake Cameron Winklevoss account with a fake Harvard.edu email address.
Zuckerberg showed off the new, fake profile, he said he created. Here's what he said it looked like:
Hometown:“I’m f---ing privileged…where do you think I’m from?"
High School: You’re not even allowed to speak its name. Personal info.
I’m looking for: Women.
Interested in: Action tonight.
Ethnicity: Better than you.
Height: 7’4”.
Body type: Athletic.
Hair color: Ayran Blond.
Eye Color: Sky blue.
Smoke: No.
Drink: Socially.
Favorite music: The sound of myself masturbating.
Favorite Movie: The Adventures of Baron Munchausen.
Favorite quote:“Homeless people are worth their weight in paper clips – I hate black people."
Athletics: I can pull a 2K in 2 minutes and 36 seconds.
Languages: WASP-y.
Instruments: Music gets in the way of hearing my voice.
Clubs: My dad got me into the porcelain.
Interests: Trying to find my penis. Squandering my father’s money. Looking like a douchebag.
About me: Gotta love my shit-eating grin.
Next, Mark told a friend he logged into the accounts of some ConnectU users and changed their privacy settings to invisible. In an IM, Mark explained his idea was to make it harder for ConnectU users to find their friends on the site, thus reducing its utility.
Later, Mark told a friend he'd gone a step further, deactivating about 20 ConnectU accounts entirely.
It is not clear how Mark accessed these accounts. (In an earlier hack of the email accounts of two Harvard Crimson editors, he used login information stored in Facebook's servers.) It does appear that he retained access to ConnectU's servers for quite some time.
The Social Network generally paints Zuckerberg negatively – casting him as a villian and Eduardo Saverin as a victim. We think this paints a skewed picture of what actually happened. But there certainly were some scandals during Facebook's founding.
You've read the news everywhere: Cameron and Tyler Winklevoss are suing Facebook and Mark Zuckerberg again.
The basic allegation remains the same. They say Zuckerberg unfairly cut them out of an ownership stake in Facebook. (Back story here.)
Now, in an ironic turn, we've learned that there's another player in this drama who alleges that the Winklevoss brothers did a very similar thing to him.
His name is Wayne Chang.
In a suit filed late last year, Chang says the Winklevoss brothers merged their company, ConnectU, with Chang's Web development business to create a new company, The Winklevoss Chang Group (WCG).
Chang's complaint says that though the Winklevosses "expressly agreed that the litigation between ConnectU and Facebook was an asset of ConnectU and an asset of WCG," he never got any of the millions of dollars the Winklevoss brothers got when the sold ConnectU to Facebook as part of their settlement with Mark Zuckerberg.
Delightfully, Chang's complaint even includes an instant messenger conversation between him and Cameron Winklevoss.
The Winklevoss twins' irrational crusade against Mark Zuckerberg and Facebook is not over.
The twins plan to double down on their fight in 2011, willing to risk throwing away the $65 million settlement they received in 2004 (which is now worth $100+ million).
The settlement was $20 million in cash, and $45 million in stock. The twins say Facebook deceived them about the value of the stock, thus giving them too few shares. They want to go to court to get the proper valuation on the stock.
To do so, they have to scrap the original settlement, and take a chance at getting a better payout.
Why are they still fighting this fight? Over the ridiculous idea of "principle."
"The principle is that they didn’t fight fair," Tyler Winklevoss tells the New York Times. He adds, "The principle is that Mark stole the idea."
That's B.S.
It's also hypocritical.
The Winklevosses voluntarily signed the settlement agreement, and Facebook's success has made them centi-millionaires. Now they want more. So they want to revoke the settlement agreement they voluntarily signed -- and, in so doing, go back on their word.
So the Winklevosses only fall back on "principle" when it suits them.
The truth of the matter is this is all about money. And thanks to Facebook's success, the Winklevosses have already gotten vastly more than they deserve.
The Winklevii say the $40 million in stock they received should be worth $500 million today, but Facebook gave them a bogus valuation in the 2004 settlement.
So instead, it's closer in value to $120 million.
Remarkably, the Winklevosses still appear to think that everything that Facebook and Mark Zuckerberg have achieved is because of them. This is beyond delusional. It's megalo-maniacal.
These are Harvard graduates and Olympic athletes we're talking about. And they're wasting their lives trying to claim credit for something they had next to nothing to do with.
As the 9,000 Groupon clones, and hundreds of Facebook clones have demonstrated, ideas are a dime-a-dozen. It's execution that counts. Mark Zuckerberg executed. The Winklevosses didn't. And they've already been paid $120 milion for their failure, which is more than the vast majority of entrepreneurs will ever get.
Does anyone on this planet think the Winklevosses could have gotten a $120 million exit for their idea, ConnectU, if they had run it instead of Mark Zuckerberg?
The answer to that question, apparently, is "yes." There are two people that think that: Tyler and Cameron Winklevoss.
They tell the Times Zuckerberg has done little more than "not screwing up" Facebook. They "absolutely" think they could have made ConnectU into Facebook with hundreds of millions of users.
What an arrogant, silly, statement.
As Mark Zuckerberg's character in The Social Network says to Winklevoss characters, "If you guys were the inventors of Facebook you'd have invented Facebook."
If the Winklevosses had had any of Mark Zuckerberg's talent or vision, they could have built ConnectU into a beast that killed Facebook. After all, Facebook only had a slight head start.
But, they didn't.
Move on boys. This is beyond pathetic.
Facebook and the infamous Winklevoss twins are back in court today.
Confused? Thought this thing was over already?
Here's a ~100 word summary of how we got here:
The Winklevosses hired Zuckerberg to create a site. Zuckerberg stalled, and built Facebook instead.
The Winklevosses sued.
All parties settled and agreed the Winklevosses would get 1.25 million Facebook shares and $20 million cash.
The Winklevosses thought they were getting stock worth $35.90/share, because that's what Microsoft paid for 1.6% of Facebook.
But Microsoft bought preferred shares. The Winklevosses got common stock, valued at $8.88 per share.
The Winklevosses say Facebook did not make this distinction clear.
Facebook says the Winklevosses should have asked.
Now the Winklevosses want a San Francisco appeals court to do undo the settlement.
Today, Facebook lawyers will ask the appeals court to throw out the case.
So now what?
IF FACEBOOK WINS: The Winklevosses will walk away with Facebook stock worth between $30 million and $82 million, as well as $20 million cash.
IF THE WINKLEVOSSES WIN: The court will throw out the settlement and we're back to square one.
Required reading:
A US court ruling says the Winklevoss twins cannot undo the settlement they made with Facebook back in 2004.
The settlement netted the Winklevii $20 million in cash and 1.25 million Facebook shares valued at $8.88 per share. Today that's worth north of $100 million.
But it's not enough for the Winklevii, because they believe they were misled about value of those shares.
They wanted the settlement to be torn up so they could sue Facebook all over again and get the proper price for the shares.
Apparently they can't do that. And they'll just have to deal with getting over hundred million for doing almost nothing while Mark Zuckerberg built Facebook into a global force.
