The Education of Mark Zuckerberg

For Mark Zuckerberg, Facebook's public offering is a turning point. It is the deal that will either prove once and for all that the company is changing just about everything, or that the mania over social media is spiraling out of control.

By EVELYN RUSLI, NICOLE PERLROTH and NICK BILTON

His audience this Monday morning, a Who’s Who of Wall Street heavy-hitters, with untold billions to command, shifts in its seats. Papers rustle. BlackBerrys buzz. Cue Mr. Zuckerberg and —

Wait: where the heck is Zuck?

Mr. Zuckerberg, the hoodied man-child of Facebook, is stuck in the men’s room. Apparently, the suits can wait.

Up on the stage, Sheryl K. Sandberg, Mr. Zuckerberg’s No. 2 and the polished, corporate yin to his nerdy, coder yang, vamps a little: You know Zuck, she shrugs. And the money types laugh: yes, we know Zuck.

It’s May 7, a week before Mr. Zuckerberg’s 28th birthday. And, as Wall Street, Silicon Valley and the wider world all know, something big is coming. It is the deal that will either prove once and for all that Facebook is changing just about everything, everywhere, or that the mania over social media and this company, its apotheosis, is spiraling out of control.

Inside a ballroom at the Sheraton New York in Midtown Manhattan, Facebook’s executives, spinmeisters and bankers are choreographing its initial public stock offering. This is no mere I.P.O. It feels like a cultural event, a pinnacle in the history of tech, a moment. The deep pockets have arrived at the Sheraton for a multibillion-dollar sales pitch. If all goes well, Facebook will go public on Friday in an I.P.O. that could value it at nearly $100 billion.

One hundred billion dollars — for a company that, eight years ago, didn’t even exist.

No one has more riding on this than Mark Elliot Zuckerberg, hero-villain of “The Social Network,” destroyer of worlds, devourer of time and, for better and worse, the latest in a line of revolutionaries stretching back to Gutenberg who have upended the way we communicate and think.

The outlines of the Zuckerberg story thus far — the boyhood in Dobbs Ferry, N.Y., the Harvard wars over “thefacebook,” the relentless rise in Silicon Valley — are by now well known. But Facebook’s I.P.O. will begin a new chapter — indeed, a new volume — in one of the great business narratives of our time. It will also make Mr. Zuckerberg almost impossibly rich. In an instant, his stake could be worth upward of $18.7 billion.

Mind-boggling figures aside, the question on many minds is this: Is Mr. Zuckerberg really ready for this? Is he — there’s no sugarcoating it — grown up enough to lead a public corporation that is more valuable than McDonald’s or Goldman Sachs? The answer to those questions will determine the future of Facebook, as well as the fortunes of its new, public shareholders. For the first time, Mr. Zuckerberg will be judged, in real time, by a relentless stock market. And that market, as C.E.O.’s everywhere know, is merciless.

“You’re making a bet, and the bet is always on ‘Can the founder go somewhere?’ ” Reid Hoffman, a co-founder of LinkedIn, an adviser to Mr. Zuckerberg and an early financial backer of Facebook, said in an earlier interview. “And Zuck’s done great.”

It’s hard to argue. The question, however, is where Mr. Zuckerberg goes from here as a chief executive. He declined to be interviewed for this article, but interviews with dozens of venture capitalists and entrepreneurs in Silicon Valley, as well as with Facebook colleagues and outsiders who have mentored him along his climb, paint a promising picture. Beneath that hoodie, these people say, is an increasingly assured leader, one tempered by failures — and there have been some big ones — as well as astonishing successes.

Friends and colleagues agree that Mr. Zuckerberg’s goal is be a C.E.O. for the long haul. Like a software engineer writing a program, he has tried to fill in the gaps in his personal code, and to ensure, as a programmer might put it, that his code doesn’t break.

Even now, with a multibillion-dollar brass ring at hand, Mr. Zuckerberg remains intensely aware of his limitations, these people say. Where he is strong — in product design and strategy — he tends to micromanage. Where he is weak — day-to-day management, operations — he hires people with a defter touch. He has enlisted top engineers and managers, including the formidable Ms. Sandberg, 42. Friends and colleagues say she has coached the often-awkward Mr. Zuckerberg on how to interact with employees and to build Facebook’s business.

But Mr. Zuckerberg has also invested in a personal brain trust beyond Facebook’s headquarters in Menlo Park, Calif. He cultivated as advisers such tech giants as Bill Gates and Steve Jobs, as well as others as varied as Marc Andreessen, the co-founder of Netscape, and Donald E. Graham, the chairman and chief executive of the Washington Post Company.

One venture capitalist tells how, when he met Mr. Zuckerberg in 2005, the young man wanted more than the V.C.’s money. He wanted an introduction to Mr. Gates. (He eventually got one, on his own. Today, Mr. Gates regularly advises him on philanthropy and management issues.)

“What’s most interesting about Mark is how he developed himself as a leader,” says Marc Benioff, the chief executive of Salesforce, who has known Mr. Zuckerberg for years. “Not only did he have an incredible vision for the industry, but he had an incredible vision for himself.”

Granted, Mr. Zuckerberg can still come across as a bit of a social misfit, particularly on buttoned-down Wall Street. Last Monday at the Sheraton, for instance, some took issue with his dorm-room wear, considering it a snub to the financial industry.

“Mark and his signature hoodie: He’s actually showing investors he doesn’t care that much,” Michael Pachter, an analyst for Wedbush Securities, told Bloomberg TV. “He’s going to be him and he’s going to do what he’s always done.” Mr. Pachter added: “I think that’s a mark of immaturity. I think that he has to realize he’s bringing investors in as a new constituency right now, and I think he’s got to show them the respect that they deserve because he’s asking them for their money.”

Yet there’s no denying that those on Wall Street, as well as Facebook’s 901 million monthly users worldwide, have grown accustomed to Mr. Zuckerberg, quirks and all. Sure, techno-gods like Mr. Jobs and Mr. Gates long ago challenged the old stereotypes of how C.E.O.’s should look, sound and act. But when Mr. Zuckerberg burst onto the scene, Facebook’s success pushed the boundaries even further.

“He is a sponge in terms of learning. He has a higher ask-to-talk ratio than anyone I know,” says one of Mr. Zuckerberg’s friends, who, like many people interviewed for this article, spoke on the condition of anonymity, given the imminent I.P.O. “He is constantly asking ‘Why? Why? Why?’ and he has a very clear sense of what he is good at and somewhere between average and mediocre at.”

MUCH has been written in recent years about the death of the “imperial C.E.O.,” the executive who leads from a glorious distance, screaming orders at underlings.

To look at him, Mark Zuckerberg might seem just the opposite. But most people who know him say he harbors more than a hint of C.E.O. imperialism. Joe Green, his roommate at Harvard, says that, particularly in the early days, Mr. Zuckerberg was so confident that he often came across as aloof. He wasn’t the best communicator, Mr. Green says.

“You can see that as a bad thing, but you have to have an irrational level of self-confidence to start something like Facebook,” says Mr. Green, now a co-founder of Causes, a popular Facebook application.

Perhaps it is no surprise, then, that Mr. Zuckerberg is fascinated by ancient Greece and Rome. As a boy, a favorite video game was Civilization, the object of which is to “build an empire to stand the test of time.”

Civilization, one friend says, was “training wheels for starting Facebook.”

But, in 2006, Mr. Zuckerberg almost lost his grip on the company, in an episode he has since come to view one of his biggest failures as a C.E.O.

At the time, the Yahoo executive Daniel L. Rosensweig was doggedly courting Facebook, hoping for Yahoo to buy it. Mr. Zuckerberg’s price, $1 billion, was roughly 1/100 of what Facebook is expected to be valued at in its I.P.O. this week.

Mr. Zuckerberg and Mr. Rosensweig, who is now C.E.O. of Chegg, informally sealed the deal with a handshake. Then Yahoo’s share price tumbled abruptly on the stock market, and Yahoo reduced its offer to $850 million.

Relieved, Mr. Zuckerberg walked away — and vowed that he would never make the same mistake again. “If you don’t want to sell your company, don’t get into a process where you’re talking to people about selling your company,” Mr. Zuckerberg said at a start-up conference at Stanford University last October. He resolved to retain control of Facebook. And he then pushed out colleagues who had supported the Yahoo deal.

His conviction has been on display — often controversially — as Facebook has confronted the thorny issues of online privacy. When Facebook introduced its News Feed feature in 2006, for instance, Mr. Zuckerberg was convinced that it would be a hit. Instead, many users were outraged that their home pages would automatically broadcast every profile change and activity.

At one point, Facebook got a call from the Palo Alto, Calif., police department, asking if the company could turn off the News Feed. People were threatening to stage a protest march downtown.

Mr. Zuckerberg eventually apologized — but he left News Feed largely intact. Indeed, even now, he is pressing users to share more information, often without their full understanding, and dials back only when the complaints grow loud. Beacon, an advertising program that automatically publicized consumers’ purchases on sites like Amazon to Facebook, turned out to be a flop. Mr. Zuckerberg abandoned it and later settled a related class action by paying $9.5 million to set up a privacy foundation.

Then he simply moved on.

“The dude is relentless,” one former Facebook employee says. “If it doesn’t work one way, he keeps coming back.”

THE humdrum offices of The Washington Post, in northwest Washington, are a world away from Silicon Valley. But the Facebook story took a crucial turn there in early 2005, when, through a Harvard classmate, Mark Zuckerberg met Donald Graham of the Washington Post Company.

Mr. Zuckerberg and Sean Parker — a co-founder of Napster, an early confidant and the company’s first president — traveled to Washington to see if the company would invest in Facebook.

As David Kirkpatrick later recounted in “The Facebook Effect,” Mr. Zuckerberg was struck by the differences between the Post Company and technology companies in Silicon Valley.

“I was just blown away by the difference in culture, that it’s just a long-term focus there, and that they’re so focused on the brand,” Mr. Zuckerberg recalled in the book.

Mr. Zuckerberg would later shadow Mr. Graham for four days, sitting in on meetings and analyst presentations, trying to learn what it was like to run a large company. In 2009, Mr. Zuckerberg invited him to join his board.

The Post never did invest in Facebook.

Mr. Zuckerberg was impressed not only with Mr. Graham’s long-term view, but also with the Post Company’s shareholder structure. Like many media companies, it has two classes of stock. This setup gives the Graham family significant voting power.

Mr. Zuckerberg emulated that structure. When Facebook goes public, he will own a minority stake in the company — but will control more than half of the voting power.

Mr. Parker’s story, too, provided valuable lessons. Mr. Parker, now 32, taught Mr. Zuckerberg the importance of maintaining power over his company. For Mr. Parker, the matter was personal. As a founder of Plaxo, the online address book, he had fought bitterly with his venture capital backers and eventually left the company poorer than he’d hoped.

Eager to protect Mr. Zuckerberg, he helped come up with legal documents that guaranteed Mr. Zuckerberg two Facebook board seats. (Mr. Parker got one.) As long as Mr. Zuckerberg held a seat, his shares couldn’t be taken from him. When Mr. Parker left Facebook, he gave his seat to Mr. Zuckerberg.

SEAN PARKER played another crucial role at Facebook: he helped recruit many of its early employees. Among them were Matt Cohler, then a rising star at LinkedIn; Kevin Colleran, one of Facebook’s first sales executives; and Aaron Sittig, who worked with Mr. Parker at Napster and became Facebook’s lead designer. Mr. Parker also ran Facebook’s early financing rounds, acting as a go-between to influential investors like Mr. Thiel, a co-founder of PayPal.

But Mr. Jobs, too, taught Mr. Zuckerberg about hiring. In his early days at Apple, Mr. Jobs often sounded out potential hires during long walks around Palo Alto.

Mr. Zuckerberg sought out Mr. Jobs early on at Facebook. The two were known to take afternoon walks in Palo Alto, and they nurtured what many describe as a meaningful personal relationship despite their eventual business rivalries. (Mr. Zuckerberg was also inspired by Apple designs, and modeled Facebook’s F8 conferences on annual Macworld conferences. Mr. Zuckerberg later adopted Mr. Job’s walkabout approach to hiring. When Facebook was headquartered in Palo Alto, he often took high-level new recruits on hikes along the wooded trails near his offices.

Several people who were hired this way say the strolls usually meandered along the trail — with Mr. Zuckerberg asking questions of the new recruit along the way — and ended atop a lookout. There, Mr. Zuckerberg would explain the terrain in front of them and his vision for the future.

“He pointed out Apple’s headquarters, then Hewlett-Packard and a number of other big tech companies,” one person who was recruited by Mr. Zuckerberg told The New York Times last year. “Then he pointed to Facebook and said that it would eventually be bigger than all of the companies he had just mentioned, and that if I joined the company, I could be a part of it all.”

“WE don’t need to get any lawyers involved. Let’s just talk alone.”

Those are the words Mr. Zuckerberg often uses, over the phone or by Facebook Instant Messenger, in an initial overture to a company he wants to buy. Over the past eight years, Facebook has bought a string of start-ups, such as FriendFeed, Snaptu and Gowalla, and announced in April it would buy Instagram for $1 billion.

As chief executive, Mr. Zuckerberg has proved himself a savvy negotiator of deals.

“Mark will convince companies he is going to acquire that they should accept a deal on a projected valuation,” says one C.E.O. who held talks with Mr. Zuckerberg. “Then, he’ll go back to investors who want to put money into Facebook and say, look, this start-up was going to join us at this valuation, so you should invest at that number.”

For example, during the closing hours of the Instagram talks, Mr. Zuckerberg and Kevin Systrom, the Instagram chief executive, reached a deal in private, at Mr. Zuckerberg’s $7 million, five-bedroom home in Palo Alto, while their lawyers and advisers watched from afar.

“As the deal came to a close, Mark and Kevin sat outside and ate steaks and ice cream, while the lawyers all sat inside watching ‘Game of Thrones,’ ” said a person who was present. It wasn’t lost on those there, this person said, that “two 20-somethings were alone hammering out the terms of the deal.”

The Instagram deal underscored how Mr. Zuckerberg has cemented his power over the last eight years. Facebook’s board, which got a brief e-mail about the deal a few days before it was announced, according to those close to the company, never pushed back.

And so now, as C.E.O., Mark Zuckerberg has never been more secure — or, given the coming I.P.O., more exposed. By most accounts, he has few close friends outside the company. He has a girlfriend, Priscilla Chan, and a dog, Beast. Like his master, Beast, a Puli with thick dreadlocks, has a page on Facebook. (It has 541,786 “likes.”)

On some evenings, as dusk falls in Menlo Park, Mr. Zuckerberg and a small circle of his lieutenants play roller hockey, and maybe knock back a beer or two, outside Facebook’s headquarters. The game is a relatively recent arrival there, although Mr. Zuckerberg has played it since his boyhood in Dobbs Ferry.

Out in the courtyard, the crew — almost all of them men, almost all in their 20s — hoot and skate until it is almost too dark to see much of anything. Across the courtyard floor, giant black tiles spell out the word “hack.” They’ve nicknamed their rink “Hack Stadium.”

The Facebook boys and their captain, Mark Zuckerberg, skate hard. They line up shots with care. And they play to win.

NYT