Group Dynamics


In the movie "The Social Network", director David Fincher explore the origins of the social media company Facebook, at Harvard and chronicles the early years of the company. Co founders, Mark Zuckerberg and Eduardo Saverin seem to be good friends and have a good professional relationship starting out.

 They start off with Eduardo giving Mark a $1000 dollars so that he can make the initial site titled "Thefacebook". It starts off at just a few top tier universities, limited to just college students. Their site proves to be pretty popular, as it's being talked around campuses quite a bit. They later meet with the co-founder of Napster, Sean Parker, giving them some advice on how to expand their company and have a greater reach beyond universities.

Saverin has a bit of disdain about Parker, and objects to many of the business decisions that he was making for the company. For example they accepted $500,000 from the investor Peter Thiel (who is also the founder of PayPal), and Saverin did not like this, and just in general the way the direction of the company was going in.

It eventually culminated to a breaking point, when Saverin is asked to come into the office and finds his shares are heavily diluted, while the other major shareholders kept theirs ownership percentages the same. If I recall correctly his shares are diluted from 34% down to .03%. Saverin confronts Zuckerberg in a rage and picks up his laptop and throws it down. After a heated argument, Eduardo vows to sue Mark for everything and storms out in a fit.

Eduardo does make good on his threat and files a lawsuit against Facebook. During the deposition, Saverin solemnly tells Mark that "I was your only friend" feeling betrayed and could not understand why Zuckerberg did what he did. 

Eventually Mark's lawyers decide to settle with Saverin rather than taking it to court, because they believed they would lose because of Mark's arrogant attitude and substantial proof of the hostile takeover.

To make a note, this movie is not a 100% accurate, but from interviews and research the writer made it as close to life as possible with just adding some material here and there to make it more interesting. The movie also deals with the Winklevoss's twins' lawsuits against Mark for intellectual property for apparently stealing "their" idea for Facebook, but for the purpose of the post I wanted to just focus on the most important conflict.

Mark and his other investors in the company did what they did because Saverin froze the bank account when he objected to one of their decisions.  I guess from a business standpoint, it was probably a good idea for them because Saverin simply wasn't really making any contributions to the company from their point of view and he was being a more nuisance than anything.

Saverin was feeling left out of the company as a co founder himself and felt as if he was being shut out. I think this conflict was inevitable to be honest. Mark has a cold and rude demeanor, that it is apparent from the first scene of the movie where his girlfriend breaks up with him because of his patronizing manners. He simply lacks a lot of emotions and sympathy so I highly doubt it could have happened any other way.


To this day, many people can clearly see how ruthless Zuckerberg was in creating Facebook, even willing to screw over his good friend. But he did nevertheless less, become one of the richest people alive today and Facebook has so much global influence. The tagline of the movie was "You don't get to 500 million friends without making a few enemies" and it is a poignant way to describe the situation.

Comments

  1. Professor ArvanNovember 16, 2019 at 8:08 AM

    Once upon a time, I saw that movie. I remember next to nothing about it, other than how Zuckerberg's attitude was depicted, which you captured in your post, and maybe that originally Facebook was based on intellectual property theft, as the idea originally was not Zuckerberg's. That part you left out. Maybe it wasn't relevant to the story you told. Maybe it was.

    There is a general issue with startups about how to incorporate the strong wills of the founding members when they disagree about future direction. Steve Jobs left Apple fairly early on (though by then Apple might no longer have been considered a startup). There is also an issue with people leaving well established companies when not in a leadership position, so they can develop their own startup. In each fo this cases separation might be the efficient thing to happen, though it can be accompanied by hard feelings.

    You did not try to relate this story to Bolman and Deal chapter 8. Was Zuckerberg a Model 1 leader? While the movie may not have shown this, it would be interesting to supplement it with articles about working at Facebook and if the environment was welcoming or not. Because the asset value of the company rose so quickly, particularly at or around the time of the IPO, employees who held some stock may have been pleased just for that reason. The question is whether there were non-pecuniary reasons to like or dislike working at Facebook and whether those reasons could be traced to Zuckerberg's leadership style. I don't know the answer, but it seems a natural subject to investigate.

    ReplyDelete
    Replies
    1. Paul MilgromDecember 11, 2019 at 3:25 PM

      I do think Zuckerberg was (or still is) a Model 1 leader. He was very self absorbed and lacked sympathy for his actions. He removed Eduardo ruthlessly and did not take his actions with more gracefulness. He blamed a lot of problems on others and often just displayed single loop learning.

      I don't necessarily know if the environment was welcoming or not, but it is a good topic to delve into the future.

      Delete
    2. Paul MilgromDecember 12, 2019 at 1:26 AM

      https://www.vanityfair.com/news/2017/10/early-facebook-employees-regret-the-monster-they-created

      Not directly related, but I found an article in which early employees of facebook regret working there. It's quite interesting to read I found.

      Delete

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