How I Think

🚀 Why Zuckerberg laughed at $1 billion

Published over 1 year ago • 2 min read

hey builders,

I remember exactly what I was doing at 22. I was incinerating 80 hours a week (mostly) formatting powerpoint slides and excel charts at Goldman.

Stressful? Of course but I learned a bunch to.

I got to watch big decisions. But I had 0 responsibility to make them.

My 50 year old boss with 100s of deals under his belt made the decisions.

But at 22, Mark Zuckerberg has a predicament.

It's June 2006 and Yahoo puts a $1 billion offer on the table.

Here's an excerpt from long time Facebook (and Amazon) exec Dan Rose on it:

"One of Mark’s first big fights was with his own board + exec team. They tried to convince him to sell the company to Yahoo for $1B in '06.
At the time FB had 5M users (all college) and was 2 yrs old.
At the age of 22, Mark stood to gain $300M personally.
How could he say no?
Everyone told Mark to sell. Friends said he'd be crazy to pass up $1B. His management team wanted an exit.
His board put pressure on him. But Mark knew something they didn’t."

So when you're 22...

99.9% of us are focused on finishing up college.

Your biggest concern lies with the cute girl (or guy) that won't text you back.

But at 22, Zuck is staring at a $300 million deposit into his bank account after 2 years of work.

Of course, he's going to take it... right?

But Zuck rolls up to the board meeting...

“This is kind of a formality, just a quick board meeting, it shouldn’t take more than 10 minutes.
We’re obviously not going to sell here.”

Wait why?

Let's dig into how Zuck made this decision so easily...

1) Bet on a Unique Insight

Zuck didn't sell facebook because he knew something no one else did.

"Facebook was on the cusp of launching new products that would completely change the trajectory of the company."

In June 2006, Yahoo drops the billion dollar offer on Zuck's desk.

In September 2006, Facebook launches the feature that forever changes social media.

The news feed.

If Yahoo thought Facebook was worth $1 billion without a clue of all the crazy new product ideas buried in Zuck's brain...

Then what was Facebook actually worth?!

A hell of a lot more. And you can't undervalue a unique insight.

2) A Fighter's Mentality

Every great founder operates in a steel cage match... and develops a fighter's mentality.

Elon fought off bankruptcy with a funding round that closed on Christmas Eve 2008 when Tesla had 3 days left to live.

At 22, Zuck wages war with his board over the Yahoo offer. And he wins.

And here's the beauty of the fighter's mentality:

"You don’t have to be mean to be a fighter. Some CEOs struggle with this (famously Steve Jobs), but Mark pulled it off gracefully. He didn’t yell at people, never threw furniture or lost his temper. He was just ruthlessly decisive, always willing to make the hard call."
- Dan Rose

This ties into one of my favorite concepts from Paul Graham:

Fierce Nerds.

Fierce nerds are highly competitive, intensely ambitious, intelligent nerds who ruthlessly attack their objectives.

Zuck is the fiercest of fierce nerds.

Within a few years of the Yahoo offer, Zuckerberg replaces his entire exec team and re-organizes the board.

And one year after rejecting the Yahoo offer, Facebook raises a Series C from Microsoft at a $15 billion valuation. Not to shabby.

See ya next week,

Chris Hlad

p.p.s. check out the full "Fierce Nerds" essay from Paul Graham here. It's one of my favorites

How I Think

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