Background
Mark Zuckerberg and Eduardo Saverin became good friends while studying at Harvard University.In 2004, the two young entrepreneurs, along with a few other friends, founded Facebook.Saverin was the business brains behind the venture, providing international experience and financial acumen, while Zuckerberg was the genius behind the computer code that made the world’s largest-ever social networking platform possible.As co-founders of Facebook, the two friends each owned a sizeable stake in their newly minted creation—one that was to earn them both billions. However, acrimony between the two soon developed and the result became a legal battle in the courts that pitted the two influential and powerful figures against each other.
Definitive Timeline of Events
In the summer of 2004, Zuckerberg and Saverin signed a partnership agreement that gave Saverin a 30% share of Facebook and made him the businessman behind the venture.Things were going smoothly and they even officially incorporated with the idea of taking Facebook to the next level.They appointed themselves as co-presidents and Zuckerberg focused on the development of the site while Saverin was in charge of the business and finance side of the operation.But their dream was to be short-lived, as shortly afterward Zuckerberg struck a deal with the venture capital firm Accel Investors.This deal saw him take control of the company in exchange for a 12% stake.As a result of the deal, Saverin’s stake was reduced from 30% to under 10%.
The Court Battle
The legality of the investors deal was called into question, and Saverin took Zuckerberg and Facebook to court, claiming that his rights had been disregarded.The trial was broadcast on all media outlets and lurid details emerged about machinations and underhand tactics conducted by Zuckerberg, painting the young billionaire in a negative light.The legal battle was long and complex, but eventually it went in favour of Zuckerberg, who savoured a victory which preserved his control of the firm, while also increasing his own personal stake further.
Unclear Reasons For Dispute
The reasons behind the dispute remain unclear.Were money, power, and control at the center of the conflict, or were the two friends looking to gain a greater measure of control over the new business they had created out of thin air?It is difficult to ascertain the exact underlying reasons for their disagreement, as the two clearly had varying visions for how the firm should move forward.
Post Settlement Impact
The settlement had a major impact on the development of Facebook. With Zuckerberg firmly in control, the company was able to expand rapidly, and it grew from being a social networking platform for students, to being the largest social network in the world.The estimated wealth of Mark Zuckerberg stands at over $30 Billion, while Saverin’s estimated worth is around $3 Billion— a remarkable achievement for both.
Ethics and Integrity
The dispute highlights the need for businesses to have a clear understanding of integrity and ethics, but more importantly, it highlights the need for entrepreneurs to have a solid grasp of how to navigate the complexities of business relationships.Navigating the complexities of work relations and avoiding personal grievances is a crucial part of running a successful business.
Long-term Implications
The legal battle between Zuckerberg and Saverin is an example of how disputes between co-founders can have long-term repercussions for both parties, and for the business itself.It is therefore imperative for business owners and entrepreneurs to seek legal advice when drawing up agreements and contracts, to avoid any potential conflict further down the line.
Inspiring Tales
Despite their differences, Zuckerberg and Saverin are both shining examples of how entrepreneurs can turn ambitious ideas into multi-billion dollar businesses.Their story has inspired countless other entrepreneurs to take those first steps, with the hope of one day achieving the same level of success.
Investment Strategies
The dispute between Zuckerberg and Saverin ended in victory for the former, but not before Saverin was able to invest in other online businesses, such as Qwiki and Jumio. As such, it is possible to see how a lack of foresight and preparation on the part of Zuckerberg, compounded by the success of Qwiki and Jumio, may have given Saverin the impetus to launch legal action against his former friend.
Employment Challenges
The dispute between Zuckerberg and Saverin had far-reaching implications for Facebook, as well as for other businesses, who had to consider the implications of such a high-profile case for their own employment contracts.The battle between the two friends unambiguously demonstrated the importance of strong and clear employment contracts and regulations, and the potential ramifications of failing to properly prepare such contracts, both in terms of legal action, and the difficult task of managing the employment of key personnel, especially when conflicts arise between co-founders.
Finding Balance Between Business Risks and Rewards
The ultimate problem, which is often faced by business owners, is the issue of balancing risk and reward.In the case of Zuckerberg and Saverin, the two were able to capitalize on the success of their idea, but it came at the expense of their friendship.It is therefore clear that while risk-taking is a key element of business success, there is also an importance to balancing this risk with the potential reward.It is only by carefully considering the potential outcomes of the risk that entrepreneurs can ensure that the rewards from their efforts are not diminished by personal conflict or disagreements.
