Facebook’s public offering this May will reportedly raise up to $13 billion. This figure makes the social network giant the largest IPO in history, and puts the company’s valuation at $100 billion. Founder Mark Zuckerberg retains 57 percent voting shares, and stands to earn a billion in cash from the IPO.
How did he do it? As Facebook’s President in 2004, Napster founder Sean Parker made sure Zuckerberg kept a huge equity stake. He pushed for the company’s high valuation. Then Parker created two seats for Zuckerberg in the board structure. He kept enough power over the board. When Parker left Facebook, he gave Zuckerberg his own seat.
In 2009, the board of directors moved the existing shareholders stock from Class A to B shares, which have 10 times the voting power. This made the founder and CEO a very powerful player, because his shares carried more weight.
He settled with Harvard schoolmates Cameron and Tyler Winklevoss for $65 million. The twins claimed Zuckerberg stole the original idea for Facebook from them. However, they stopped appealing in 2007.
Facebook co-founder Eduardo Saverin left after suing the company and Zuckerberg. Reports said Zuckerberg and his investors diminished Saverin’s role to edge him out, and Saverin left with only 5% of the company.
Zuckerberg refused multi-million and billion dollar offers from companies like Google, Viacom, Yahoo, AOL, and Microsoft. Instead, Facebook hired top talent from competitors like Google and Apple. He follows lessons from Steve Jobs, focusing on building great products and eliminating distractions.
Kyle Brandon
Kyle Brandon pursued a degree in Information Technology. He is skilled at designing websites and creating graphics through different applications.
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