Facebook's plan to hook up the world (pg. 2)

The Facebook CEO padded into an interview recently on his 23rd birthday, barefoot, unshaven, wearing a T-shirt and jeans. Zuckerberg couldn't find an eraser for his whiteboard, so he used a knit hat he picked up from the floor. When I failed to notice, he pointed it out to me, attempting to be a helpfully colorful subject of journalism. He seldom does anything but work. For a while he led midnight staff meetings, until COO Van Natta, who has two small children, couldn't stand it anymore.

Zuckerberg uses one term constantly to describe the core value of Facebook: the "social graph." The programmer-turned-CEO says he means this "in the mathematical sense of a series of nodes and connections, with the nodes individuals and the connections the friendships." This is the essential asset that Facebook will now make available to others, he says.

His epiphany about its importance came when Facebook launched a rudimentary photo application in 2005. Though it lacked many features of other online photo sites, it almost immediately garnered the most traffic by far. The reason, he decided, was that Facebook members could quickly learn when friends uploaded new photos, and thus they looked at more of them. He hopes the best new applications by outsiders on the Facebook platform will experience a similar viral popularity.

That same year, Zuckerberg met the Post's Don Graham through the daughter of another Post executive who went to Harvard (as Graham had). "He described Facebook, and I just thought 'Gosh, that's one of the best ideas I've heard,'" says Graham, who, according to Zuckerberg, offered to invest $5 million for 10% of the company. (Graham says he made an offer, but declines to confirm the number.) Zuckerberg decided to take it. But word got out that Facebook was seeking investors.

Jim Breyer of Accel Partners, an investor in major tech companies, heard that Zuckerberg was willing to sell a stake. "We jumped all over it, even though we were told the deal was done," he recalls. He took Zuckerberg to dinner at the classy Village Pub in Woodside, Calif. Breyer ordered a Kistler Pinot Noir, a formidable wine, and suggested Zuckerberg do the same. Instead the CEO ordered a Sprite. He wasn't yet old enough to drink. Breyer said he'd invest $12.7 million for 13% of the company.

Zuckerberg went back to Graham, saying he felt a moral obligation to stick with their original deal. But Zuckerberg says the Post CEO told him he should take Breyer's deal, even though it meant Graham couldn't invest. So Zuckerberg did. Graham still speaks to Zuckerberg frequently and last year asked him to address top managers at the Post. "Success has not spoiled Mark Zuckerberg," says Graham. "He has never once talked to me about the money he can make from Facebook. He just talks all the time about making it better."

Zuckerberg has an unwavering certainty that what Facebook is building is important, even historic. He was the one who was most adamant about Facebook's long-term value over the past year, when there were big offers on the table, reportedly both from Viacom (Charts) and Yahoo (Charts, Fortune 500), which is said to have offered close to a billion dollars. Says Peter Thiel, a board member: "For better or worse the company's not going to be sold any time soon. It will remain a standalone business for a while, because the gap is enormous between what Mark and now the rest of the board thinks the company is worth, and what the outside world thinks."

Next page: Facebook's plan to hook up the world (pg. 3)

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