The Facebook Effect Part 7

Zuckerberg was certain that Yahoo's bid, impressive as it was, would be seen as way too low if the News Feed succeeded as he hoped it would. The launch was planned in less than two months, when the new school year began. And Facebook was also planning at almost the same time to make another dramatic change-it was going to open itself up so that anyone could join. No longer would it be necessary to be affiliated with a college, high school, or workplace network. This open registration came to be called "open reg." Unlike work networks, it wasn't simply taking the college model and applying it in a new market. It was a wholesale s.h.i.+ft-declaring that Facebook ought to be for everyone. The company didn't drop its old structure. It still slotted every user into a network. But if you weren't in a school or a workplace, you could just join the network for your city. This would be the true test of Facebook's broader appeal beyond students.

Cohler and Breyer were both worried that the failure of work networks might mean that open reg would bomb as well, and that Facebook would never go beyond the student market. "We were saturated in college," says Cohler. "We were saturating in high school. Mys.p.a.ce was very strong in the twenty-something demographic. And Mark had what felt at the time like a blind belief that large-scale adoption of the product by adults was just going to work. He had always been right about those things and many of us had been wrong, up until the work networks."

If Facebook was not going to jump beyond colleges and high schools into the broader population, then its growth had almost certainly topped out. To Cohler that meant the Yahoo offer might be the best they'd ever see. "Mark, I'm open to having my mind changed," said Cohler. "Explain it to me."

"I can't really explain it," answered Zuckerberg. "I just know.'"

In the opinion of many of the company's more veteran employees and investors, Facebook had a golden opportunity to capitalize on its uniquely thorough penetration of the college market. Some said Facebook looked like MTV in its early years, when its rock-video network created a new form of media that young people simply couldn't stop watching. Those who held this view argued Facebook risked undermining its standing among high school and college kids by inviting a bunch of uncool adults into the service with them.

Zuckerberg disagreed. His view was consistent and clear-Facebook needed to go beyond college and become a site everybody could use to connect with their friends. He and Parker and Moskovitz had been saying since mid-2005 that Facebook was not meant to be cool, just useful. If younger people were turned off as the site broadened demographically, so be it. Zuckerberg knew that people on Facebook weren't very aware of anyone outside their own social circle anyway. Older people might join in droves without the average college kid even noticing.

The tension with Breyer and his executives and the gravity of the question of whether or not to sell to Yahoo gnawed at Zuckerberg. Some nights, unable to sleep Some nights, unable to sleep, he would get into his car and just drive, with his Green Day and Weezer CDs cranked up loud. He spent hours pacing around the pool at the company house, trying to think things through. His girlfriend, Priscilla, lying on a nearby chaise one day, said to a friend, "I hope he doesn't sell it "I hope he doesn't sell it. I don't know what he'd do with himself." Zuckerberg had a talk around this time with his older sister Randi, who worked in marketing at Facebook. "He felt really conflicted," she recalls. "He said, 'This is a lot of money. This could be really life-changing for a lot of people who work for me. But we have so much more opportunity to change the world than this. I don't think I'd be doing right by anyone to take this money.'"

The negotiations at Van Natta's house continued for the first two weeks of July. Yahoo's lawyers conducted due diligence on the company's financials. Finally the two sides reached an agreement in principle for Yahoo to buy Facebook for $1 billion cash. But for all that, some on the Yahoo side could tell that Zuckerberg remained unconvinced. He seemed to be taking his sweet time at every phase of the talks. They weren't sure he was really willing, despite what might have been hammered out with Van Natta. They were right. And some of Zuckerberg's other att.i.tudes frustrated the Yahoo team as well. For instance, one Yahoo negotiator recalls, "Mark had no interest at all in accommodating advertising in Facebook's product."

Then all the tension was relieved with unexpected suddenness. In mid-July, Yahoo announced second-quarter financial results. Wall Street viewed them as disappointing and knocked Yahoo's stock down 22 percent in a single day. Shortly thereafter, CEO Semel got cold feet, much as had Viacom's CFO earlier in the year. How would Wall Street react if Yahoo spent a huge amount on a company with so little revenue? Semel reduced his bid to $850 million, recognizing it could end the deal. It did. His deputy Rosensweig called and told Zuckerberg that Yahoo was reducing its $1 billion offer. As soon as he got off the phone, a grinning Zuckerberg strode over to Moskovitz's desk a few feet away and gave a big high-five. In a ten-minute conference call, Facebook's board rejected the offer. Even Breyer was comfortable with the decision.

As all this was under way, executives at other media and technology companies were starting to ask if they ought to buy Facebook. Rumors of Yahoo's billion-dollar bid were circulating.

At Time Warner, discussions about Facebook briefly turned serious. AOL CEO Jonathan Miller wanted to buy it. He saw community as the core of AOL, manifested in its chat rooms, forums, and AIM. Facebook would fit in perfectly, he thought. But AOL was just a division of Time Warner. Miller couldn't proceed without the concurrence of the parent company's leaders, who had turned down previous proposals he'd made for acquisitions. Miller also knew Zuckerberg would not want to take Time Warner's stock, much derided at the time for performing so poorly. Any deal would have to be for cash.

So Miller got creative. A partners.h.i.+p with another Time Warner division, he concluded, might help overcome corporate resistance. He succeeded in recruiting Ann Moore, CEO of Time Inc., the magazine division, for a possible joint bid for Facebook. The two concocted a plan by which each would sell a.s.sets to a.s.semble cash for a Facebook purchase. AOL would sell MapQuest as well as its Tegic software, used on cell phones to predict words you're trying to key in. Miller hoped to get as much as $600 million altogether. For her part, Moore would sell Time Inc.'s British magazine publisher IPC for around $500 million. Then they'd have enough for a cash bid for Facebook.

But when they brought their proposal to Jeff Bewkes, Time Warner's president, he shot them down. He said if they could live without those properties they should go ahead and sell them, then turn the cash over to the parent company. If they wanted to do a Facebook acquisition later they should come to him and he would consider it. That was the end of that. Zuckerberg never even heard about the plan.

As the summer continued, excitement built inside the company about the twin launches planned for the first weeks of school. Facebook's News Feed team was putting on the finis.h.i.+ng touches. And the people overseeing open registration had decided to also inaugurate a new way of getting friends to join you on the service. You would be able to download your email address book from any of the major email providers-Hotmail, Yahoo mail, Gmail, or AOL-and with a few clicks find out who in your address book was already on Facebook. You would also be able to send emails to anyone who wasn't on Facebook, inviting them to join. So central was this element that some began referring to open registration as "Address Book Importer."

Developing the News Feed was by far the most complex and lengthy project Facebook had ever tackled. But by midsummer a version was working. One night, sitting in his living room, Chris c.o.x saw the first News Feed "story." On his home page was one brief line: "Mark has added a photo." "It was like the Frankenstein moment when the finger moves," c.o.x marvels. The News Feed would eventually be comprised of a long list of such alerts customized for each user. The conceptual model for the News Feed was a newspaper that was custom-crafted and delivered to each user. Facebook called each little alert item a "story." The software that calculated which stories should go to each user was deemed "the publisher."

There was extraordinary antic.i.p.ation at the company as News Feed's debut neared. Dave Morin, an employee at Apple, was being recruited by Parker and Moskovitz to join the company at that exact anxious moment. (Parker may have stopped getting a salary, but his pa.s.sion for Facebook's success was unabated.) Morin recalls a conversation with Parker the night before News Feed launched. "Morin, tomorrow will be the day that decides whether or not Facebook becomes irrelevant or becomes bigger than Google," Parker intoned. Moskovitz had a less portentous thought for Morin. "Tomorrow you're going to love the new home page so much," he said, "you're going to want to work here for free!"

Facebook turned on News Feed in the wee hours of the morning of Tuesday, September 5. Everybody had been working so hard that the office was a wreck-wires and papers strewn everywhere. The corporate refrigerator was packed with cheap Korbel champagne for a big celebration. People pulled it out and began swigging directly from the bottles. Some people even brought in New Year's noisemakers. This was something to celebrate. As they pushed the b.u.t.ton to officially turn the feed on, a crowd gathered around a monitor. Zuckerberg was there, barefoot, wearing a red T-s.h.i.+rt from New York's CBGB's nightclub and black baggy basketball shorts.

Ruchi Sanghvi, the News Feed product manager, posted an upbeat note on the Facebook blog, "Facebook Gets a Facelift." "We've added two cool features," she wrote guilelessly, "news feed, which appears on your homepage, and Mini-Feed, which appears in each person's profile. News feed highlights what's happening in your social circles on Facebook. It updates a personalized list of news stories throughout the day, so you'll know when Mark adds Britney Spears to his Favorites or when your crush is single again....Mini-Feed is similar, except that it centers around one person. Each person's Mini-Feed shows what has changed recently in their profile and what content (notes, photos, etc.) they've added."

Now a user's home page was entirely composed of algorithmically selected snippets telling them what their friends were up to. Here are some examples that appeared in users' News Feeds: David Walt added new photos; Monica Setzer is now single; Amanda Valerio changed her profile picture; Alex Stedman left the group UCSB Students Against Beer Pong; Dan Stalman and Alex Rule are now friends; Lauren Chow is attending The G.o.ds Must Be Crazy; Garrett Tubman is better cause zackie just cheered him up; and Updated: 14 of your friends joined the group Students Against Facebook news feed (Official Pet.i.tion to Facebook).

Yes, there was a problem. Apparently Facebook's users hated News Feed. After the engineering team pushed the code live, they sat and watched as reactions from Facebook's 9.4 million users started coming in. The very first one read, "Turn this s.h.i.+t off!" Photos of the evening show a celebration suddenly turned sour, as slightly inebriated staffers stopped gleefully brandis.h.i.+ng their Korbel and began glaring at screens suddenly filled with cascading complaints.

Thus began the biggest crisis Facebook has ever faced. Only one in one hundred messages to Facebook about News Feed was positive. At Northwestern University in Illinois, a junior named Ben Parr woke up Tuesday morning, logged into Facebook, and did not like what he saw. He quickly created the antiNews Feed group "Students Against Facebook news feed." "You went a bit too far this time, Facebook," he wrote. "Very few of us want everyone automatically knowing what we update...news feed is just too creepy, too stalker-esque, and a feature that has to go." Within about three hours the group's members.h.i.+p Within about three hours the group's members.h.i.+p reached 13,000. At 2 reached 13,000. At 2 A.M A.M. that night, it had 100,000. By midday Wednesday 280,000 had joined, and Friday it hit 700,000.

And there were about five hundred other protest groups. Their names included "THIS NEW FACEBOOK SET-UP SUCKS!!!", "Chuck Norris come save us "Chuck Norris come save us from the Facebook news feed!," "news feed is a chump d.i.c.k wuss douchbag a.s.shole p.r.i.c.k cheater b.i.t.c.h," and "Ruchi is the Devil." At least 10 percent of the site's users were actively protesting the change. from the Facebook news feed!," "news feed is a chump d.i.c.k wuss douchbag a.s.shole p.r.i.c.k cheater b.i.t.c.h," and "Ruchi is the Devil." At least 10 percent of the site's users were actively protesting the change.

The primary objection to News Feed was that it sent too much information about you to too many people. A headline in the Arizona Daily Wildcat Arizona Daily Wildcat at the University of Arizona summarized: at the University of Arizona summarized: STUDENT USERS SAY NEW FACEBOOK FEED BORDERS ON STALKING. STUDENT USERS SAY NEW FACEBOOK FEED BORDERS ON STALKING. It quoted a freshman saying It quoted a freshman saying "You shouldn't be forced to have a Web log "You shouldn't be forced to have a Web log of your activities on your own page." And at the University of Michigan, the of your activities on your own page." And at the University of Michigan, the Michigan Daily Michigan Daily quoted a junior who found it problematic on the viewer's side. quoted a junior who found it problematic on the viewer's side. "I'm really creeped out "I'm really creeped out by the new Facebook," she said. "It makes me feel like a stalker." Many began referring to the service as Stalkerbook. You were stalked, and you were turned into a stalker. Who wanted that? by the new Facebook," she said. "It makes me feel like a stalker." Many began referring to the service as Stalkerbook. You were stalked, and you were turned into a stalker. Who wanted that?

The company's first official reaction emerged late Tuesday night. Zuckerberg wrote a blog post with the condescending headline "Calm down. Breathe. We hear you." He took a rational line: "We're not oblivious of the Facebook groups popping up about this (by the way, Ruchi is not the devil). And we agree, stalking isn't cool; but being able to know what's going on in your friends' lives is. This is information people used to dig for on a daily basis, nicely reorganized and summarized so people can learn about the people they care about." He also noted a point that to him and his colleagues at Facebook was fundamental to News Feed: "None of your information is visible to anyone who couldn't see it before the changes."

The next day television news crews began to gather in front of Facebook's Palo Alto headquarters building. The company had to hire security guards to escort employees to and from the office. Students from several schools were calling for a ma.s.sive in-person protest there. Employees were scared. "We had all these conversations," remembers Sanghvi. "'Should we shut off the News Feed?' 'Is it going to kill the company?'" There were earnest debates in Facebook's conference rooms about whether they should simply block messages about the protest groups from showing up in people's News Feeds. But Zuckerberg, in New York on a promotional trip But Zuckerberg, in New York on a promotional trip, argued firmly with his colleagues by email and phone that this was a matter of "journalistic integrity"-to cut off debate would be contrary to the spirit of openness that led him to create the company in the first place.

But despite the hubbub, Zuckerberg and everybody else at Facebook saw one central irony about the episode: that the protest groups had grown so fast. In itself that was testimony to the News Feed's effectiveness, they believed. People were joining the groups to protest News Feed because they were learning about them in their News Feeds. As Zuckerberg explained it to me at the time, "The point of the News Feed is to surface trends going on around you. One thing it surfaced was the existence of these anti-feed groups. We really enabled these memes to grow on our system." To him it was the ultimate evidence that News Feed worked as it was intended.

However, such calm and clever logic would not quell the uprising. So Zuckerberg agreed to compromise. c.o.x, Sanghvi, senior engineer Adam Bosworth, and several other engineers spent a frantic forty-eight hours writing new privacy features that gave users some control over what information about them was being broadcast by the News Feed. You could now instruct the software not to publish stories about specific sorts of actions. For instance, you were able to silence it when you commented on a photo, or-and this was an important one-when you changed your relations.h.i.+p status.

Zuckerberg stayed up all Thursday night in his hotel room in New York writing a new blog post announcing the new privacy controls. It had a markedly different tone than his first one. "We really messed this one up," it began. "We did a bad job of explaining what the new features were and an even worse job of giving you control of them... We didn't build in the proper privacy controls right away. This was a big mistake on our part, and I'm sorry for it." He also announced that in a few hours he would be partic.i.p.ating in a live public discussion about the News Feed on a group called "Free Flow of Information on the Internet."

The "Students Against Facebook news feed" group peaked that day at 750,000 members. The demonstrations were canceled. The privacy controls tamped down the protest quickly.

The News Feed enabled very large groups to form on Facebook almost instantly. That had never been possible before. And the antiNews Feed groups were not the only ones that burgeoned that first week. Even as "Students Against Facebook news feed" was gathering steam, another one with a more juvenile tone was taking off. It was called "If this group reaches 100,000 my girlfriend will have a threesome." It reached its target in less than three days, as awareness spread via the virality of the News Feed. (The message turned out to be a hoax.) Meanwhile yet another new group was collecting tens of thousands of new members and rea.s.suring Facebook employees that there was in fact some redeeming value to News Feed. It was called "Save Darfur."

Zuckerberg was entirely willing to tweak News Feed, but he never for a moment considered turning it off. Explains c.o.x: "If it didn't work, it confounded his whole theory about why people were interested in Facebook. If News Feed wasn't right, he felt we shouldn't even be doing this" ("this" being Facebook itself). But Zuckerberg in fact knew that people liked the News Feed, no matter what they were saying in the groups. He had the data to prove it. People were spending more time on Facebook, on average, than before News Feed launched. And they were doing more there-dramatically more. In August, users viewed 12 billion pages on the service. But by October, with News Feed under way, they viewed 22 billion.

The first time I ever met Zuckerberg was at lunch on Friday, September 8, the day Facebook unveiled the News Feed privacy changes. Only hours earlier he'd posted his contrite letter to users after staying up all night, and he was shortly to partic.i.p.ate in the live question-and-answer session to help placate protesters.

He was completely unfazed. He arrived at the restaurant wearing a short-sleeved T-s.h.i.+rt decorated with a whimsical image of a bird on a branch. He immediately launched into a confident peroration about social networking and how Facebook fit into it; he almost disregarded the fracas he'd spent the preceding days trying to tamp down. His rhetoric was big-picture and visionary. Almost offhandedly, he shared his dispa.s.sionate a.n.a.lysis of why Facebook's users were so mad about News Feed. He said that he hadn't antic.i.p.ated the uproar because he had thought users would realize that nothing on News Feed hadn't already been visible on Facebook in the past; it was just better organized and presented. But he now realized, he said, that this argument was only hypothetical. It was apparent that people felt that normal obstacles to intrusiveness had been improperly removed. He was starting to realize that users take time to get used to changes, no matter how inevitable or necessary they might seem to him.

News Feed was more than just a change to Facebook. It was the harbinger of an important s.h.i.+ft in the way that information is exchanged between people. It turned "normal" ways of communicating upside down. Up until now, when you desired to get information about yourself to someone, you had to initiate a process or "send" them something, as you do when you make a phone call, send a letter or an email, or even conduct a dialogue by instant message.

But News Feed reversed this process. Instead of sending someone an alert about yourself, now you simply had to indicate something about yourself on Facebook and Facebook would push the information out to your friends who, according to Facebook's calculations of what was likely to interest them, might be interested in the activity you were recording. And for the recipients of all this information, looking at their Facebook home pages, this new form of automated communications made it possible to stay in touch with many people simultaneously with a minimum of effort. It was making a big world smaller.

In essence, what Facebook had created was a way to "subscribe" to information about a friend. Instead of waiting for a friend to send you information, now you told Facebook-merely by being friends with someone-that you wanted to hear about them. To friend them was to subscribe to their data, so that Facebook's software would pull their information to your page. The main precedent for such a subscription model was the first well-known system for feeds-RSS (Really Simple Syndication). RSS had become popular along with blogging a few years earlier. It was a way to subscribe to the output of a given blog or website. RSS feeds had become a routine way for Web denizens to receive news, commentary, and many other types of information. Applying it to behavioral information about people, however, was a radical departure for the Net and would prove to be hugely influential.

But in their anger about the News Feed students were nonetheless recognizing something important and, for many, genuinely disturbing-when people can see what you are doing, that can change how you behave. The reason the News Feed evoked something as intrusive as stalking was that each individual's behavior was now more exposed. It was as if you could see every single person you knew over your backyard fence at all times. Now they could more easily be called to account for their actions.

Facebook had acquired the power to push people toward consistency, or at least to expose their inconsistencies. Once everything you do is laid out in chronological order for your friends to see, that may allow people to recognize things about you that they never previously knew, whether for good or ill. If you smoked a joint and a friend happened to snap a photo, that photo might get posted on Facebook. If you held a party and didn't invite a friend, they were now more likely to find out about it. You were asked to declare whether you were "in a relations.h.i.+p" or "single." You couldn't tell one girl one thing and another girl another. Any change in your relations.h.i.+p status would get pushed out on the News Feed.

Another reason many Facebook users were upset with the News Feed was more unsurprising-they had accepted too many "friends." Facebook was designed as a way to communicate with people you already knew. But for many it had instead become a way to collect friends, even a compet.i.tion to see who could have the most. But if your behavior was going to be broadcast to everyone on your friend list, people who had engaged in rampant friending now had little control over who saw into their private lives.

In his planning for News Feed and his response to the revolt, Zuckerberg established a pattern he would repeat in future controversies. He pushed for News Feed out of his conviction that it was the logical next step for the service. He did not give sufficient consideration in advance to how it would impact users' sense of privacy, and more importantly, how it would make them feel. Not everyone appreciated the transparency that Zuckerberg envisioned. One person's openness was another person's intrusiveness. Zuckerberg resisted criticism at first, then capitulated and turned contrite. In the end he embraced dialogue with the protesters. Facebook's iterative approach to all things prevailed. And more or less, all was well.

Despite the rocky start for News Feed, Zuckerberg considered it critical that Facebook continue expanding its reach. He still wanted to move quickly toward open registration. He wanted this not because he wanted more users so Facebook could make more money; instead he thought that Facebook was more useful as it acquired more users. At lunch on September 8 he said, "Whenever we expand the network, that makes the network stronger."

Zuckerberg also never considered mothballing the open registration plan. He and his colleagues, Chris Hughes and public relations manager Melanie Deitch, did debate among themselves at our lunch whether to open up as planned the following week or to delay open reg to allow the News Feed hullabaloo to die down.

In the end Zuckerberg delayed open registration by just two weeks, until September 26. That was partly so that additional privacy controls could be added to ensure that student users didn't feel that new, older users coming in following open registration would shadow them. He wasn't going to make exactly the same mistake twice in one month.

But there was another distraction during those same weeks that took up a lot of Zuckerberg's time-Yahoo returned. Even after the company's stock had plummeted in July and it had retreated from its billion-dollar offer, CEO Semel still badly wanted to own Facebook. He and his staff watched the explosion of the News Feed controversy and its rapid denouement as Zuckerberg deftly addressed the objections. They were impressed. Separately, Yahoo's stock had regained more than half the value it lost in July, bolstering Semel's nerve.

Now Semel reapproached Zuckerberg with the surprising news that he wanted to renew his original $1 billion purchase offer. He even suggested he might go higher. This was a new situation.

Though Zuckerberg had stayed coolheaded during the News Feed crisis, the young CEO was now unnerved. His users suddenly seemed less predictable. And the failure of the work networks continued to gnaw at him. He was losing confidence in the prospects for open registration, which would launch in mere days. And he had promised the board he would take a billion-dollar offer seriously.

Zuckerberg and Breyer had a blunt conversation. Both clearly recalled the stress of the earlier negotiations. Zuckerberg began to wonder if in fact he ought to sell the company. "I want to keep our options open," he told Breyer. "If the number of users and engagement is not growing steadily after open registration, maybe that billion or billion-one is something I'd want to do."

Open registration and the launch of the address-book importer became a make-or-break test of Facebook's long-term viability. Would it flop as work networks had? Were adults ever going to want to join Facebook?

Open registration launched on September 26. Every day for the next two weeks, a group of six pored over the latest data. The group included Zuckerberg, Breyer, Peter Thiel, COO Van Natta, "consigliere" Cohler, and co-founder Moskovitz. In the last few days of September the data was nerve-rackingly unclear, which meant that a sale might be imminent. Yahoo's lawyers were again conducting due diligence, getting ready for a deal. Sean Parker was watching closely from the sidelines, appalled. "We almost took the offer," he says. "It was the only time Mark felt he couldn't withstand the pressure from his teammates."

But Zuckerberg's confidence in Facebook's strategy was again vindicated. One colleague remembers being in the CEO's all-white private conference room during these weeks when somebody burst in and announced "Ten million! This is so great!" Reaching that many users was a major milestone in the company's growth.

After about a week it was apparent that not only were adults joining Facebook, but once inside they were inviting friends, posting photos, and doing all the other things that active users did. They were engaged. Prior to open registration, new users were joining at a rate of about 20,000 a day, but by the second week in October the figure was 50,000. And students didn't rise up against the new adult users as some had feared. Perhaps the News Feed ruckus had worn users down. Or maybe they were so busy checking out all the stuff they were learning about on News Feed that they didn't have time to protest.

Breyer, in particular, was a.s.suaged by the results of open registration. "Opening it up kicked in new usage," recalls Breyer. "At that point, it was pretty much game over. Our growth numbers looked good. And we just said, 'We're not ready to sell.'"

The company may have remained intact, but some of Zuckerberg's relations.h.i.+ps did not. In the months that followed, his dealings with Breyer were strained. Van Natta had pushed so hard for a sale to Yahoo that Zuckerberg never fully trusted him again, according to one of Zuckerberg's close friends. Van Natta remained as COO for another year. Even Cohler, one of Zuckerberg's closest confidants, felt the tension. For a while Cohler was excluded from the inner circle. Says an adviser to Zuckerberg, "Mark is all about loyalty to the company, and if you want to sell the company you're not friends to Mark Zuckerberg. Mark remembers everybody who was in favor of the Yahoo deal."

But in the wake of that tumultuous September of 2006, Zuckerberg's stature as a leader soared at Facebook. Many employees even began to view him with a touch of awe. Everyone knew he had been resolute about both News Feed and open registration. Says one senior executive, speaking of Zuckerberg's response to the News Feed protests, "It was a moment of greatness for Mark. It cemented him as the person who would run this company forever. He looked at his conscience and came up with a great compromise so people could better control the information being shared. That completely silenced everyone, and within a few days the whole thing had blown over."

And while many of the company's 130 employees wondered if it made sense to turn down Yahoo-after all, many would have become multimillionaires if Zuckerberg had agreed to sell-the company's forward progress now started to acquire an air of inevitability. Board member Breyer began to allow himself to envision a much grander Facebook that spanned the entire Internet, a vision he'd resisted in the past. Naomi Gleit, a product manager who had been opposed to News Feed, voices the feelings of others: "He was just two steps ahead of everybody else," she says. "He had pushed the company, and gotten lots of negative feedback. But he had been right."

Zuckerberg himself remembers the anxiety of the Yahoo talks. "It was one of the most stressful times," he says, in an uncharacteristic acknowledgment of his own anxieties. He worried how employees would react when he and the board decided not to sell. "I was really lucky because a lot of times when a company goes through a hard decision like that it can be years until it's clear that you made the right decision. Whereas in this case it was pretty clear very quickly."

At one staff meeting during those chaotic weeks, when Facebook's ability to maintain its momentum seemed so precarious, twenty-two-year-old Mark Zuckerberg showed a candor that both surprised many of his colleagues and endeared them to him. "It may not make you comfortable to hear me saying this," he said, "but I'm sort of learning on the job here."

For its holiday party that December, the entire company, now about 150 people, took buses to the Great America Theme Park in nearby Santa Clara. From the minute people got on the buses they started drinking. By the time they arrived at the park many were already drunk. Facebook's employees celebrated a successful year on the park's thrill rides that spun, dropped, twisted and inverted them. On the way home an employee threw up in an air vent of one of the buses. The company had to pay several thousand dollars to repair the damage. It was, in a way, Facebook's last gasp of amateurism. The company had 12 million active users. It had pa.s.sed the point where it could be run like a dorm-room project.

10.

Privacy.

"You have one ident.i.ty."

How much of ourselves should we show the world? It's an important question Facebook forces us to confront. Do I want you to know that I am a longtime Fortune Fortune magazine journalist who covers technology and is now writing a book about Facebook? Or should I tell you I am a fifty-seven-year-old husband of an artist, father of a teenage girl, sometime poet, and former union activist? Up to now, depending on the social context, I would most likely have presented one or the other of these ident.i.ties to you. On my single Facebook profile, pretty much all is revealed. magazine journalist who covers technology and is now writing a book about Facebook? Or should I tell you I am a fifty-seven-year-old husband of an artist, father of a teenage girl, sometime poet, and former union activist? Up to now, depending on the social context, I would most likely have presented one or the other of these ident.i.ties to you. On my single Facebook profile, pretty much all is revealed.

That is no accident. Zuckerberg designed Facebook that way. "You have one ident.i.ty," he says emphatically three times in a single minute during a 2009 interview. He recalls that in Facebook's early days some argued the service ought to offer adult users both a work profile and a "fun social profile." Zuckerberg was always opposed to that. "The days of you having a different image for your work friends or co-workers and for the other people you know are probably coming to an end pretty quickly," he says.

He makes several arguments. "Having two ident.i.ties for yourself is an example of a lack of integrity," Zuckerberg says moralistically. But he also makes a case he sees as pragmatic-that "the level of transparency the world has now won't support having two ident.i.ties for a person." In other words, even if you want to segregate your personal from your professional information you won't be able to, as information about you proliferates on the Internet and elsewhere. He would say the same about any images one individual seeks to project-for example, a teenager who acts docile at home but is a drug-using reprobate with his friends.

Zuckerberg, along with a key group of his colleagues, also believes that by openly acknowledging who we are and behaving consistently among all our friends, we will help create a healthier society. In a more "open and transparent" world, people will be held to the consequences of their actions and be more likely to behave responsibly. "To get people to this point where there's more openness-that's a big challenge," says Zuckerberg. "But I think we'll do it. I just think it will take time. The concept that the world will be better if you share more is something that's pretty foreign to a lot of people and it runs into all these privacy concerns."

Most people would find these views discomfiting, and Zuckerberg spends little time dwelling on the obvious downside of his vision. The path to more openness is already strewn with victims whose privacy was unwillingly removed. As one expert in privacy law recently asked As one expert in privacy law recently asked, "How many openly gay friends must you have on a social network before you're outed by implication?" The problems with privacy on Facebook typically arise when the comfortable compartments into which people have segregated various aspects of their lives start to intersect. You may attempt to project one ident.i.ty for yourself on your Facebook profile, but your friends, through their comments and other actions, may contradict you.

Facebook is founded on a radical social premise-that an inevitable enveloping transparency will overtake modern life. But through strength of conviction, consistency, and strategic flexibility, Zuckerberg has been able to keep Facebook true to this premise despite the pressures that have come as it grows toward 500 million users. To understand Facebook's history you must understand Zuckerberg's views about what at Facebook they call "radical transparency." The company's most painful moments have come because it took actions-like the launch of News Feed-that suddenly exposed users' information in unexpected ways.

With its mammoth scale, Facebook's very success has rendered the premise less alarming. For better or worse, Facebook is causing a ma.s.s resetting of the boundaries of personal intimacy. A large number of Facebook's users, especially younger ones, revel in the fullness of disclosure. Many users willingly fill out extensive details about their career, relations.h.i.+ps, interests, and personal history. If you are friends with someone on Facebook, you may learn more about them than you learned in ten years of offline friends.h.i.+p. Zuckerberg considers himself a strong partisan for privacy rights and is proud that Facebook has from the beginning offered users so many controls to determine who sees their information. But he also strongly believes that people are rapidly losing their interest in sequestering their data. So to keep the service in line with what he sees as changing mores, he continues to pust Facebook's design toward more exposure of information, even as most privacy controls remain in place. This contradiction helps explain the series of privacy-related controversies that have dogged the company throughout its history-around the News Feed in 2006, Beacon in 2007, the terms of service in early 2009, and the "everyone" privacy setting in late 2009. In each case the company pushed its users a bit too hard to expose their data and subsequently had to retreat.

But despite Zuckerberg's opinion there remain many ways in which social conventions and personal behavior have not yet caught up to Facebook's uncompromising environment. As it becomes harder to orchestrate how others view us, does that make us more consistent, or just more exposed? Longtime Facebook Chief Privacy Officer Chris Kelly echoes his boss: "We've been able to build what we think is a safer, more trusted version of the Internet by holding people to the consequences of their actions and requiring them to use their real ident.i.ty." Outside experts take a different view. "At every turn, it seems Facebook makes it more difficult "At every turn, it seems Facebook makes it more difficult than necessary to protect user privacy," wrote Marc Rotenberg, executive director of the Electronic Privacy Information Center (EPIC) and a respected Internet watchdog, in a mid-2008 op-ed essay. Rotenberg believes that users are not given sufficiently simple controls for their information, and that Facebook for all its belief in transparency is not very transparent about what it does with our information. than necessary to protect user privacy," wrote Marc Rotenberg, executive director of the Electronic Privacy Information Center (EPIC) and a respected Internet watchdog, in a mid-2008 op-ed essay. Rotenberg believes that users are not given sufficiently simple controls for their information, and that Facebook for all its belief in transparency is not very transparent about what it does with our information.

The amount of data about us that resides on Facebook also raises public policy questions about privacy. Should this company-or any one company-control and aggregate so much inside its own infrastructure? Should that be a job for government? People want to be in command of their digital ident.i.ty. Even if Facebook makes promises about how it will treat our data, how can we be certain it will be used as we say it should, not only now but in the future? Facebook makes the personal data provided by users available to advertisers, in aggregated form, for its own commercial gain. It and its business partners learn a lot about us, but in general we know far less about it and exactly how the company is using our data.

Privacy activist Rotenberg certainly thinks so. "Who will control our digital ident.i.ty over time?" he asks. "We still want control. We don't want Facebook to control it." Facebook will certainly face repeated backlash both from users and government regulators as its privacy policy evolves.

The older you are, the more likely you are to find Facebook's exposure of personal information intrusive and excessive. Many adult users of Facebook have trouble accepting the idea that a single profile should conflate their personal and professional lives. Some of them therefore use it exclusively for genuinely personal information and try to avoid accepting friends from work. Others keep personal stuff to a minimum and connect indiscriminately with work colleagues and contacts, including those they don't know well, aiming to turn Facebook into a networking bonanza. My Facebook friend Robert Wright, fifty-two, a respected nonfiction author who recently published The Evolution of G.o.d, The Evolution of G.o.d, only went on Facebook reluctantly, to help promote his writing. "Facebook requires an amount of disinhibition that is not natural to me. I'm too self-conscious to use modern technology effectively," he says. only went on Facebook reluctantly, to help promote his writing. "Facebook requires an amount of disinhibition that is not natural to me. I'm too self-conscious to use modern technology effectively," he says.

Even some of Zuckerberg's a.s.sociates disagree with him. "Mark doesn't believe that social and professional lives are distinct," says Reid Hoffman, the early Facebook investor and creator of the business-only LinkedIn social network, which discourages inclusion of personal information. "That's a cla.s.sic college student view. One of the things you learn as you get older is that you have these different contexts." Longtime Facebook programmer Charlie Cheever (now departed from the company) is another skeptic: "I feel Mark doesn't believe in privacy that much, or at least believes in privacy as a stepping-stone. Maybe he's right, maybe he's wrong." By "stepping-stone," Cheever means Zuckerberg sees privacy as something Facebook should offer people until they get over their need for it.

But some theorists of business applaud Zuckerberg's approach. John Hagel, fifty-nine, a top researcher and consultant at Deloitte Consulting and author of several bestselling books about the Internet and business, believes presenting what he calls "a holistic version of ourselves" is inevitable and probably beneficial. The reason, he says, is the accelerating pace of change in business and society. "If we don't keep acquiring new knowledge by partic.i.p.ating in broader networks of relations.h.i.+ps, we'll be out of work," he explains. "But sustained relations.h.i.+ps must be based on trust, and that's harder if you're only showing a part of yourself."

It's not that Zuckerberg believes in total disclosure. He wouldn't reveal confidential goings-on at Facebook on his own profile. Hagel too has his limits. "If I'm going to criticize my daughters I won't do it on Facebook," he says. "On the other hand, it's valuable for people to know I have two daughters because it creates more sense of who I am as a person."

Some people thrive on the unbridled self-disclosure. Jeff Pulver, a New York tech entrepreneur and consummate networker both on and offline, does much of his business on Facebook and Twitter, using them to send messages and arrange meetings. But he also is his real self in such interactions, he insists. "I call it life 3.0," he says, "living more and more of your life online and connecting in real ways. People who have their s.h.i.+elds up and don't make themselves vulnerable won't ever understand why there's all this excitement about Facebook and Twitter and social media."

In 2007, London-based technology expert Leisa Reichelt coined the phrase "ambient intimacy" on her blog to describe the dynamics of Facebook and other new services that enable individuals to freely talk about themselves to groups of friends or followers. She defined it as "being able to keep in touch with people She defined it as "being able to keep in touch with people with a level of regularity and intimacy that you wouldn't usually have access to, because time and s.p.a.ce conspire to make it impossible." The phrase struck a nerve globally with students of social networks. with a level of regularity and intimacy that you wouldn't usually have access to, because time and s.p.a.ce conspire to make it impossible." The phrase struck a nerve globally with students of social networks. A widely discussed 2008 article in the A widely discussed 2008 article in the New York Times New York Times Magazine Magazine by Clive Thompson detailed his own experience with Facebook and Twitter. It explored the social implications of ambient intimacy and was an argument for its virtues. "The new awareness...brings back the dynamics of small-town life, where everybody knows your business," Thompson wrote, approvingly. by Clive Thompson detailed his own experience with Facebook and Twitter. It explored the social implications of ambient intimacy and was an argument for its virtues. "The new awareness...brings back the dynamics of small-town life, where everybody knows your business," Thompson wrote, approvingly.

The reality is that nothing on Facebook is really confidential. The company's own privacy policy is blunt on this score. Any of your personal data "may become publicly available," it reads. "We cannot and do not guarantee that User Content you post on the Site will not be viewed by unauthorized persons." To be fair, this language is intended primarily to inoculate Facebook against potential lawsuits. The company certainly tries hard to give you protections for what is meant to be confidential. But many people do not understand or take advantage of Facebook's often-complicated controls for their own information. That frequently leads to misunderstandings and embarra.s.sment.

Once people expose their real behavior on Facebook, when they do something rash or stupid it is more likely to become "publicly available." A young U.S. employee of Anglo-Irish Bank asked his boss for Friday off to attend to an unexpected family matter. Then someone posted a photo on Facebook of him at a party that same evening holding a wand and wearing a tutu. Everyone in the office-including his boss-discovered the lie. A political candidate in Vancouver, Canada, withdrew from his race after a newspaper published a Facebook photo showing two people happily pulling on his underwear. Notoriously, Barack Obama's speechwriter Jon Favreau was publicly embarra.s.sed when a blog published a photo that showed him at a party with his hands on the breast of a life-size cardboard cutout of Hillary Clinton. It had been posted on Facebook by one of his friends. And Facebook disclosure can do more than merely embarra.s.s you. A 2009 poll of U.S. employers found that 35 percent of companies had rejected applicants because of information they found on social networks. The number one reason people weren't hired: posting "provocative or inappropriate photographs or information." Colleges too are increasingly searching Facebook and Mys.p.a.ce as they make admissions decisions.

Perhaps the Favreau incident was on President Obama's mind when he spoke to a group of high school students in Virginia in September 2009. "I want everybody here to be careful about what you post on Facebook," he said, "because in the YouTube age, whatever you do will be pulled up later somewhere in your life. And when you're young, you make mistakes and you do some stupid stuff." Facebook members.h.i.+p is becoming common Facebook members.h.i.+p is becoming common among younger and younger children-it is now commonly used by many eleven-year-olds and those even younger, despite Facebook rules that users must be thirteen. among younger and younger children-it is now commonly used by many eleven-year-olds and those even younger, despite Facebook rules that users must be thirteen.

You don't have to be young to make mistakes there, however. Numerous Facebook incidents have exposed unseemly behavior by people in positions of responsibility. A guard at a Leicester, England, prison A guard at a Leicester, England, prison was fired after colleagues noticed he was friending prisoners. was fired after colleagues noticed he was friending prisoners. A Philadelphia court officer was suspended A Philadelphia court officer was suspended and rea.s.signed after a juror in his courtroom reported he had asked her to be his Facebook friend. Jurors also have erred. Several verdicts in various parts of the United States have been challenged by convicted defendants after they learned that supposedly silenced jurors had posted remarks on Facebook while the trial was under way. and rea.s.signed after a juror in his courtroom reported he had asked her to be his Facebook friend. Jurors also have erred. Several verdicts in various parts of the United States have been challenged by convicted defendants after they learned that supposedly silenced jurors had posted remarks on Facebook while the trial was under way.

Even people whose very job is to keep secrets are flummoxed by Facebook's inducement to transparency. After the United Kingdom announced in mid-2009 that Sir John Sawers would become the next head of its spy agency, the Secret Intelligence Service (formerly called MI6), the Daily Mail Daily Mail newspaper discovered a publicly accessible trove of family photos that had been posted by his wife on Facebook. newspaper discovered a publicly accessible trove of family photos that had been posted by his wife on Facebook. They included images of holidays They included images of holidays, family friends, and details that could reveal where Sawers lived and how he spent his time.

Facebook transparency can jar intimate relations.h.i.+ps. Many still haven't gotten used to seeing and knowing so much about their significant others. If your boyfriend shows up in photos with another girl, it may mean nothing, but who knows? Worse is when someone learns they are no longer a couple at all-by seeing a change in a Facebook profile. The outcome can even be tragic The outcome can even be tragic: a British man allegedly killed his wife, from whom he had recently separated, after he saw her relations.h.i.+p status on Facebook change from "married" to "single."

Photos in particular can reveal, as they did for Sir Sawers, who you spend time with, what you do with them, and where you go. High school and college students essentially conduct their lives in the open on Facebook. They conduct one-to-one dialogues with their friends on their Facebook "wall" despite the fact that anyone else with access to that profile can see it. This information is generally visible to anyone in their school network.

A few dissenters in the young generation find the obsession with Facebook self-presentation unhealthy. Shaun Dolan, a twenty-five-year-old New York a.s.sistant in a media firm, has made a deliberate decision to stay off the service. "My generation is unbearably narcissistic," he said in an email to me. "When I go out with my friends, there is always a camera present, for the singular goal of posting pictures on Facebook. It's as if night didn't happen unless there's proof of it on Facebook. People painstakingly monitor their own Facebook page to see what pictures they get tagged in, or what picture would best represent them to their friends."

Some call such behavior exhibitionism, or, as my longtime Fortune Fortune colleague Brent Schlender puts it, a search for "digital fame." On Facebook we follow the minutiae of our friends' lives the same way millions follow Britney Spears in colleague Brent Schlender puts it, a search for "digital fame." On Facebook we follow the minutiae of our friends' lives the same way millions follow Britney Spears in People People magazine. Andy Warhol famously said that "everybody will be famous for fifteen minutes," but on Facebook what's limited is not how long you are famous but how widely. It may be only among a circle of friends or school-mates. magazine. Andy Warhol famously said that "everybody will be famous for fifteen minutes," but on Facebook what's limited is not how long you are famous but how widely. It may be only among a circle of friends or school-mates. The Internet theorist David Weinberger The Internet theorist David Weinberger now posits that "on the Web, everybody is famous to 15 people." now posits that "on the Web, everybody is famous to 15 people."

Many young people don't seem to know when extreme self-exposure becomes reckless. A twenty-year-old employee of Petland Discounts in Akron, Ohio, posted a photo of herself on Facebook holding two rabbits she had just drowned. Animal rights activists were outraged and she was shortly arrested and charged with cruelty to animals. Teenagers routinely post photos showing themselves and others using drugs or drinking when they are not of legal age. At Amherst Regional High School At Amherst Regional High School in Amherst, Ma.s.sachusetts, a student gathered up pictures that showed popular kids drinking and possibly using marijuana, then sent them en ma.s.se to the school princ.i.p.al and others in the community. At another high school, the princ.i.p.al went onto Facebook and suspended all the athletes he saw in photos of a party who were holding bottles of beer. ( in Amherst, Ma.s.sachusetts, a student gathered up pictures that showed popular kids drinking and possibly using marijuana, then sent them en ma.s.se to the school princ.i.p.al and others in the community. At another high school, the princ.i.p.al went onto Facebook and suspended all the athletes he saw in photos of a party who were holding bottles of beer. (Those with red plastic cups were spared.) Facebook interactions with teenagers are almost universally fraught for adults, because the two generations have such fundamentally different att.i.tudes about what is proper personal disclosure. One San Francisco executive was friended by her partner's teenage son. When he took a summer trip to Europe he headed to Amsterdam and excitedly told friends on Facebook all about his pot smoking. My friend was torn-should she tell her partner, or would that be betraying the trust given her by the teenager? A sixty-year-old in Virginia saw her nephew swearing furiously on his Facebook page, but knew that his extremely strict school could expel him for that. She confronted him about it herself rather than telling his parents.

Since most teenagers still won't friend their parents, some families have inst.i.tuted a rule that as a condition of having a computer and using Facebook the parents get access to their child's profile. They are frequently distressed by what they find there.

How much Facebook should encourage users to reveal has been the subject of debate throughout the company's history. "Our mission since day one has been to make society more open," says marketer Dave Morin, a member of Zuckerberg's inner circle. "That's what it's all about, right? We help people be more open across more contexts. I think they have to worry less all the time about being who they actually are." But Facebook COO Sheryl Sandberg, thirty-nine, looks at it slightly differently. "Mark really does believe very much in transparency and the vision of an open society and open world, and so he wants to push people that way," she says. "I think he also understands that the way to get there is to give people granular control and comfort. He hopes you'll get more open, and he's kind of happy to help you get there. So for him, it's more of a means to an end. For me, I'm not as sure." Sandberg, fourteen years Zuckerberg's senior, thinks it's fine if someone doesn't want to make his or her life transparent.

Facebook does have a unique ability to help users control where information about themselves flows. But it only works because of Facebook's rigid requirement that people use their real names. If you weren't confident people on Facebook were who they said they were, you would not be able to selectively permit them to access your data by friending them. You can restrict or amplify the extent of their view into your information, as well as adjust how much information you see about them, by putting them into groups called Friend Lists. These groups-for work, family, college friends These groups-for work, family, college friends, or whomever-enable you to send information to one group and not to others. However, only about 25 percent of users actively use these controls, according to Facebook's chief privacy officer, Chris Kelly. Many consider them maddeningly difficult to use.

Facebook at least potentially already has more ways for users to control their data than just about any other site on the Net. Longtime top company architect Adam D'Angelo says Facebook represents a "new model for information" because of these controls. "Every piece of information on Facebook is protected by restrictions that say who can see it," he says. "Certain sets of people can see certain pieces of information." D'Angelo is right to note that such "granular" controls are found almost nowhere else on the Net, partly because only Facebook has so much information about who is doing the looking.

In late 2009 Facebook renovated its privacy controls and made a major effort to explain to users how to put friends into groups and a.s.sign various levels of disclosure to information. However, in the course of requiring users to adjust their settings, the company set the default setting on new controls to "everyone." Many users who were not paying attention found their information more exposed rather than less, despite this supposed "improvement" in privacy. The counterreaction was strong. A group of privacy organizations led by Marc Rotenberg and EPIC filed a formal complaint with the U.S. Federal Trade Commission, asking for an investigation and penalties for Facebook. The complainants included important groups like the American Library a.s.sociation and the Consumer Federation of America. Before the change Facebook executives had spoken enthusiastically of it, saying it was likely to rea.s.sure users about their data. Ironically, EPIC's suit a.s.serted quite the contrary: "Facebook's changes to users' privacy settings disclose personal information to the public that was previously restricted...These changes violate user expectations, diminish user privacy, and contradict Facebook's own representations." The company had still not learned how to antic.i.p.ate and accommodate the concerns and att.i.tudes of its users regarding privacy. They apparently were not yet ready for too much transparency.

Zuckerberg more or less lucked into giving Facebook's users the control they do have. In the beginning it became apparent that users at Harvard shared so much about themselves because they knew that only other Harvard students-members of Facebook's Harvard network-could see it. So as Facebook evolved, the concept of networks grew with it. All users were initially put into a network by default-for a university, a high school, a workplace, or a geography. For years I was in the Time Inc. network and also the New York one. You can see information about other people in your networks, and they can see yours unless you adjust your privacy preferences to prevent it. (I do, for both networks.) But n.o.body outside the network can see your information unless you explicitly permit them to. Now, in a key change, regional networks are being eliminated. That will dramatically reduce the number of people who can see most users' data if they haven't "friended" them.

For all the privacy challenges on Facebook, most people seem comfortable with how it works. In a September 2009 survey it was found to be the tenth-most-trusted company of any type in the United States in a survey of 6,500 consumers by research firm Ponemon Inst.i.tute and TRUSTe, which verifies Internet sites. Facebook ranked ahead of Apple, Google, and Microsoft.

But the influence of Zuckerberg's more extreme convictions remains apparent as you walk Facebook's halls. Some there talk about a concept they call either "ultimate transparency" or "radical transparency." Since the world is likely to become more and more open anyway, people might as well get used to it, the argument goes. Everything is going to be seen.

The place where your information is most obviously transparent is Facebook's photos application. That's where it is hardest to limit the disclosure of information about yourself. You have no control over whether someone posts a photo of you there. You do have the right to delete the "tag" on a photo that identifies you and causes that information to be disseminated to your friend list. However, generally by the time you delete one, news of the tag has already been distributed in Facebook's News Feed. (Any user can also adjust Facebook's privacy settings so they cannot be tagged at all.) Photos are visible by default. Everyone on the entire service can see them unless you deliberately adjust your privacy controls, and most users don't.

Many users over the years have wanted Facebook to remove objectionable photos of them taken by others. However, the company follows a firm policy that while the tag is in your control, the photo is not. It belongs to the photographer. Facebook has also, wrongly in my view, resisted letting users approve tags of themselves before they are affixed to a photograph and distributed to friends.