Chapter 597: Conflict

Finally, Martin brought the conversation to a close.

He smiled and said, "Now that we've all caught up, let's talk investment. I've got something to do tomorrow, so I can't stick around too long."

Mark Zuckerberg sighed. "I still envy you, Martin. You don't have to waste time sitting in class."

Mentioning classes piqued Martin's curiosity. "Mark, you clearly love computer programming—so why did you major in psychology at college?"

Mark gave a wry smile. "Because I thought it through. Starting a business while in college means I need a major that's relatively light and easy to pass. Psychology lets me free up a lot of time."

Even though Harvard is the world's top university for psychology, its courses were still a breeze for someone like Mark. He completed his degree easily and focused most of his energy on building his business.

"Martin, we need about two million in funding. I think we can offer you 45% equity. What do you think?" Mark hesitated as he spoke, a bit embarrassed.

At this point, he still had no idea how much potential Facebook would hold in the future and was worried the offer might be taking advantage of Martin.

But Martin was ecstatic inside. What a deal.

Still, he kept a straight face and replied calmly, "Alright, since I'm helping a friend, I'll accept. But the voting rights of those shares should remain with you, Mark."

Mark was overjoyed!

The reason he had approached Martin for investment was exactly this—he wanted funds, but without losing control.

Just as he was about to agree, Eduardo Saverin cut in from the side. "I don't agree. Forty-five percent is too much. I think two million is fair for 20% equity, no more."

Martin and Mark both frowned—Martin inwardly, Mark visibly.

Mark pushed back. "Eduardo, two million for 45% is already a premium."

Eduardo replied firmly, "I believe in Facebook's future. At the rate we're growing, 100 million users isn't far off. Five percent of Facebook will be worth far more than two million."

"But we're talking about right now," Mark argued, visibly frustrated. "Without that money to expand our servers, the site will crash. There won't be a future!"

Martin understood Eduardo's reasoning—he made valid points—but it was clear his concerns were more political than financial. Eduardo feared power being consolidated in Mark's hands.

Originally, the share distribution was: Mark Zuckerberg held 60%, Eduardo 35%, and Dustin Moskowitz 5%. That gave Eduardo a significant say, even if not enough to challenge Mark. But if Martin received 45%, Eduardo's shares would be diluted, and if Martin transferred his voting rights to Mark, the entire company would fall under Mark's control.

This same concern would later lead to Eduardo's falling out with Mark.

As Facebook attracted more investors, Eduardo began to resist signing key documents. This escalated tensions, and Sean Parker later proposed setting up a new, more formal company in Delaware—Facebook.0. The original company jointly controlled by Mark and Eduardo would be called Facebook 1.0.

Then came the masterstroke: Facebook 0.0 was used to acquire Facebook 1.0.

Mark and Dustin transferred Face's intellectual property rights to Facebook 0.0, making it the legal owner of the platform.

Eduardo still held shares in the new company, but he was no longer part of its management.

The articles of incorporation for Facebook 0.0 listed Mark with 51%, Eduardo with 34.4%, Dustin with 6.81%, and Sean Parker with 6.47%.

In short, Eduardo had been quietly sidelined.

Outraged, Eduardo froze Facebook 0.0's bank account, further escalating the conflict.

Then Sean Parker made another move—diluting Eduardo's shares without his knowledge, dropping him to 10%. The fallout was immediate and total.

Eventually, Eduardo was completely pushed out of the management team and lost his authority over the company.

At this point, you might feel sorry for Eduardo. After all, he was a co-founder whose stake was continuously eroded until he became a marginal figure.

But the truth is—he brought it on himself.

From the beginning, Eduardo treated Facebook as a side hustle, a way to make a quick buck. While Mark and Dustin were fully committed—taking leaves of absence and dedicating themselves full-time—Eduardo told Mark flat-out that he planned to graduate and go to business school, and that school came first, no matter what the company needed.

Worse, he even used Facebook to advertise a competing job site he had invested in—without involving the team.

The core issue? If you're just in it for the money, fine. Hold your shares quietly and watch their value grow. But don't insist on controlling management decisions.

That refusal to let go of power eventually led to the full-scale split between him and Mark.