Part III of the Facebook Trilogy. Now that yet another Facebook “founder” wannabe has come out of the woodwork to claim his riches, it’s time to take stock of the lessons that entrepreneurs should learn from the evolving story
of the founding of Facebook. First-time entrepreneurs make a lot of mistakes, and Mark Zuckerberg is no exception, so let’s see what we can take away from the ongoing claims against Facebook.
of the founding of Facebook. First-time entrepreneurs make a lot of mistakes, and Mark Zuckerberg is no exception, so let’s see what we can take away from the ongoing claims against Facebook.- Plan for a startup years in advance. Actually, kindergarten might be the perfect place to start because that’s where we all learn how to play well with others. Since anyone reading this blog is way past that point, however, you might want to mentally go back in time and make sure you didn’t talk about anything remotely related to the business you’re about to start. Remember that bully who used to tease you about your ideas? Oops—where is he now? (See #3)
- Say goodbye to colorful friends. If you’re hanging around people who have committed fraud, gone to jail, filed for bankruptcy, or play way over the edge (e.g. Paul Ceglia, who is the most recent claim on FB foundership), you might want to quietly drift out of their lives. Colorful friends have a way of resurfacing at the most inopportune times, so best not to acquire them in the first place. (See #4)
- Don’t do anything without a lawyer. I can’t believe I just said that, since we are such a litigious society and I definitely don’t want to encourage the lawyers (see #5), but reality is reality. One of Mr. Ceglia’s claims is that Mr. Zuckerberg signed a work-for-hire contract with him in 2003 that gave Mr. Ceglia an 84 percent stake in Facebook (actually a Facebook-like concept—I’m getting deja vu images of the Winklevoss twins here). Signing contracts without being aware of the ramifications can definitely come back to bite.
- Clean up your messes before you launch a business—preferably before you talk about a new business. Lawyers who deal with Internet entrepreneurs claim that these startups are pretty messy from a legal standpoint (and probably from every other standpoint). Scott C. Dettmer, a Silicon Valley attorney, asserts that forming startups is usually a very informal and chaotic process, and no one is thinking too carefully about what they’re saying. That can present a lot of problems when a new company suddenly gets a big investment and hangers-on start seeing dollar signs. Best to get signoffs from anyone you worked with who is not part of the startup when things are still at their riskiest and you don’t know that you’ll succeed. In other words, clean up the messes when the company isn’t worth anything.
- Consider becoming a lawyer for high profile startups—that’s where the money is. I’m being just a little bit facetious, but only a little. I don’t have a count of all the lawsuits currently pending against Facebook, but founder wannabes are not the only source. It seems that an entire country, Canada to be exact, has filed claims about Facebook appropriating private friend lists and profile photos, violating Canadian privacy and consumer protections laws. The spreading class action suit says that Facebook shouldn’t be permitted to enjoy the economic benefits of unlawful conduct without the customers getting a piece of the action (so I guess it’s OK to be unlawful as long as the customer is participating). And if this is like class action suits in the U.S., if they win, the plaintiffs will get $1.50 each and the lawyers will get $100 million. Oh, and did I mention that the Federal Trade Commission may also be going after Facebook. Like I said, this is about lifetime employment for attorneys. If you're looking for security, this is the profession.
Stay tuned. The soap opera around Facebook will go on for a long time, but there’s no reason you can’t learn from some of Mr. Zuckerberg’s mistakes, especially if you’re about to start a new venture.
