April 27, 2005

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Classifieds

Palo Alto Online

In your face

by Sue Dremann

Mark Zuckerberg's $85 investment is about to pay off -- big time.

A founder of Thefacebook.com, an online directory that connects college students through a social network, Zuckerberg, 20, said his company is securing investors from Silicon Valley and raising upward of $10 million in early funding.

Not only that, he has just opened a corporate office in downtown Palo Alto.

Pretty heady stuff for a kid with no business experience. But Zuckerberg isn't going it alone. Sean Parker, co-founder of Napster and Plaxo, is on board as president of the nascent company.

"I've learned a lot from Sean," he said.

Zuckerberg and a few friends started Thefacebook.com more than a year ago while sophomores in Harvard. Influenced by other online social networking sites, such as Friendster.com, Zuckerberg hit upon the idea of creating a site where students could make connections campus-wide with the click of a button.

Students can check out pictures of their peers, discover their class schedules, interests and social affiliations. Users can find someone they saw across the room at a party, or learn about that cute girl in biology class.

Only students with valid school e-mail can register, and users can restrict which groups can access their information.

The site has taken college campuses by storm. A little over a year later, Thefacebook.com is accessible on 500 college campuses with a goal of hitting 900 by the end of the year, Zuckerberg said. Eventually, Thefacebook wants to connect up with 1,400 four-year colleges in the country.

Just beyond the glass double doors of The facebook's corporate headquarters at 471 Emerson St., a cardboard box labeled "mail" in fading permanent marker sits on the slate floor in the foyer. Trendy graffiti art by San Jose artist David Choe scrawls its way up the staircase walls: a cartoon guy with oversized hands; a buxom woman riding on the back of a rottweiler.

The offices, situated on the building's second floor, are still being assembled. Against one wall is a full-sized fridge topped with a variety of wine and liquor bottles contribute to the collegiate ambiance.

Zuckerberg, in T-shirt and jeans, is feeling a bit fuzzy -- he worked through the night, getting to bed at 9 a.m. The ratty sofa -- on which he slept last night, in an office dubbed "the dorm room" -- isn't comfortable, but it's an integral part of the college vibe Thefacebook cultivates, he said.

By contrast, new maple patterned melamine desks grace the otherwise empty rooms; and the beginnings of technical equipment -- new monitors have just been set up in the last couple of days.

The business has gone from serving 4,000 Harvard users to more than 2.3 million users today. (Stanford has 10,800 users, and Berkeley 18,200.) It's free to students, but people pay $10 to $15 a day per school to place an ad. They can announce having a party, or sell a couch through small, unobtrusive classified ads with links.

Sponsored groups -- such as a soccer club or some other organization, or paid promotions by outside companies -- also control the look and feel of a group on the site, but don't have access to the members' profiles or personal information.

The revenue from ads and sponsored sites rakes in the bucks -- upward of six figures a month, Zuckerberg said.

The company is hitting its share of bumps along the way, with a lawsuit filed by Harvard rival ConnectU.com last September. The suit claims Zuckerberg -- who worked for the start-up as a programmer in late 2003 -- stole ConnectU's technology and business model. Thefacebook has filed a counter-suit.

Zuckerberg isn't perturbed. Neither are investors. Pay-Pal co-founder and former CEO Peter Thiel of Clarium Capital in San Francisco, is an investor, Zuckerberg confirmed, and there are others; but he was less forthcoming regarding rumors that Accel Partners is a lead investor.

"We will neither confirm nor deny who the investors will be. ...There is a primary investor and a few others. There are rumors leaked, but they are wrong about the amount of money," Zuckerberg said.

"We're giving them a small piece of the company," he added.

Zuckerberg and friends landed in the Bay Area as a way to escape Boston for awhile last summer. He soon got into the business network.

"It makes sense to stay here and not go to school. I figured Palo Alto would be a good place for a corporate center," he said.

While his school plans are up in the air, his father -- a dentist -- and mother -- a psychiatrist in Westchester county -- New York don't want him to "get kicked out of college," he said. He would like to go back to school, but if Thefacebook goes well, it won't be anytime soon, he said.

E-mail Staff Writer Sue Dremann at sdremann@paweekly.com.

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