Company History

A 19-year-old boy launched a site with his roommate as a Harvard sophomore on February 4, 2004. His name was and his friend name was Eduardo Saverin both are students of .

Initially, It was called "thefacebook.com," the interesting thing is that the site was instantly accepted to the people. After six years later, the site has become one of the biggest web sites in the world, visited by 400 million people a month. It was quickly capture the internet users and it has built a largest social community in the world. Although there have controversy that the idea of stolen from three seniors students of Harvard University.

The primary dispute around Facebook's origins centered around whether Mark had entered into an "agreement" with the Harvard seniors, Cameron and and a classmate named Divya Narendra, to develop a similar web site for them -- and then, instead, stalled their project while taking their idea and building his own.

The litigation never went particularly well for the Winklevosses.

In 2007, Massachusetts Judge Douglas P. Woodlock called their allegations "tissue thin." Referring to the agreement that Mark had allegedly breached, Woodlock also wrote, "Dorm room chit-chat does not make a contract." A year later, the end finally seemed in sight: a judge ruled against Facebook's move to dismiss the case. Shortly thereafter, the parties agreed to settle.

But then, a twist.

After Facebook announced the settlement, but before the settlement was finalized, lawyers for the Winklevosses suggested that the hard drive from Mark Zuckerberg's computer at Harvard might contain evidence of Mark's fraud. Specifically, they suggested that the hard drive included some damning instant messages and emails.

The judge in the case refused to look at the hard drive and instead deferred to another judge who went on to approve the settlement. But, naturally, the possibility that the hard drive contained additional evidence set inquiring minds wondering what those emails and IMs revealed. Specifically, it set inquiring minds wondering again whether Mark had, in fact, stolen the Winklevoss's idea, screwed them over, and then ridden off into the sunset with Facebook.

Unfortunately, since the contents of Mark's hard drive had not been made public, no one had the answers. But now we have some.

Over the past two years, we have interviewed more than a dozen sources familiar with aspects of this story -- including people involved in the founding year of the company. We have also reviewed what we believe to be some relevant IMs and emails from the period. Much of this information has never before been made public. None of it has been confirmed or authenticated by Mark or the company.

Based on the information we obtained, we have what we believe is a more complete picture of how Facebook was founded. This account follows.

And what does this more complete story reveal?

We'll offer our own conclusions at the end. But first, here's the story:

Read more: http://www.businessinsider.com/how-facebook-was-founded-2010-3? op=1#ixzz3J2rHy0Sj

1. Source: At Last -- The Full Story Of How Facebook Was Founded

IPO Info:

In May 2012, Facebook raised US$ 16 billion through its Initial Public Offering (IPO), valuing the company at US$ 104.2 billion. Facebook embarked on the IPO to meet regulatory requirements as well as raise the requisite funds for its future expansion. It planned to use the funds raised through the IPO to develop new technologies, make acquisitions, and recruit the talented people needed for its future expansion. Facebook was facing heightened competition from rivals like Inc. (Google) which had started its own social network, 'Google+'. Facebook could not successfully expand itself into other internet services despite its attempts to provide new services like email.

So, it decided to focus more on social networking to expand its business. Facebook started to concentrate more on increasing its revenues through mobile advertising as more and more people were accessing the internet through their mobile devices like smartphones. It started a new initiative for mobile devices called 'sponsored stories' where business organizations and individuals could pay Facebook to highlight stories related to their businesses.

Facebook also started to focus more on emerging markets as its growth rate in the developed markets was nearing saturation point. The company was getting more users from developing markets like India and Brazil. It started attracting more software developers to develop applications for emerging markets. To meet the problem of low PC penetration in the emerging markets, Facebook planned to make its services more accessible on low-end mobile devices. It had entered into a global partnership with MediaTek, Inc. (MediaTek) in November 2011 to integrate Facebook into MediaTek's mobile platform for low-end feature phones. It also acquired the mobile application developer Snaptu to bring the Facebook application to more feature phones around the world. Despite the initiatives taken by Facebook, its share price underperformed after it came out with its IPO, an indication of low investor confidence in its future growth prospects.

Perhaps one shouldn't enjoy the misfortunes of others, but I was glad to watch Facebook shares fall last week.

It's good to know that the laws of supply and demand still apply, even to a social media company that was billed as the can't-miss IPO of the decade. If you price something too high, people won't buy. If you try to sell more than people want, the price will fall. That's as true on Wall Street as it is at a farmers' market.

Facebook and its underwriters, led by Morgan Stanley, flouted those basic rules. They seemed to believe their own hype.

The initial public offering was already expensive by almost any measure, and then underwriters raised the price at the last minute. They also added more shares to the offering.

They clearly overreached. By Friday, the shares were 16 percent below their $38 offering price. A week of trading had shaved Facebook's market value by almost $15 billion.

A Nasdaq trading glitch caused confusion as trading began, but humans, not computers, have to take the blame for this flop. Computers don't get greedy.

“When you price shares so every ounce of value is realized in the first trade, then to whom are you going to sell them?” asks Ken Crawford, a managing director at Argent Capital Management in Clayton.

Facebook got top dollar for the shares it sold, but that's not the only objective of an IPO. “You want people to be happy that they own your stock,” Crawford says. “You don't want to just get a top price for a nanosecond.”

It's hard to feel sorry for the underwriters, who earned $170 million in fees from this deal, or for hedge funds that didn't get the quick trading profit they hoped for. The Facebook flop does, however, raise some troubling questions about the IPO market.

IPOs have been relatively rare over the past dozen years. The cost of being a public company has risen, and an ample pool of private-equity funds has given owners an alternative source of cash. Many people had hoped that Facebook would make IPOs fashionable again. Instead, it provided a case study in the perils of going public.

Tim Zechman, managing partner of Grant Thornton's Clayton office, says several of the audit firm's U.S. clients have been considering IPOs.

“Especially for ones that are private-equity backed, you're hearing the IPO back in the mix as an exit strategy,” Zechman said. “A few years back, it wasn't even mentioned.”

No other IPO is likely to generate the hype that made Facebook an anomaly, so Zechman doesn't think last week's trading will dissuade other companies from testing the public markets.

Scott Livingston, chief executive of Livingston Securities in New York, doesn't expect a dearth of IPOs either. He says the JOBS Act, a new federal law that relaxes some regulations for small companies going public, should increase the number of offerings.

“Facebook was a bump in the road, maybe a particularly nasty bump where we bottomed out, but we didn't blow a tire,” Livingston said.

Still, Wall Street has some soul-searching to do. Raising capital for young companies is one of the stock market's core functions, and a high-profile IPO was an opportunity to demonstrate the virtues of capitalism. Instead, we got yet another lesson in greed.

DIVIDEND POLICY

They have never declared or paid cash dividends on our capital stock. They currently intend to retain any future earnings for use in the operation of our business and do not intend to declare or pay any cash dividends in the foreseeable future. Any further determination to pay dividends on their capital stock will be at the discretion of our board of directors, subject to applicable laws, and will depend on their financial condition, results of operations, capital requirements, general business conditions, and other factors that our board of directors considers relevant. In addition, the terms of our credit facility contain restrictions on our ability to pay dividends.

Government Regulation they are subject to a number of U.S. federal and state, and foreign laws and regulations that affect companies conducting business on the Internet, many of which are still evolving and being tested in courts, and could be interpreted in ways that could harm there business. These may involve user privacy, rights of publicity, data protection, content, intellectual property, distribution, electronic contracts and other communications, competition, protection of minors, consumer protection, taxation and online payment services. In particular, they are subject to federal, state, and foreign laws regarding privacy and protection of user data. Foreign data protection, privacy, and other laws and regulations are often more restrictive than those in the United States. U.S. federal and state and foreign laws and regulations are constantly evolving and can be subject to significant change. In addition, the application and interpretation of these laws and regulations are often uncertain, particularly in the new and rapidly-evolving industry in which they operate. There are also a number of legislative proposals pending before the U.S. Congress, various state legislative bodies, and foreign governments concerning data protection which could affect us. For example, a revision to the 1995 European Union Data Protection Directive is currently being considered by legislative bodies that may include more stringent operational requirements for data processors and significant penalties for non-compliance. In November 2011, they reached a 20-year settlement agreement with the FTC to resolve an investigation into various practices, by entering into an agreement that, among other things, requires us to establish and refine certain practices with respect to treatment of user data and privacy settings and also requires we complete bi-annual independent privacy audits. Violation of existing or future regulatory orders or consent decrees could subject us to substantial monetary fines and other penalties that could negatively affect our financial condition and results of operations. Various laws and regulations in the United States and abroad, such as the Bank Secrecy Act, the Dodd-Frank Act, the USA PATRIOT Act, and the Credit CARD Act impose certain anti-money laundering requirements on companies that are financial institutions or that provide financial products and services. Under these laws and regulations, financial institutionsare broadly defined to include money services businesses such