Harvard’s alumni magazine, 02138, is generating a lot of attention for an article about Facebook’s creation and the various lawsuits initiated by other Harvard alumni against Mark Zuckerberg. The magazine got a lot of juicy tidbits from protected legal documents that a court clerk accidentally turned over to the article’s author. Facebook quickly put some of its millions to good use and filed legal motions trying to convince a judge to order the magazine to remove references to the protected legal documents, but they’ve apparently lost the motions and the information is still on 02138’s website.

In general, Zuckerberg seems like an aggressive guy with questionable ethics, but I’d aready posted about that. In addition, with all of the negative press surrounding Beacon (Facebook’s overly aggressive advertising system), Zuckerberg is realizing that the media often builds you up only to then tear you down.

In some sense, I feel sorry for Zuckerberg (or as sorry as you can feel for a 24-year-old self-made billionaire). He’s trying to finish puberty while navigating his way in a high-stakes, fast-paced, cut-throat business culture with international media outlets and tech analysts scrutinizing his every move. As one commentator humorously notes: “Maybe 13 year-olds shouldn’t be CEOs.”

But what’s cool about the 02138 article is that they’ve posted online some of the tawdry tibits that Zuckerberg definitely didn’t want anyone to see — they’ve included PDFs of Zuckerberg’s college application, his online journal, his testimony before the Harvard disciplinary committee, his depositions, etc. (Kara Swisher of the Wall Street Journal notes the irony that Zuckerberg wants to have his private life protected, even as he tries to monetize all of the private details of Facebook’s users via Beacon.). Interesting reading . . .

A few highlights:

• Zuckerberg once handed out business cards that read: “I’m CEO … bitch.”
• He has noted that he prefers Asian women.
• During March 2006 negotiations with Yahoo executives, Zuckerberg refused to meet over a weekend because his girlfriend was in town. “When I’m hanging out with her, I tend not to be that engaged [in work],” he said. (This might not seem like such a big deal in Europe, but it’d be absolutely unheard of in the United States, particularly when an Internet giant like Yahoo is meeting with you because they want to buy your start-up for $1 billion.)
• Zuckerberg owns 20 percent of Facebook, which means that on paper he’s worth $3 billion.
• Zuckerberg learned to code in sixth grade (at about 12 years old), when he got first desktop PC and the book C++ for Dummies.
• As a senior in high school, Zuckerberg and friend Adam D’Angelo designed a music plug-in called Synapse that played songs in patterns based on the user’s listening habits. D’Angelo is now Facebook’s chief technology officer. When tech website Slashdot linked to the plug-in, WinAmp, Microsoft, AOL, and others sought to buy Synapse, but the two friends decided not to sell it at first. Soon it was too late and the big companies were no longer interested. (Let’s hope for his sake that history doesn’t repeat itself!)
• Zuckerberg is really confident in his coding ability, but less so in his design ability. So when he starts a project, he starts first with the design. In his words: “I know I can code well, but I’m not so confident about the design and I know how important that is to the final product, so I always like to get the design out of the way first … I start with a simple design and build pages on top of that.”
• Zuckerberg is well known for programming long hours without eating and with little sleep. He claims that he coded the original Facebook site in just over a week, during Harvard’s exam period.
• As a sophomore at Harvard, where he was a computer science major, Zuckerberg got into trouble when he created a website called “facemash” — a kind of Hot or Not service that put photos of two Harvard students side-by-side and asked users to choose who was hotter. To get the photos, Zuckerberg had hacked into Harvard’s servers and copied pictures from student directories, informally known as facebooks. He admits in his journal that it was a crappy thing to do: “[O]ne thing is certain, and it’s that I’m a jerk for making this site. Oh well. Someone had to do it eventually … ” Harvard’s disciplinary committee (known as the Ad Board) placed Zuckerberg on probation for “improper social behavior.” It was that notoriety that caused the guys at ConnectU (the site that allegedly “inspired” Facebook) to ask him to do the programming for their proposed social networking site.
• Though his parents are affluent (he’s the son of a dentist and a psychiatrist), when Zuckerberg went to Silicon Valley in the summer of 2004 without an internship to seek funding and work on Facebook, his parents paid only for his mobile phone bills and health insurance. He decided to drop out of Harvard at the end of the summer to stay in Silicon Valley (at that point, the company had 250.000 users), funding the company with the rest of the money that his parents had saved up for his college education.
• In Silicon Valley, networking paid a huge initial role in Zuckerberg’s ability to get financing for Facebook. During the summer of 2004, he became friends with Sean Parker, one of the founders of Napster. Parker advised Zuckerberg on how to set up a company and introduced him to VCs. In return, Zuckerberg made him company president. Zuckerberg later forced Parker to step down after he was arrested for cocaine possession. But having Parker on-board helped bring in millions of dollars of venture capital.
• Zuckerberg is also involved in another lawsuit involving Eduardo Saverin, one of the original founders (he owned 30%) who says he was forced out when Zuckerberg incorporated Facebook, diluted Saverin’s stake and became sole director.
• At Harvard, Zuckerberg claimed that money was the least important thing to him when he did a project: “I don’t really like putting a price-tag on the stuff I do,” he told Harvard’s daily newspaper, the Harvard Crimson. “That’s just, like, not the point.”

This guy’s certainly experienced a lot for someone who’s only 24 years old!

I’m hooked. I’ve resisted for as long as I could, but I’ve fallen in-love.

I tried to resist all of the Facebook media love-fest for as long as possible. I remember reading about some crazy guy at Goldman Sachs or something like that who said that he’d rather get fired than give up using Facebook at work.

Last week, I read with some disbelief that Microsoft had valued Facebook at $15 billion, up from $10 billion just a few months ago, which makes Facebook the 5th most valuable Internet company in the world with a market cap that’s bigger than IAC and Salesforce combined.

Following is the chart from TechCrunch reviewing the market cap and revenues of the Internet giants. It’s unlikely that Facebook is generating the revenues to justify its entry into such elite status, but that’s not my problem. I’m a user, not an investor.

And after using Facebook, I can be a “hater” no longer. I find myself perusing my old computer for pics to upload, so convinced am I that the rest of the world wants to see pics of my weekends and holidays that I’ve long forgotten about.

I don’t have time to speak to my mom and she accuses me of avoiding her calls, but I look for pics of Xmas holidays so that I can remember the good times spent with her.

I also spend hours searching for “friends” with whom I’ve lost touch. Most of them I really never even spoke to in high school or college, and it’s been about 10 years since those glory days. But there’s a perverse thrill in re-establishing contact with people, some of whom you tried so hard to forget about when you graduated.

Maybe time heals all wounds.

Or maybe people are cooler and more interesting when you don’t have to speak with them. When all you have are photos and blurry recollections (or reimaginings) of good times spent together. When you can become a voyeur peering from the safety of your laptop into their lives and personal photos.

And then there are all those apps. I don’t think I ever realised that I needed any of them. A week ago I thought that the whole Facebook App Week, and the idea of VCs funding companies whose entire raison d’etre was to create a Facebook App, was ridiculous. And maybe they still are.

But like my iPod, my Blackberry and now Facebook, silly little things that shouldn’t matter so much now matter a lot and have become life-defining than interpersonal contact.

I’ve even started to use Twitter.

The Wall Street Journal is reporting that Microsoft is in talks to buy 5% of Facebook for $300-500 million. Facebook is courting multiple investors and is asking for a valuation of at least $10 billion.

Google is apparently also in the running, though Google has a lot less cash saved up than Microsoft does.

Must be nice to be Mark Zuckerberg.

Facebook is growing quickly. It not boasts 40 million users, up from 9 million one year ago.

But the funny thing is that the Journal reports that Facebook has chosen the investment approach, because their business model can’t sustain an IPO. The valuation isn’t based on actual earnings or profit. It’s estimated that Facebook has earned the majority of its $60 to $90 million (with no profit) in annual revenue from an advertising deal with Microsoft and that this year it will have a profit of $30 million on revenue of $150 million.

That’s a multiple of 300x profit, which is a bit exagerrated, particularly if you take into account that the payments from Microsoft are effectively a subsidy to create a relationship with Facebook. Although social networking sites like Facebook have huge audiences, most of their members don’t want to see ads. Their click-through rate is relatively low.

But the valuation is more about the clash of the Titans — Google vs. Microsoft — and the fight for the future of the Internet than it is about Facebook per se.

The Journal also has an interesting “where are they now” study of GeoCities, a social networking site that was the Facebook of its day. In August 1998, GeoCities was the 3rd most visited site on the web, and Yahoo bought the company in 2000 for $4.7 billion. But GeoCities failed to update its technology quickly enough so that less than a decade later, the site and its technology are obsolete. Apparently, Yahoo was more focused on building traffic than on improving the service, which meant that Facebook, YouTube and MySpace were soon able to dominate the social networking space.

As the Journal points out, of the top 20 most visited sites in 2003, only 9 still occupy market-leading positions. Innovation — and finding a viable business model — are the keys to staying relevant.

$500 million should go a long way towards making that possible.

It seems that the only way to become really rich is to build a monopoly and convert that monopoly into other monopolies. I guess it sounds kind of simple when you say it out loud, but it’s the key insight into the Wall Street Journal’s profile of “Mexico’s Mr. Monopoly”, Carlos Slim. Some monopolies are bought (particularly in “developing” countries like Russia and Mexico) and others are arguably made. Slim’s monopolies appear to be a combination of the two methods.

A few facts from the Wall Street Journal:

• The 67-year-old tycoon controls more than 200 companies in telecommunications, cigarettes, construction, mining, bicycles, soft-drinks, airlines, hotels, railways, banking and printing.
• His companies make up more than 1/3 of the value of Mexico’s leading stock market index
• His fortune represents 7% of the country’s annual economic output. (At his height, John D. Rockefeller’s wealth was equal to 2.5% of U.S. gross domestic product.)
• His fortune has grown faster than any in the world during the past two years, rising by more than $20 billion to about $60 billion currently (Bill Gates is worth about $56 billion).
• This is the first time that the world’s richest person has come from the “developing” world since Forbes started tracking the wealthy outside the U.S. in the 1990s.

A lot of Slim’s fortune appears to have come from a nice bit of networking. Knowing the right people seems to be a key ingredient of becoming really successful, and that’s true in any country and probably throughout human history. In Slim’s case, he was obviously a very intelligent and talented guy, but his rise in power seems connected to the rise of Carlos Salinas in 1988. Salinas was trained at Harvard and was intent on modernizing Mexico. He and Slim became friends in the mid-1980s, and Salinas often promoted Slim as the country’s best and most intelligent young businessperson. Under Salinas, hundreds of government companies were sold in auctions, including companies that constitute the core of Mr. Slim’s current wealth. Unsurprisingly, Mr. Slim won many of these bids, leading some to suggest that he won them due to his connections.

It seems pretty much the same story as the Russian oligarchs that now own half of London.

And much like in Russia, the key question in Mexico is whether the government will be able to control the oligarchs that they have helped to create and who might become more powerful than the State itself.

It’s interesting to see how democracy, money and networking intertwine to create undemocratic and inegalitarian icons.

Say what you will about the US, but I think that the Google guys and Bill Gates made their billions in a lot more transparent way that was related more to innovation and less to “enchufes” (contacts) and unjust privatization initiatives. In the US, we don’t mind that people are rich. That’s apparently the goal of life and the basis of our individual and collective self-worth. Money is power. But we expect that people should earn their money to the greatest degree possible (let’s not be naive, there’s always some element of luck and contacts). It may be idealistic and in some cases hypocritical (look at the Clinton and Bush political dynasties), but that’s what we prefer.

Developing countries seem to transfer wealth from the state to friends of the state.

The same thing happens in the US — look at George Bush, Dick Cheney, Halliburton and lobbyists in general. But I think that the key differences are of scale and transparency. And, as Bill Gates found out, any threat of a monopoly gets attacked by the full power of the state and put under intense scrutiny to make sure that the public doesn’t end up subsidizing the rich any more than necessary.

The desired transfer of wealth is from rich to poor, not vice versa. And even America’s business oligarchs recognise it. Hence, the Gates Foundation and Warren Buffet’s donation to the Gates Foundation.

On the other hand, I think that a lot of Spanish companies are in no danger of becoming monopolies anytime soon. The focus on quality of life over material wealth definitely has a downside. Indeed, one way not to make a lot of money — and maybe to get run out of business — is to expect your customers to adapt to your preferences, whether we’re talking about online or offline commerce. That’s what I found out today, when I went to my gym and found that they now have “August hours”, which means that they open later (at 10AM) and close earlier (9:15PM) during the week, and are completely closed during the weekend.

But wait a minute: Don’t most people work out before work, after work and on weekends? Who works out during normal working hours during the week? Do people no longer need to go the gym because it’s August?

I must have missed the memo.

Taking into account that the typical Spanish workday begins between 9 and 10 AM, and ends between 7 and 8PM, this schedule makes absolutely no sense, except for the fact that the owner wants to enjoy the nice weather. She’s apparently not alone — I’d say that half of the shops and restaurants in Barcelona are closed, even though this is “high season” for tourists. But I don’t see the owner’s vacation schedule should inconvenience me if I have to continue paying the full gym dues during the month of August.

In the US, the customer is always right.

In Spain, it’s more like: The customer? Who cares?

Time to look for a new gym.