Who really runs Facebook?

Who are the investors, directors, and executives around Zuckerberg, and which have a hand in steering the ship?

Peter Thiel, Director: Best known for cofounding PayPal, Thiel is now a venture capitalist and was Facebook's first serious investor. His $500,000 angel investment in 2004 earned him a 10.2 percent share in the company, which is now equal to about $1 billion on paper. Unconventional in his politics (and reportedly a stern anti-immigration advocate), Thiel sits on the board of directors despite the 3000-strong membership of the "Take Nativist Peter Thiel Off Facebook's Board of Directors" Facebook group. He has also compared tech bloggers to terrorists.

Jim Breyer, Director: Jim Breyer's Accel Partners gave Facebook its first serious venture-capital investment, dropping over $12 million into the company in 2005. Breyer took a seat on the board, as well, and he personally owns about 1 percent of the company. In interviews, Breyer seems to have his finger on the pulse of the company's operations and direction more than the other directors do, and he clearly has a sort of parental pride in both Zuckerberg and Facebook.

Marc Andreessen, Director: The most recent person to join the Facebook board of directors, Netscape founder Marc Andreessen has been a personal mentor to Zuckerberg for some time, and his role on the board largely formalizes that relationship. As Techcrunch notes, Andreessen operates a competitor in the form of the struggling Ning, which lets users create their own custom social networks for a fee. How the two work out those issues is a mystery; however, it's interesting that Andreessen is the only director who does not have a formal financial stake in the company.

Additional Investors

Microsoft: The largest single investor in Facebook, Microsoft put $240 million into the company in 2007, which earned it a mere 1.6 percent stake at the time. The deal (said to have been negotiated largely via text message) dramatically vaulted Facebook's value, but didn't do much to change how Facebook is managed. In addition to its sliver of equity, Microsoft got a banner-ad arrangement on the site that runs through 2011 and, more important, blocked Google from making a similar deal. However, with no board representation and, apparently, little to say about how Facebook is operated, Microsoft seems to be largely a silent partner these days.

Li Ka-shing: This Hong Kong multibillionaire invested $60 million in Facebook in 2007, and then dropped in $60 million more under the terms of an option agreement. The arrangement was a bit strange for both sides, as Li invests primarily in Hong Kong businesses and operates a massive conglomerate with a quarter-million employees. Facebook is likely a diversion for the 79-year-old man, although observers have suggested that the relationship could eventually be fruitful for expanding Facebook (or a similar site) into China, something that has been rumored for months.

European Founders Fund: Facebook accepted a quiet and small $15 million (estimated) round of equity from this German group in 2008--perplexing many experts, since it had taken in a total of $300 million in 2007. The EFF is a trio of brothers who primarily invest in major European Internet ventures, and though the involvement of the group in Facebook management is unknown, it is almost certainly minimal to nil.

TriplePoint Capital: This Silicon Valley finance company provided $100 million in debt to Facebook in 2008, atop an earlier $30 million of debt already offered. As a debt provider, TriplePoint does not own any equity stake in Facebook, but it will eventually need to be paid back. Any involvement it has in Facebook management would likely be restricted to financial covenants that determine "safe" cash and asset levels along with a payment schedule for TriplePoint to recover its money.

Digital Sky Technologies: The most recent and curious investment in Facebook came in 2009, with Russian investment firm Digital Sky Technologies taking a near 2 percent stake in the company in exchange for $200 million in cash. It has also bought up another 3 percent or so from various employees and other holders, including Thiel. The Moscow connection piqued the interest of many people who weren't familiar with DST, which suddenly found itself thrust into the limelight in the United States. That said, despite Zuckerberg's assertion that "they have a lot of experience they can bring" to Facebook, DST is known to be a hands-off investor that likely has no real input on day-to-day operations (nor wants any). At the time, Zuckerberg implied that he didn't even need the money but simply took it as a hedge against a future business downturn.

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Christopher Null

PC World (US online)
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