ConnectU Spills Value of Facebook Deal: $65M

http://www.law.com/jsp/ca/PubArticleCA.jsp?id=1202428139731

by rogercosseboom • 17 years ago

35 26 17 years ago

law.com

josefresco• 17 years ago

$65 million for having an idea taken that they probably would have failed at if executed themselves.

That's a nice pay day (for the lawyers too)

dpeq• 17 years ago

Especially for the lawyers ... would be interesting to know what's left.

old-gregg2• 17 years ago

First, what makes you think that "they probably would have failed"?

Second, he stole not just "an idea", he stole the code, he participated in their in-house discussions and effectively was spying over his future competitors, and most importantly he stole a lot of time - ConnectU founders were lured into believing that their product was moving along for a while.

Nobody pays $65M in a settlement for "stealing an idea". The fact that Facebook settled for such amount only means that ConnectU lawyers were able to prove some of these nasty things above.

Personally I'm very disgusted by this accident, I regret that jail time wasn't even a question. Something very similar happened to one of the startups I was involved in, but in that case it was an opposite spin: an "idea guy" who contributed nothing but the idea, used cofounding developers to build a prototype and then diluted them to almost zero even prior to A-round.

This undermines the entrepreneurial spirit. And the fact that you can get away with it (like Zuk did) in such visible manner is even worse, it's like O.J case for software.

ericwan• 17 years ago

The fact that we never heard of ConnectU but only facebook if they didn't file a law suit made me also think they probably would have failed.

breck2• 17 years ago

You seem like you have pretty strong opinions so I'm not going to try to convince you, I'm just going to state my opinion.

The world is a better place for Zuckerberg acting as he did. Facebook has become an incredibly successful company with great products. He obviously made the decision that he could do a much better job running the show than the ConnectU guys, and he went ahead and proved it. I have nothing but respect for that.

As for stealing code--I think it's generally pretty trivial for any developer worth his salt to rewrite things from memory without having to steal it(given that I think he only worked for ConnectU parttime for a few weeks--not enough time to build a substantial codebase). I'd be surprised if any ConnectU code was "stolen". I wouldn't be shocked if some lines were reused out of laziness, but in general I think a few weeks of code in most cases is useless. A rewrite will often be better and easier.

I would hate it if we ever even considered putting people in jail for branching out because they believe they can do a better job at innovating and leading a business than their current employers. That's the heart of capitalism--creative destruction; upsetting of the status quo.

If you're concerned that one of your co-founders may branch off and compete with you, I'd say the problem is probably with you--there's not a lot of confidence in your abilities if that happens. Zuckerberg from what I've read had been coding for a decade--that's a significant investment of time that the ConnectU guys didn't make. I probably would have done the same thing.

jonknee• 17 years ago

That's $65 million more dollars than Facebook has ever profited. Not a bad deal.

jorgeortiz85• 17 years ago

Eh. It was probably paid mostly in shares of Facebook itself. So it's $65 million if you believe that Facebook is worth $15 billion.

vaksel• 17 years ago

its not all stock, so regardless of the amount they still made more profit than facebook

gravitycop• 17 years ago

if you believe that Facebook is worth $15 billion.

Facebook is usually valued at $4 billion. http://blogsearch.google.comq=facebook+valuation+%224+billio...

homme• 17 years ago

So it's $65 million if you believe that Facebook is worth $15 billion.

I don't. Why should anyone?

cellis• 17 years ago

Note that the stock:cash ratio was not disclosed. Depending on what it is, the payout could be significantly less (in the near future, at least; I am firmly in the camp that facebook is worth billions).

fallentimes• 17 years ago

I think I rather have $10 million in cash than $65 million in facebook stock.

whacked_new2• 17 years ago

Is there any mechanism stopping the sale of stock right now? If they feel like selling, there should be somebody willing to take it, no?

aston3• 17 years ago

In the interest of keeping Facebook private, I'm sure they would have given out the shares with some sort of stipulation against selling them without Facebook approval. Once too many people have shares, the company would be required to IPO.

jacquesm• 17 years ago

most likely they have a contract that lists exactly who they can sell those shares to and when, with the 'who' being facebook in a large number of cases.

Let's hope for them that blabbing about the deal isn't one of those, but since this is essentially 'damages' they may have had some leverage in the negotiations.

palish• 17 years ago

"The $65 million is presumably an estimated value of the settlement, which was paid in a mix of cash and Facebook shares."

Because Facebook's valuation is completely stable and accurate.

whacked_new2• 17 years ago

I always thought this was a petty/trollish lawsuit, and never bothered to follow it, but does this say that there was merit behind ConnectU's lawsuit?

Ok, downmodded, now does that mean yes, or no? A mere click is a bit too abstract.

kwamenum86• 17 years ago

The title is misleading- ConnectU's former lawyers published the estimated value of the settlement inadvertently.

petercooper• 17 years ago

This whole thing forgets Aaron Greenspan, another Harvard alumni who has a claim on coming up with the concepts behind Facebook:

http://www.nytimes.com/2007/09/01/technology/01facebook.html...

aston3• 17 years ago

AKA thinkcomp, as seen commenting elsewhere on this post.

ConnectU Spills Value of Facebook Deal: $65M

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