Facebook is today worth over a trillion dollars, but it was once very close to being sold for just $1 billion.
Peter Thiel, PayPal co-founder and early Facebook investor, once recounted a pivotal moment in the summer of 2006 when Facebook had turned down Yahoo’s offer to buy the company for $1 billion. Thiel’s recollection reveals the conviction of a young Mark Zuckerberg, who, at just 22 years old, turned down a life-changing sum, a decision that would reshape the technological landscape as we know it.
“The single most important decision in the history of Facebook,” Thiel explains, “was in the summer of 2006. Two years into (Facebook) we got an acquisition offer for 1 billion dollars from Yahoo to buy the company.” The stakes were high, and the decision rested on the shoulders of a remarkably young CEO and his board members. “So there were three of us on the board: Mark Zuckerberg, myself, and another venture capital investor. We had a Monday morning board meeting to decide should we take the billion dollars or not.”
Zuckerberg’s mind, it seemed, was already made up. “Mark sort of started the board meeting and said, ‘You know this is just a pro forma thing. We’re just going to talk about this for 10 minutes because we have to have a quick board meeting to turn it down. I’m not taking it.’”
Thiel and the other board member, understandably, tried to reason with him. “Then the two of us said, ‘Well you know, maybe we should… you’re 22 years old, you’ll get 250 million. There’s a lot you could do with 250 million dollars.’”
Zuckerberg’s response was both simple and revealing. “And Mark said, ‘Everyone, I don’t actually know what I would do with the money. I would probably just start another social networking company. But I already have one, so why would I sell it?’” Thiel adds, “Anyway, it took more than 10 minutes. We went back and forth like this for about eight hours. But at the end of the day the decision was not to sell the company.”
Thiel concludes with a broader observation about what defines hugely successful tech giants: “And I would submit that any super successful, super big tech company is one where you’ve been offered multiple times… people have offered to buy it, and you chose never to sell it. You’re not…if that…afraid of success.”
This decision, as Thiel points out, was arguably the most important in Facebook’s history. It underscores the difference between building a company for a quick exit and building a company with a long-term vision. Zuckerberg’s conviction in his vision allowed Facebook to grow into the behemoth it is today. Facebook isn’t only one of the most valuable companes it the world, but it’s also played a critical role in shaping the current digital landscape. The story also highlights the potential pitfalls of prioritizing short-term gains over long-term vision in the tech industry. Had Zuckerberg accepted Yahoo’s offer, the trajectory of social media, and perhaps the internet as a whole, would have been drastically different.