Just how much was Facebook willing to pay to settle the lawsuit alleging that founder Mark Zuckerberg had stolen the concept and some code from fellow Harvard classmates Cameron and Tyler Winklevoss and Divya Narendra?
That was the $64m question that appeared would never be answered given the secrecy around the settlement.
But it appears that we now have an answer thanks to a prominent law firm that couldn’t help but brag.
According to a marketing brochure published by Quinn Emanuel, the law firm that represented ConnectU, the company started by the Winklevosses and Narendra, Facebook paid approximately $65m in stock and cash to get Zuckerberg’s former buddies to go away. They, of course, had alleged that they hired Zuckerberg to build out a social network of their own and that Zuckerberg instead left them hanging while he went on to launch thefacebook.com on his own.
Details of the settlement, such as how much cash was paid, are unknown and given that Facebook stock was involved, the exact figure of $65m is certainly an estimate. Facebook has been valued at as much as $15bn in the past but most reports peg its current internal valuation at closer to $4bn today. Since the company’s shares are not publicly-traded, putting a good value on them isn’t easy.
Clearly, though, while the settlement may be small in relative terms, it’s quite large in absolute terms. As Zusha Elinson of The Recorder points out, the costs of defending the ConnectU lawsuit certainly wouldn’t have cost Facebook $65m. But given what was at stake, it’s likely that Facebook and its investors didn’t want to risk an adverse judgment and decided that settling was the best course of action.
I suppose one might take this to mean that there was probably more to the claims made about Zuckerberg’s actions than Facebook and Zuckerberg have led everyone to believe. But business is business and the past is the past. Facebook continues to grow and has now officially surpassed MySpace by almost all important metrics.
Except one: revenue. Which means that the billion-dollar question still not answered is: after 5 years, how is Facebook going to become a self-sustaining business?
To which I answer: who knows.
One thing is for sure though. If you’re looking for a law firm that understands the concept of ‘discretion‘, Quinn Emanuel is probably not at the top of your list.