Here's a message for all the tech bloggers and reporters freaking out over the alleged Associated Press bombshell that some copy-paste legerdemain led to the revelation that Facebook valued itself at $3.7 billion at the time of the ConnectU vs. Facebook court settlement:
Please, chill out! This is not news!
While it had not yet been reported that the ConnectU settlement was a reported $65 million (though since it was in cash and stock, that value may have dropped with the onset of the recession), the $3.7 billion Facebook valuation has been around since July.
The New York Times' Brad Stone broke the figure--well, $3.75 billion--amid the hullabaloo surrounding the redacted court transcripts. I know we're bloggers and we have the attention spans of goldfish and all, but the hype over this "shocker" is a bit silly.
Earlier this week, the AP had obtained court documents dating back to June, when ConnectU vs. Facebook was settled. The founders of ConnectU, former Harvard classmates of Facebook founder Mark Zuckerberg, had sued the eventual CEO because they alleged he stole their intellectual property when he was employed as a programmer for ConnectU. But the court documents were kept sealed, largely because there was information pertaining to the privately owned Facebook's valuation. Media outlets, among them CNET News, had lobbied to have the redacted documents made public. The AP eventually used a copy-paste function in an electronic version in order to expose the censored content. Oops.
ConnectU, meanwhile, has contested the settlement because its founders, who include identical twins and Olympic rowers Cameron and Tyler Winklevoss, claimed they were misled as to how much Facebook was worth.
Facebook's valuation has been the subject of scrutiny ever since Microsoft invested $240 million in the social network at a sky-high $15 billion valuation. But that investment was one of preferred stock, and it soon became clear that Facebook's paper valuation was significantly lower.
The AP story does have one new tidbit: Facebook was appraised at $8.88 per potential share as part of the $3.7 billion valuation. That figure obviously has dropped since then, given the impact of the recession.
Aside from that, this is a story that was reported almost eight months ago. Keep calm and carry on, folks. To my fellow members of the media, I'm sure there's a "cool new use for Twitter" story to be reported. We clearly can't get enough of those.
Talk about spilling the beans: A marketing brochure for law firm Quinn Emanuel Urquhart Oliver & Hedges, which represented would-be social network ConnectU in its much-publicized suit against Facebook, claimed that the final settlement netted the site's founders a handsome $65 million in Facebook stock and cash.
Oops.
A Law.com article dug up the brochure and its claim, and has posted a .pdf file on the Web. According to the same article, principals at the law firm now regret posting the results. Meanwhile, ConnectU remains in a fee dispute with Quinn Emanuel, a fact which came to light when the plaintiff changed its mind about the suit's eventual settlement last year.
ConnectU was founded by twins Cameron Winklevoss and Tyler Winklevoss, along with their classmate Divya Narendra, when all three were students at Harvard University. They hired Mark Zuckerberg, now the CEO of Facebook, as a programmer and eventually alleged that he swiped their code and business model to create the now-ubiquitous social network.
ConnectU vs. Facebook, which had dragged on since 2004, eventually settled in August right around when Cameron and Tyler Winklevoss, who are identical twins, were finishing in sixth place in a rowing event at the 2008 Olympics in Beijing.
It seems like a staggering amount, considering the casual terms of ConnectU's employment agreement with Zuckerberg had meant that it was very difficult for the Winklevosses and Narendra to prove that there had been a physical theft of code. So keep this in mind: Even if Facebook's valuation is nowhere near the $15 billion that it was valued at in the halcyon days of that $240 million Microsoft investment, $65 million is fairly small potatoes for Zuckerberg & Co. They were likely willing to make some concessions to get a longstanding legal tiff off the table. (CNET Networks, then-publisher of CNET News, had intervened in the lawsuit for the limited purpose of trying to unseal some court records.)
Facebook, unsurprisingly, has opted not to comment on this situation.
The 2008 Olympics in Beijing are over for Cameron and Tyler Winklevoss, the founders of would-be Facebook rival ConnectU who earned spots on the U.S. rowing team. The identical twins ended up placing sixth overall in the men's pair event; they don't take home any medals, but it's still a more than respectable finish. To get there, the pair had to make it through two rounds of heats, a semifinal, and then the grand final; just making it to the last round is a big accomplishment.
The Winklevosses placed sixth out of the six boats in the final with a time of 7:05.58 on the 2,000-meter course; the gold was snagged by the Australian crew of Drew Ginn and Duncan Free, the team that had beaten the Winklevosses in the event's semifinal on Wednesday. The Aussies won with a time of 6:37.44.
Rounding out the medal stand in second and third place, respectively, were crews from Canada and New Zealand. In fourth was Germany, and South Africa placed fifth.
The brothers Winklevoss had recently settled a lawsuit against Facebook founder Mark Zuckerberg, whom they accused of stealing their plan and business code while all three were students at Harvard and Zuckerberg was employed as a ConnectU programmer. ConnectU has nevertheless contested the settlement, claiming Facebook failed to adequately disclose details involving its valuation.
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There's been another victory on the water for ConnectU founders Cameron and Tyler Winklevoss--even as their court case against Facebook continues to peter out unfavorably.
The identical twins, representing the United States in the men's pair (M2-) event of the Olympic rowing races in Beijing, placed second in their Wednesday semifinal to advance to the grand final.
At the 500-meter mark, a quarter of the way through the race, the Winklevosses were in fifth place out of the six boats. But they powered through crews from Germany, Serbia, and Italy to cross the finish line just less than 2.5 seconds behind the winning Australian crew of Drew Ginn and Duncan Free. The U.S. pair's final time was 6:36.65.
The Winklevosses are best known in the tech world for having founded ConnectU, a social network for college students that once employed Facebook founder Mark Zuckerberg as a programmer. ConnectU's founders--the twins, along with Harvard classmate Divya Narendra--began seeking legal action against Zuckerberg and Facebook in 2004, long before its Silicon Valley deification.
They alleged that Zuckerberg, a Harvard colleague, had swiped ConnectU's business plan and development code in order to kick-start Facebook; courts, however, have been skeptical because of the casual, dorm room nature of the company's early days. No formal contracts were signed, weakening ConnectU argument, and even though the case has been settled, the plaintiffs have continued to fight due to a dispute over Facebook's valuation.
Things have thus far fared much better for the Winklevosses in Beijing, where rowing insiders say the twins were not expected to win a spot in the grand final. In the race on Saturday, they will be up against the German and Australian crews, as well as the top three finishers from the event's other semifinal: Canada, New Zealand, and South Africa.
If they place first, second, or third in that race, they'll have some medals to take home.
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As twins Cameron and Tyler Winklevoss power toward Wednesday's semifinal in the rowing events of the Olympics in Beijing, their longstanding court case against Facebook is winding down.
A San Jose, Calif., judge ruled late last week that ConnectU, the start-up that the brothers founded with Harvard classmate Divya Narendra, must transfer its stock to Facebook as part of the settlement acquisition by Tuesday, despite the claims on behalf of ConnectU that Facebook failed to disclose its true valuation when negotiating the terms of the settlement. The start-up's founders alleged fraud on Facebook's part, and claimed that irreparable harm would ensue from the settlement going through in its present form.
Facebook had been valued on paper at $15 billion when Microsoft took a $240 million stake last November. But that valuation was specific to Microsoft's preferred stock and the business deal surrounding it, Facebook said. Its real valuation is between $3 billion and $4 billion--reports place it at $3.75 billion.
Judge James Ware ruled last Friday that while ConnectU's appeal can be heard, the settlement has to go through first. "The longer the court delays in enforcing the settlement between the parties, the more likely the value of the consideration subject of the settlement (i.e. the value of the stock of each company) will change," Ware wrote in his ruling. "This means that the status quo cannot be preserved with a stay."
Ware originally rejected claims of fraud in June, prompting the appeal.
ConnectU's founders are slated to receive a mixture of cash and Facebook stock as part of the settlement. They originally sued Facebook in 2004, claiming that founder Mark Zuckerberg had swiped their code and business plan after being employed as a ConnectU software developer.
ConnectU founders Cameron and Tyler Winklevoss pulled through in a repechage (second-chance heat) on Monday on the Olympic rowing course in Beijing, where they're representing the United States in the men's pair event.
The identical twins, best-known in the tech world for being two-thirds of the Harvard-founded start-up that foisted an intellectual-property suit upon Facebook founder Mark Zuckerberg, had failed to immediately qualify for the semifinals in their Saturday heat. They'd placed fifth and needed a third-place finish to qualify. But the repechage offered another chance for them to earn a shot at the semifinals, which take place on Wednesday.
The Winklevoss twins proceeded to win their repechage, beating the second-place Croatian pair of Niksa and Sinisa Selin--who are also brothers, albeit not twins. The Croatian brothers medaled in both the 2000 Olympics in Sydney (in the men's eight) and in the 2004 Olympics in Athens (in the pair).
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Cameron and Tyler Winklevoss, the identical twins who went from a legal spat with Facebook founder Mark Zuckerberg to a berth on the Olympic rowing team, didn't do so well in Beijing on Saturday. In the preliminary heat for their event, the men's pair (M2-), they placed fifth out of five boats.
In the 2000-meter course, the twins came in with a time of 7:13.64, behind the fourth-place Polish team with a time of 7:01.90. The top three places were taken by the French, Italian, and Canadian teams respectively.
They were in a tough heat: the French and Canadian pairs had both medaled in recent world championship events. And in international rowing events, you're never eliminated after the first round, so the U.S. pair will have a chance to compete again in a repechage (second-chance round) on Sunday to try to earn a spot in the semifinal.
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Cameron and Tyler Winklevoss have been in the press a lot recently for being "those guys who sued Facebook." As two of the three founders of ConnectU, they had accused Facebook founder Mark Zuckerberg of intellectual property theft long before he was Silicon Valley's youngest billionaire. Unfortunately, courts didn't tend to side with the brothers Winklevoss, largely because the dorm-room start-up didn't have formal paperwork to prove a breach of contract.
That case has been settled (though ConnectU has contested it), and the Winklevosses--a pair of six-foot, five-inch identical twins with a penchant for wearing matching outfits--are in pursuit of something else. They're on the U.S. Olympic rowing team in Beijing, participating in the men's pair event (referred to in shorthand as M2-). That means they're in a two-person boat, each with one oar; not to be confused with the men's double event (M2x), in which each of the rowers has two oars.
Want to see these guys row? You can watch it online starting very, very early on Saturday morning. The NBC Olympics site will be streaming the first set of rowing heats starting at 1:50 p.m. Saturday, Beijing time, and the Winklevosses will be in the first heat of the men's pair event, which goes off at 4:10 p.m. That's 4:10 a.m. Eastern time, or 1:10 a.m. Pacific time. They'll be up against teams from Italy, France, Canada, and Poland; if they place first, second, or third, the U.S. pair will go straight to the semifinal on Wednesday. If not, they'll have another shot at it during a repechage event on Sunday.
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Cameron and Tyler Winklevoss might not have gotten their way with Mark Zuckerberg, but they've got a different prize in mind now: Olympic glory.
Tyler Winklevoss, one-third of ConnectU's founding and one-half of the U.S. men's straight pair.
(Credit: usrowing.org)The identical twins, who founded one-time Facebook rival ConnectU with their Harvard classmate Divya Narendra, have earned spots on the U.S. Olympic rowing team that will compete later this summer in Beijing. The team's roster was announced Friday and is currently pending approval by the United States Olympic Committee.
Recently, the Winklevoss twins have been in the news because of their long-running lawsuit against Facebook founder Zuckerberg, whom they had once hired as a programmer for ConnectU.
Since 2004, they have alleged that he stole their business plan and source code. The legal fight dragged on until a settlement was reached earlier this year. Then, however, ConnectU's lawyers challenged the agreement and claimed that Facebook had committed fraud. Earlier this week, a judge decided to enforce the settlement, which provided ConnectU with a mixture of cash and stock (effectively, an acquisition by Facebook).
It was no secret that the Winklevoss twins (or "Winklevii," as they are reportedly nicknamed) were in the running for the Beijing squad, but their spots on the roster were not guaranteed until Friday's announcement.
Fittingly, the two will be rowing together. They'll be in the men's straight pair event, which pits heats of two-person boats (each rower has one oar) against one another for the standard distance of 2000 meters.
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A U.S. District Court judge has decided to enforce the settlement that Facebook and would-be rival ConnectU signed in February, rejecting the ConnectU founders' claims of fraud.
The legal battle between the two social-networking sites has gone on since 2004, when ConnectU founders Cameron Winklevoss, Tyler Winklevoss, and Divya Narendra initially sued Facebook founder Mark Zuckerberg and several other early employees for allegedly stealing ConnectU's code and business plan while they were all students at Harvard. Facebook countersued in 2005, claiming that ConnectU had hacked into its user database to mine e-mail addresses.
Both parties must still show up in court on July 2--a "speak now, or forever hold your peace" sort of occasion. But it appears that the public will remain shut out. Earlier this week, the same judge, James Ware of U.S. District Court in San Jose, Calif., opted to make the proceedings of the case private and keep court documents under seal. CNET News.com is evaluating a possible legal challenge to Ware's decision, which keeps matters out of public view.
ConnectU's legal team had alleged fraud on Facebook's part for a number of reasons: one, because a forensic expert it hired had unearthed instant messaging logs that were relevant to the case and which had not been used as evidence prior to the settlement, and two, because they alleged that Facebook altered the value of its common stock between an October press release that pegged it at $15 billion, and February's signing of the settlement term sheet.
Facebook, which is not publicly traded, did not deny that it had altered its valuation, but Ware deemed that the failure to disclose the change in valuation could not be considered fraudulent.
"We are happy that Judge Ware enforced the agreement settling our dispute with the ConnectU founders," according to a statement from Facebook late Wednesday night. "ConnectU's founders were represented by six lawyers and a professor at Wharton Business School when they signed the Settlement Agreement. The ConnectU founders understood the deal they made, and we are gratified that the Court rejected their false allegations of fraud. Their challenge was simply a case of 'buyers remorse,' as described by the Boston Court earlier this month."
The Facebook statement continued: "We were disappointed that we had to litigate the settlement, as we believed we were caught in the middle of a fee dispute between ConnectU's founders and its former counsel. Nevertheless, we can now consider this chapter closed and wish the Winklevoss brothers the best of luck in their future endeavors."
Cameron Winklevoss and Tyler Winklevoss remain contenders for the U.S. rowing team that will compete in the Olympics in Beijing this summer.
