Facebook, Inc. (Lessons 16 & 17)

It wasn’t about two kids in a dorm room anymore.” –Chapter 25 of The Accidental Billionaires.

In our next class, we will revisit two critical events in the founding of Facebook: (i) Eduardo Saverin’s fateful decision to freeze Facebook’s bank account in July of 2004, and (ii) Facebook’s subsequent decision to become a Delaware corporation after venture capitalist Peter Thiel made a $500,000 angel investment in the social network startup. We will also address two important business law questions relating to these critical events:

  • Question #1: Did Eduardo breach any of his fiduciary duties to Facebook when he froze the company’s bank account in July of 2004?
  • Question #2: Why did Facebook, with headquarters in California, decide to become a Delaware corporation?

In addition, we will re-enact another crucial scene from the movie “The Social Network” — the scene in which Mark chastises Eduardo for freezing the bank account — so we will need two volunteers for this activity: one to play the role of Facebook CEO Mark Zuckerberg; the other to play the role of Facebook CFO Eduardo Saverin.

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