Web Startup Dangers- Facebook

Facebook founder, Mark Zuckerberg, has a long history of rather nasty ownership and intellectual property battles over the website and its creation.

One of his past ghosts may be coming back to haunt him and provide a valuable lesson to any new web business that is getting its feet underneath it. A full article on the accusations/ claims is at the Huffington Post.

Apparently, almost ten years ago when Facebook was just an apple in its father’s eye, or was at least in the early stages of being stolen from other more creative people (depends on who you ask), Zuckerberg made a contract with a New York businessman named Paul Ceglia offering up a fifty, fifty split of the company ownership. According to Ceglia’s version of events, delayed profitability and development of the site actual would have given him an 80% stake in the site.

What happens next is guess work and for the court’s to figure out. Zuckerberg says that no such ownership deal existed or that it was nullified/canceled with the agreement of both parties. Ceglia says not so fast, and claims that Zuckerberg owes him a rather massive stake in the robber baron’s company. He now has managed to produce emails, 8 years after the fact, that seem to support his case and he’s taking them to court.

It will be interesting to see where things will go from here. We know Zuckerberg has a rather well documented history of borrowing, stealing, and conniving his way into larger pieces of the Facebook pie and creative process. It would be somewhat karmic to see him lose 30% of the site or more now, since he managed to rake a few other people over the coals.

To be fair, Ceglia is felon convicted of fraud, so this may not hold a lot of water, but just imagine what happened if it did! Maybe he’d sell his share to Google. HA!

In the end, as a young internet based company, we, and many of our other clients looking to develop new social network concepts, new websites, and new mobile applications need to be aware to keep everything clear, above board, and well document. Just since we’re small doesn’t mean that informal agreements can’t bite us in the butts. Do yourself, your partners, and your clients a favor- write up some legal agreements with clear expectations, responsibilities, and financial obligations.

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