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Comment by codexon | Hacker News Reader

If this contract is real, this is bad news for Zuckerberg.

Considering that his lawyers are "unsure" he signed the contract, this is basically an admission that the contract looks valid at first glance, and that the lawyers are probably spending day and night trying to get it dismissed on a technicality, or hoping it is a forgery.

It will also be interesting to know if people here think Ceglia deserves those Facebook shares. Many people here are investors and would probably side with him, but others have expressed the sentiment that he provided a negligible amount of money and therefore contributed very little to the success of Facebook.

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From my reading it looks like Ceglia was supposed to pay the hosting fees. I wonder how much the hosting fees are and what his bill would look like going back 6 years to now.

Actually, it says that the "Seller [Zuckerberg] agrees to maintain and act as the sites webmaster and to pay for all domain and hosting expenses from the funds received."

It still seems to be a weak point in the contract. Expenses grew beyond what the investor was putting in.

I think it is pretty certain that if Ceglia wins this the results for the tech start up industry will be pretty bad. Facebook shares have been trading in closed deals for a while and I am sure there are many people that believe that they have millions or even billions of dollars in their facebook shares. If this guy wins all of these shares may lose more than 80% of their value. (This is not necessarily the case, but there is a marked possibility).

This will be felt in the VC industry, believe you me. The VC and angel investor industry relies on the big payoff and if the biggest payoff in recent history turns out to be a dud, then there will be much less demand for new investments and the few investors that remain will insist even more on professional CEOs to swoop in and take things over.

So this is something to think about. Of course, it does not mean he should not get the shares if he has a right to them legally, but the repercussions of this can be huge.

I'm not sure where the (80%) comes from, but investors will only lose value if the total value of Facebook declines.

If it turns out that Ceglia and Zuckerberg each owned 50% of Facebook in 2003, their ownership would each be diluted down in subsequent rounds of financing (from the "Investors").

So if the equity capitalization before this lawsuit is assumed to be "Investors" - 40% and Zuckerberg - 60% (an example), the new capitalization if Ceglia wins would be Investors 40%, Zuckerberg 30% and Ceglia 30%.

No impact on "Investors" ownership.

Except future rounds of capitalization might be invalid since Zuckerberg didn't have the legal right to dilute the shares he didn't own.

Many people here are investors and would probably side with him...

Interesting, I always thought most HN were starving poor hackers :)

Many and most are not the same thing. Many people here could be investors, while most could be poor hackers.

True, but if that's what he meant, then his sentence doesn't really have a point.

>It will also be interesting to know if people here think Ceglia deserves those Facebook shares.

That's what interests me most about this. I'm assuming this will come to some settlement that won't destroy facebook, and will probably give this guy some money. I'm curious about the ethics involved. Is contract law so inviolate that most people here would advocate honoring it?

Unlike many people, I'm far less interested in why this guy is filing suit so late in the game (which will almost certainly become a critical point of contention in Facebook's arguments), than I am interested in the legitimacy of the contract itself. If it turns out that Zuckerberg signed this contract in good faith, then I'm going to start to see him as either a real sleazebag, or a complete idiot. Anyone can read and understand the terms of that contract, so either he didn't read it (idiot), or he purposefully ignored it when Facebook hit it big (sleazebag). Either way, not good for Zuckerberg.

Facebook's army of attorneys may ultimately win the day on technical grounds, but if this contract is legitimate, I'd hate to see the plaintiff lose out on a lucky investment because he was an unsophisticated investor.

"... real sleazebag or a complete idiot" is a bit harsh. He was young and naive. Who isn't at 18? Zuckerberg was born May 14, 1984. This contract was signed April 28, 2003. He was 18 years old. If this contract had been signed a year earlier, it wouldn't matter because Zuckerberg would have been too young to be a party to it. Even though he was old enough to contract, I doubt Zuckerberg understood the implications of that contract (assuming it's real.) Ceglia probably didn't either.

> If this contract had been signed a year earlier, it wouldn't matter because Zuckerberg would have been too young to be a party to it.

Incorrect. A 17 year old can sign a contract, they just have the option of voiding the contract until they turn 18. (Which is why most people avoid signing contracts with minors.) Once they turn 18 they no longer have the option of voiding the contract.

There may be a period you can dispute the contract while 18 but not indefinitely. I don't remember all the details but I do know that contracts signed with minors are valid just very risky for you.

I'll grant that the "idiot" part is less damning, for exactly the reasons you mention -- maybe it's possible that he was young and naïve, and maybe it was possible that he could overlook the potentially dramatic consequences of signing that contract. But honestly? If you're precocious enough to be taking investments from strangers to build a business, you're precocious enough to read and understand a simple contract. I'm not inclined to give much sympathy on the basis of ignorance.

As for the sleazebag count, I'm not sympathetic at all. If it turns out that Zuckerberg did sign the contract in good faith, and that he did subsequently ignore it when Facebook blew up, that's pretty crooked. Maybe you can argue that he simply forgot about the contract, but that goes back to idiocy -- wouldn't you remember the guy who gave you $1,000 to buy a 50% stake in your company?

No, something is fishy here, and if the contract is real and not signed under duress it doesn't speak well to his judgment. Considering the history of claims against him, I'm not willing to assume that Zuckerberg is a boy business genius while simultaneously forgiving huge legal gaffes like this one.

Sleazebag is one of one nicer things I've heard about Zuck, but he's definitely not an idiot. Remember that this isn't the first serious lawsuit about the origin of Facebook. He seems like a real "ends justify the means" type.

Didn't they settle this once only to have Facebook (Zuckerberg) attempt to weasel out of it?

> Is contract law so inviolate that most people here would advocate honoring it?

Assuming that the contract was made in good faith, he had the opportunity to counsel a lawyer, the other guy didn't lie to him, etc, etc. Then yes I would normally believe the contract should be honored - it is bad horrible contract from Zuckerbergs perspective, but it is still a contract that he signed.

However this was a long time ago, and since the guy didn't show up until now it don't think it is fair to actually give him the procentage of facebook - a lot has been sold to the investors and he could should have shown up years ago.

"a lot has been sold to the investors and he could should have shown up years ago."

How about 50% of just Zuckerberg's share? Surely that would be fair.

Why not all of Zuck's shares? He's the one that went and sold the rest (apparently illegitimately).

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