This is almost too good to be true. The Associated Press has uncovered the details of the Facebook/ConnectU settlement using, of all things, copy and paste. After taking drastic preventative measures to keep the settlement confidential, including barring reporters from the courtroom and redacting portions of the documents, Facebook has been foiled by the most laughable lull in security I’ve heard of:
Large portions of that hearing are redacted in a transcript of the June hearing, but The Associated Press was able to read the blacked-out portions by copying from an electronic version of the document and pasting the results into another document.
Read that again. Just, wow.
Now for the juicy details:
The document reveals that Facebook’s internal valuation of the company is $3.7 billion, or $8.88 per share – far less than the $15 billion implied valuation established by the Microsoft investment in 2007 (though this comes as no surprise, as a value around $4 billion has been rumored for months).
Under their settlement, Facebook agreed to pay ConnectU $20 million in cash and 1,253,326 shares of common stock. The stock was worth $45 million, based on the Microsoft valuation, but only $11 million under Facebook’s own appraisal.
Something worth noting from these figures: Facebook paid out $20 million in cash, but only around $11 million in stock based on its own valuation (when the news of the supposed $65 million settlement was revealed yesterday by a lawfirm’s advertisement, many speculated that it was primarily in stock). The high cash value (at least compared to the stock) may indicate that the ConnectU founders really did have some compelling evidence in their case. Then again, $20 million in cash is still fairly insignificant to Facebook – it may have well been worth paying even if there was no damning evidence given that it was supposed to make the case go away forever. So much for that.
Via Techmeme.
Update: If you’d like to see the full text for yourself, you can find the PDF of the relevant document here. It appears that the issue is tied to the PDF, as the ‘copy/paste’ trick works with this document.
The AP just reached “badass” status for me. I didn’t think suits could be such badasses.
This is a video I was in for AP. I thought it was good. http://www.yout...h?v=8NT3p1xqo44
Just Amazing.
Great job AP!
Anjali Sen
real get smart stuff … this one’s everywhere
That’s hilarious…copy & paste! I have to Tweet this.
Apparently they didn’t learn any better from the multiple incidents in 2006:
http://it.slash...06/06/22/138210
Im tweeting this too. Unbelievable man!
bestjobsalways
http://tinyurl.com/7uj5ay
So Facebook is admitting its not worth 15 billion? kinda cool…but we already knew this:)
Billions or millions ?!
Anyway, these large amount of money make me not think well
Aren’t you guys boycotting the AP?
Guess that policy went out the window.
Boycotting the AP???
Totally !!
http://www.livbit.com
Of course everybody knew facebook wasn’t worth the $15b valuation! It was a smart move by MS to fend off any Google interest while the figure out what to make of the relationship. so far, it has worked to fb’s advantage.
they got 240m to explode, who gives a shit about the valuation!
Holy F*ck, this has to be THE funniest thing I’ve read all day. Copy and frickin’ paste revealed the details? Hilarious. Woe is me for Facebook – finally, everyone knows its real worth. How were they monetizing anyway? And how can the wonderboy be worth more than his site? Oops, did I just say that out loud? Sidenote: I hope this comment is cached just in case my Facebook gets deactivated for talking so much crap. ha.
Another reason iPhones need copy and paste!
even the 3.7bln valuation is a joke. in any case why theorize? FB should just go public and then we can find out what their ACTUAL valuation is…hard to argue with market cap as measured by what people are actually paying for the shares…..
dear FB execs, go dig into the silicon valley time capsule and look up “pointcast”….lesson: while you wait for the markets to improved, your competitors are replacing you
Ha ha. Funniest comment ever. Death to facecrooks.
in court nobody pays unless they know there gonna have too one way or another. hopefully this settlement will deter others from hacking your companies idea and script and starting your own company.
I don’t think you have to worry about anybody stealing your dumb ass ideas.
I haven’t laughed that hard in years.
Hahaha, hilarious. Foiled by copy and paste, what a incredible fail.
whale? perhaps that’s where he/she went.
wow.
Wow, I’m not sure if my name is actually Adam Jackson. This is kinda odd.
Ah yeaaaaaaaah, this is hilarious.
Jason, how can you possibly say $20 million in cash is a “pittance” for facebook??? The probably have less than $200 million cash left…
Losing 10% of your cash is a nightmare for any company.
Yeah, I changed it a bit. But I still think that given how long the story has been dogging the company, $20M may well have been worth it to set everything behind them.
nice post ( zaeny-junior.blogspot.com)
So basically everyone is giving their content and information, sharing, supporting, and propping up a company that cheated and stole their way to success…hmmm and we wonder why wall street, banks, and the whole economy is based on fraud, bogus bonuses and greed.
FACEBOOK = CHEATERS
It is that simple (let’s not complicate anything else)
And Shawn Fanning stole Napster!
Very curious!
Does anyone know what document format the “electronic document” was in? Was is Word or PDF? How did they attempt to redact it? Black text on black background?
Who released the “electronic version”? The court? The lawfirm? Facebook? ConnectU? Maybe other released transcripts (possibly for other cases) contain similar redacted text that might share some interesting information.
I am surprised connectu is still up… I don’t think I know a single person who ever used it. Wonder if those Harvard students will try and get something new going
This is the first time I heard about ConnectU
I’m guessing “wonderboy” was hired to code a few pages of Perl, but decided to make improvements/changes and run the site himself. In his defense, I bet you they were offering to pay him close to nothing for the finished product. I bet those original specs would be good for a few laughs.
>Read that again. Just, wow.
Someone doesn’t read daily wtf, or risks digest. I give this wtf 4 out of 10.
At least your head’s partway out this time though.
Wonder if the .pdf was created with Adobe Acrobat… guess there will be some repercussions if that is the case. Anyone know ?
I don’t know, but whoever created the document didn’t actually redact the content. They just placed a colored box over the text in order to hide it. If they really redacted the content then there would be no way for AP to uncover the info.
“The high cash value (at least compared to the stock) may indicate that the ConnectU founders really did have some compelling evidence in their case”
Jason, can you elaborate?
Zuck was given code from connectU to fix from a previous programmer. He started work on it, told them he was progressing nicely and then quit suddenly, and started facebook a few months later.
Mark has been working hard on FB for 5+ years now, you can imagine the stress, pain, etc. and for his work, has 1 million for himself, his shares are vested.
Then BAM! ConnectU you get 20 million cash + shares. : T
Fuck Zuck, no matter how hard he worked. He is a scumbag thief! Boycott FB!
Document can be found in full here: http://www.twid...ook-vs-connectu
I looked at that .pdf.
Don’t know how exactly how these hearings go and how stenographer’s transcripts get digitized….
…but did they seriously just change the text color to white so it would match the background?
holy sh*t that would be great
Also, Jason, the picture for this is great.
US military got same problem in 2005, it’s a well documented trick.
http://www.zdne...39190487,00.htm
I remembered this happening regarding a military secret document a few years ago (and it caused a huge uproar as well as helping the word “redact” enter the common lexicon).
Thanks for the link Bertrand.
In 2007 this happened in a transcript from FIA (Formula 1) in the McLaren/Ferrari case
http://www.form...ia-transcripts/
Facebook have done pretty well here despite the frenzy the story is going to create.
Will others still think Marc Zuckerberg is a golden boy despite this fraud?
umm… ’scuse me while i take the “glass 1/4 full” perspective and point out that a company worth $3.7B isn’t exactly chopped liver. i’m sure Facebook execs are crying themselves all the way to the bank over this one.
(nice sleuthing by AP tho
Banks won’t cash “options.” Right now these Execs are just holding paper and a hope that they are worth something.
@jay: maybe not banks, but individuals will.
i know there are people who have sold options at prices near the number reported… so there *IS* a market, and i’d be surprised if at least some folks haven’t gotten a little bit of liquidity.
they are definitely worth something, even if you don’t think so.
The real interesting question is what is the ConnectU’s attorneys contingent fee based on? The 65 million that’s on their website or the 28 million?
30% of 65 milion is 19.5 million.
Also, I’m guessing they won’t take illiquid facebook stock in payment.
So the law firm gets paid cash. The twins get to split $500K and hope FB can continue to execute and make their shares liquid.
The only people who get rich in lawsuits is the lawyers.
Oh yeah. One other thing.
AFAIK, being given shares of stock in a settlement is a taxable event, whether there’s a market for the shares or not. The IRS is going to want their money too. and they definitely only take cash.
Wow. What a way to get busted.
*.doc and *.pdf files are containers. They contain all versions of the text, notes etc. even if they are hidden. Only kids (who were born after the MS Word 3.0) don’t know that you need to strip them off these when you are sending something out.
I am sure that the IRS and SEC would love to investigate the fact that they sold shares to MSN for 5x the price of their common stock. There’s NO way that this would pass any serious scrutiny.
Does the AP own the copyright on the document they copied?
They probably think they do…
How did the AP justify copying the text? Don’t the document owners hold a copyright? I thought the AP holds all copyrights as sacrosanct and could never break the sacred contract by ‘copying’. Maybe the document owners should charge the AP per word copied.
Under their settlement, Facebook agreed to pay ConnectU ██████████████████████████████
██████████████████████████████████████████████████████████████
███████████████████████████████████████████████████████████ under Facebook’s own appraisal.
^^ That’ll be $1500 please.
Yeah, I guess the Lawyers will get paid in cash. Since the original founders of the company, they should receive stock right, which makes sense. Since they are no longer employees, they won’t get the cash, which Zuck gets as a salaried employee. So the brothers will only get dividends and sell the shares if facebook goes public.
we developer already know it when it was start! but stock market player don’t know! lol
I hesitate to mention it, but the Facebook valuation news is actually old news. The NYT had it six months ago.
http://news.cne...0162468-36.html
Yep, that’s why it wasn’t really the focus of the post. I don’t think anyone should be surprised by the valuation.
In some cases, if a pdf document is posted online and you can find it using Google, you can also strip out redaction by opting to “view as HTML” rather than download the pdf.
I’ve used that to great effect in the past.
Anyone think that there will be another social network to overcome Facebook? What else possibly could be done?
twitter.com/cliffdailey
Who has a ConnectU account..anyone?
http://twitter.com/cliffdailey
A couple years ago Zuckerberg was offered a billion dollars to sell FaceBook. Seems like he should have done that as the additional investments over the last couple years I am sure diluted his stake.
Back then he actually had his name be worth something and VCs would have thrown money at him…now the company is struggling to monetize and worse yet he is exposed as a cheat.
He is probably a “one trick pony” like Mark Cuban was, the key difference being is that Mark didn’t cheat his way into success.
And Cuban knew when to sell
@bart czernicki: WTF are you talking about?!?
zuck had an offer from Yahoo to sell for around $1B.
he turned it down, and got financing done at $15B equivalent, albeit from motivated investors.
later, they were valued at somewhere around $4B.
now $16B is definitely > $1B, and even if that was a temporary number $4B is still > $1B.
not to mention, FB is *still* growing and monetizing.
tell me again why he should have sold to Yahoo?
Hi everyone,
This whole story is so juicy. Do you want to see the beginnings of Connect U and how I believe they beat good ole Mark Z. Check it out in the web archives. It is pretty cool. Some of the old code is their. Looks like they bought domain from a lim-optic@hanmail.net a South Korea squatter, he or she must be kicking themselves about now.
Lim Optic was owner first of Connect U:
http://web.arch...//connectu.com/
ConnectU Archives:
http://web.archive.org/web/*/http://www.connectu.com
Enjoy
You know what you call this? Good reporting.
ConnectU guys can now retire
Or they could try out for the Olympic crew team. Isn’t that random.
Sad thing is, the same copy-paste trick leaked some of the sources in the BALCO case back in 2006. You’d think they’d have figured it out by now! Your government at work …
Funny story, maybe they should spend a little of all that money on basic computer skills.