Business Lessons from “The Social Network”

Entrepreneurs often spend a long time trying to work up the gusto to quit their job and launch their business. For others, the idea comes over them and momentum takes over from there. That was the case with Mark Zuckerberg’s TheFacebook.com.

LESSON 1: IDEAS ARE CHEAP; EXECUTION MATTERS

The idea for my company, a faxed daily press release digest called “What’s Up Atlanta,” came up in discussion over lunch with a friend in the PR industry. The discussion got intense when we did some back-of-the-napkin math and determined that the thing could generate a quarter-million dollars a year.

I remember saying, “I’ve got it! We could call it ‘What’s Up!’” A few days later, I created a prototype and faxed it over to him to see what he thought.

He responded with a testy, “You stole my idea!” I was dumbfounded. Didn’t know what to say. After an awkward silence on the phone, I offered to sell him half the company if he paid 50% of my $7,000 investment at that point, but he declined.

Looking back, I shouldn’t have made the offer. Nothing against him, but what matters is who took action. Ideas are cheap. Execution matters.

LESSON 2: SMART PEOPLE WITH GREAT IDEAS MAY MAKE LOUSY PARTNERS

Napster’s Sean Parker shows up as Facebook is taking off, giving Zuckerberg some good advice. By the end of the movie though, Parker has become a Facebook stockholder who hoses Zuckerberg’s original business partner.

Selecting a business partner is almost as important as choosing a spouse. The most important characteristic of business partners is…character, and it takes a while before you know whether they have it. I was fortunate to have several business partners over the years who separated from me without messes.

One way to improve your odds of a smooth breakup is to have a prenup. Business partners who are good at things you’re not can increase the odds of your success. But sometimes those differences take it all to hell in a hand basket, and an
agreement between the two of you, drawn up earlier in calmer times, will prevent legal bills and enemies.

LESSON 3: SPEAKING OF LEGAL BILLS, COMMUNICATION AVOIDS THEM

Zuckerberg doesn’t respond to a Cease and Desist demand from the Winklevoss twins’ lawyer because he’s too busy to deal with it. Or maybe he doesn’t care. Mistake.

The reason so many lawyers make a good living is because so many people don’t talk to each other during business disagreements. As time goes by without talking, the issue of misunderstandings goes up exponentially, as do legal bills.

The real life Winkelvoss twins are back in court these days, suing Zuckerberg because their $65 million settlement didn’t reflect the value that Facebook has become. Who knows? If Zuckerberg had spent more time communicating with them, maybe the lawyers wouldn’t have won.

“The Social Network” is a good movie, not just for Facebook users. It’s also got some real-world messages for entrepreneurs.