What Mark Zuckerberg Was Doing the Last Time the Fed Raised Rates

Mark Zuckerberg, founder of Facebook, participates in a disc
Mark Zuckerberg, founder of Facebook, participates in a discussion during the World Economic Forum in Davos, Switzerland, Thursday, Jan. 25, 2007. Photographer: Daniel Acker/Bloomberg News.
Photograph by Daniel Acker—Bloomberg via Getty Images

He was 22 years old.

He had recently expanded his two year-old startup from the college market to high school kids—and he thought maybe Facebook (FB) could appeal to older people, too.

“Originally, we weren’t planning on expanding or anything,” Mark Zuckerberg told me during a visit to Fortune in the summer of 2006. But as he noticed that Facebook members were not quitting the site after graduating from school, he saw bigger markets to mine. “We’re bleeding out,” he said excitedly.

This seems like forever ago. (George W. Bush was president, MySpace was the world’s largest social network, and the Federal Reserve last raised rates in the summer of 2006.). But I remember young Zuck’s visit—the hungry Harvard dropout and his co-founder, Chris Hughes, who had stayed at Harvard and just graduated—like it was yesterday. And rereading my interview notes, which I uncovered this month while packing to move to Time Inc.’s (Fortune’s parent) new offices in downtown Manhattan, I’m struck by how clear Zuckerberg was about what Facebook was and wasn’t…and what it needed to grow.

“We’re a tech company, not a media portal,” Zuckerberg told me, comparing his startup to MySpace, which I was writing a story about at the time. MySpace, which had just been acquired by News Corp. (FOX) for $580 milllion, had more than 100 million active users. Facebook had 9 million. But Zuckerberg, whom my colleague Adam Lashinsky called “preternaturally levelheaded” in a 2005 Fortune story, contended that he had the edge.

“Here’s what’s important,” Zuck told me authoritatively.

“One, we have a large emphasis on authentication. We make sure you belong in the community that you say you do.

“Two, we give you complete control over your information—who sees what. You can set different privacy settings.

“Three, we’re a utility. Two-thirds of our users come to the site everyday.”

“We’re a bunch of computer dorks,” Zuck continued. While MySpace, built by a couple of music fanatics, allowed anybody to join and was loaded with ads, Facebook was a relatively closed network with little advertising.

“We don’t want everyone,” Zuckerberg said, describing his target audience: “Facebook is for young people to better understand the world.”

Markets evolve, and smart entrepreneurs adapt. Today, Facebook’s mission is “to give people the power to share and make the world more open and connected.” And as my Fortune colleague Leena Rao says, “The irony is that now Facebook is an advertising company, and one of the largest mobile ad companies in the world. And many think its future is also as a media company, given some of the things it is doing with news and content.” She adds, “Even Zuck is mortal and didn’t quite see the future of what Facebook was going to evolve to!”

Like the best business builders, Zuckerberg beat back his skeptics. Lashinsky, who is now Fortune’s top technology editor, recalls that Facebook, around the time of Zuck’s visit to Fortune, extended access to employees of certain companies, allowing people to join using a corporate email. “I was skeptical that anyone would want to do this,” he recalls. “I told them I would notify everyone at Fortune of the ability to do this, and I vividly recall that almost no one responded to me to say they were interested in joining Facebook.”

Fortune put MySpace on the cover in 2006. Today, MySpace operates in relative obscurity. Facebook has grown to more than one billion daily active users. Zuck showed us.

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