Sean Allen Fenn
Fake news. 2016. Brad Parscale was former President Trump’s digital media director. Back then, a Facebook advertising budget of $100,000,000 went a long way. Facebook became the most important source of news in the world. Facebook didn’t do much fact-checking at that time. What they did have was a powerful algorithm, a “Like” button, and the Open Graph.
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The history of Facebook involves a series of disputes and lawsuits. It starts with the Winklevoss twins and Divya Narendra suing Mark Zuckerberg in 2004. They accused him of stealing their ConnectU idea to create Facebook. Zuckerberg faced another lawsuit from co-founder Eduardo Saverin over share dilution. Saverin received $5 billion in shares from the settlement. Facebook’s rapid growth attracted major investments. This includes a $240 million stake from Microsoft in 2007, valuing the company at $15 billion. Zuckerberg achieved billionaire status by 2008. Facebook acquired Instagram in 2012 for around $1 billion. Snapchat refused to sell to Facebook in 2013. Facebook’s rise also led to concerns over its role in spreading disinformation. This was particularly evident in the political unrest in Southeast Asia in 2015. Facebook’s business model evolved into surveillance-driven advertising. By 2015–2016 unintended consequences reinforced confirmation bias and tribalism. This situation was about to force Facebook into a corner.
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The following is Methods of Prosperity newsletter number 41. It was originally deployed March 28, 2024. As of December 5, 2024, original subscribers have received up to issue number 77: Sam Zell (continued).
Part 41:
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Peter Theil would consider Facebook a natural monopoly. It’s become THE social networking platform. Most people connect with family and friends on Facebook. Features including the “Like” button solidified its early dominance in the market. Facebook introduced the Like button in 2007. Which simplified user interactions and promoted content based on engagement. As a second–order consequence, sensational or divisive content is often prioritized. Facebook introduced the Open Graph in 2010. Which further integrated web content into Facebook. This enhanced the presentation of shared content. False information became an issue.
During the 2016 U.S. Presidential election, the spread of misinformation became problematic. Fabricated stories and Russia-backed content aimed to influence the election. Distorted information reached millions of Americans. Cambridge Analytica had something to do with it. They used millions of unauthorized profiles to influence voter behavior. This raised serious privacy and data manipulation concerns. Mark Zuckerberg faced congressional scrutiny over these issues. His net worth fluctuated since then. As of October 2024, his net worth is approximately $206.2 billion.
Key lessons:
Have a business with a network effect.
Bad news gets the most attention.
Build something at scale.
Politics ruins everything.
Be accountable.
Peter Thiel, the first investor in Facebook, believes in the value of monopolies. They can provide progress and innovation. Facebook is a natural monopoly. Most of our family and friends have (or have had) a Facebook account. For that reason, we don’t use the platform because we like Mark Zuckerberg. We are on it because our family and friends are on it. It’s the biggest social networking protocol on planet Earth. That’s because they were able to grab so much market share early on.
Facebook introduced the “Like” button in 2007. It developed as part of a team effort led by Justin Rosenstein and others at Facebook. “Like” became a core feature. Versions of the feature have been around since at least the early 2000s. The “Like” button provides users with a simple and positive way to interact with content. Justin Rosenstein referred to it as an “awesome button”. The concept evolved through various iterations. The goal was to offer users a quick and easy method to express their approval or enjoyment of posts. It does all that without the need for lengthy comments. This feature aimed to encourage engagement and increase the visibility of popular posts. Liking a post boosts it up through the News Feed based on the number of likes received. Facebook introduced the “Like” button to users in 2009. It revolutionized how we interact with content on social media platforms. “Liking” has since become ubiquitous across various social media sites.
Every time you click “Like” it has a significant influence on the platform’s algorithm. It helps Facebook refine its understanding of your interests, emotions, and behaviors. The algorithm gives more weight and visibility to content that receives more reactions. It shows you posts in your News Feed that generate more Likes, as well as other reactions like “Angry” or “Wow”. This incentivizes content creators to optimize for reactions. That’s why users tend to produce more sensational or divisive content. It’s more likely to provoke strong emotional reactions. Facebook’s own research found something interesting about posts which trigger “angry” reactions. They’re likely to contain misinformation or low-quality content. Over time, this has skewed Facebook’s algorithm. It prioritizes content that generates high engagement. That content could be harmful or misleading.
In 2010, Facebook introduced the Open Graph. The Open Graph is a protocol that allows any web page to become a rich object in a social graph. It enables developers to integrate their pages into Social Graph. That’s the name of Facebook’s global mapping/tracking tool. It provides functionalities like profile links and stream updates for connected users. By adding specific meta tags to web pages, developers can define properties. Such as the title, type, image, and URL of the object which a user shares on Facebook. This integration enhances how Facebook displays shared content. Which makes it more engaging and informative for users.
The Open Graph allows publishers to control how their content appears when shared. That lends a certain amount of credibility to any content shared on Facebook. This can lead to higher click-through rates and more traffic to the advertiser’s website. But it doesn’t make the information true. The Open Graph tags provide structured data. Which gives social platforms more information about the content. That can improve the accuracy of social media analytics. This is dangerous for undiscerning droves of scrollers. An article containing false information can go viral.
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The 2016 Presidential race quickened. Unethical websites anywhere in the world found it easy to spread false information. Which could show up on anyone’s newsfeed. A significant number of websites churned out fabricated stories. Many of which favored Donald Trump. The town of Veles in Macedonia became known for hosting them. The operation involved numerous websites. U.S. intelligence tracked them during the final weeks of the election campaign. One of the headlines was “Pope Endorses Trump”. Imagine being a devout Catholic in 2016, leaning towards Trump for President. That might reinforce your decision to vote for Trump.
Sources in Russia used Facebook to influence Americans during the 2016 presidential election. The Internet Research Agency (IRA) was a Russian troll farm. It conducted a Facebook campaign that favored Donald Trump and disparaged Hillary Clinton. Russia-backed content reached as many as 126 million Americans through fake accounts. These were posts created to sow discord and manipulate public opinion. These efforts included spreading propaganda, staging rallies, and disseminating politically damaging information. Did this influence the election in favor of then-candidate Donald Trump? To what degree did this undermine trust in American democracy?
The content shared by Russian operatives on Facebook was part of a broader strategy. They didn’t stop at social media. Hackers released damaging information and engaged with members of the Trump campaign. This interference was part of a comprehensive effort by Russia. Not only to meddle in the election process. Evidence gathered by Special Counsel Robert Mueller determined the goal. To manipulate public sentiment through various means, including social media platforms like Facebook. The U.S. intelligence community backed up this evidence. It’s possible that Mueller was an enemy of Trump. President Trump wanted Mueller fired in 2017, citing conflicts of interest. Mueller was investigating Trump for potential obstruction of justice.
To add fuel to the dumpster fire, there was that Cambridge Analytica scandal. They were a data analytics firm that gained notoriety. Cambridge Analytica harvested millions of Facebook profiles without authorization. They built a powerful software program. The Trump campaign and the Brexit campaign used Cambridge Analytica. They obtained personal information through unauthorized means. Their software created models that could predict and influence voter choices. A whistleblower revealed the firm’s actions. It raised serious concerns about privacy violations. Is it bad that they manipulated user data for political purposes?
In 2018, Mark Zuckerberg was in trouble. Congress summoned him to address concerns related to data privacy and security issues. This was in the aftermath of the Cambridge Analytica scandal. Cambridge Analytica existed for the sole purpose of spreading rumors online. Their business plan? To manipulate Facebook users. It appeared that Facebook failed to protect user data. Zuckerberg expressed that Facebook was slow to respond after the deluge of misinformation. The U.S. Constitution prohibits the government from limiting freedom of speech. In that respect, these hearings accomplished nothing.
To conclude this chapter, Zuckerberg’s net worth has fluctuated in recent years. Dropping to around $36 billion at one point in 2022, his fortune rebounded in 2023 and 2024. His net worth surged by $28 billion on February 2, 2024. This was after Meta (Facebook’s parent company) reported strong quarterly earnings. It caused a 22% jump in Meta’s stock price. He is also set to receive around $700 million per year in dividends from Meta’s quarterly dividend. As of March 2024, Mark Zuckerberg’s net worth was around $178 billion, according to Forbes. Mark Zuckerberg's net worth is approximately $206.2 billion as of October 2024. He is currently the world’s second-richest person, trailing only Elon Musk. Much of his wealth comes from his 13% ownership stake in Meta. Zuckerberg owns around 350 million Class A and B shares of Meta. Meta’s stock has been rising about 68% since January. Zuckerberg’s net worth has surged by $78 billion this year.
I like you,
– Sean Allen Fenn
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Methods of Prosperity newsletter is intended to share ideas and build relationships. To become a billionaire, one must first be conditioned to think like a billionaire. To that agenda, this newsletter studies remarkable people in history who demonstrated what to do (and what not to do). Your feedback is welcome. For more information about the author, please visit seanallenfenn.com/faq.
