Facebook Acquires ConnectU…Almost

Have you ever sat down in a well-cushioned recliner and pondered what it would be like to be Mark Zuckerburg?  I can't say that I have, though at times I've been inclined to pretend like I'm one of the richest young people in the world.  However, to get where Zuckerburg did (for those of you who don't know, he is the brains, amongst others, behind Facebook), he had to stick and move in a couple situations.  One of those situations, namely a social startup called ConnectU, isn't about to let him forget where he came from.

Way back when, before Zuckerburg started Facebook, he used to program code for ConnectU.  At some point along the way, Zuckerburg stopped working for ConnectU and began his own little venture startup called Facebook.  The long and short of it is that Facebook blew up, and ConnectU did not. 

Of course, the folks over at ConnectU weren't blind to the fact that Zuckerburg decided to start his own social site, a site that shared similarities to ConnectU.  When someone makes it to the big show, everyone they met along the way wants a handout, right?  ConnectU is no exception, and filed lawsuits claiming that Zuckerburg stole the intellectual property inherent to ConnectU to create Facebook.

The courts ruled in ConnectU's favor that Zuckerburg did indeed steal from ConnectU to create Facebook just over a month ago.   Facebook then effectively purchased ConnectU by giving them an undisclosed amount of stock.  However, ConnectU's folks feel like Facebook tried to pull the wool over the court's eyes by selling them stock at a price lower than what it should be valued at, and is asking that the case stay open to see whether Facebook short-sold ConnectU.

The problem, however, is that establishing a fixed value for a privately-traded company like Facebook is a tad tricky.  Usually some equation encompassing business profit along with investment funds is used to estimate a privately traded company's value.  ConnectU is arguing that Microsoft's recent investment to Facebook in the vicinity of $15 billion should mean that the company is worth substantially more than the $3.75 billion Facebook claimed. Of course, a lower company value will drastically decrease the share value, so Facebook could be purchasing ConnectU at a highly discounted rate.

At the end of the day, Facebook will be de facto owners of ConnectU.  Ironing out details for lawsuits like this takes time, and ConnectU has a legitimate right to ask the court to investigate Facebook in the interests of establishing a fair share value.  No doubt Zuckerburg was looking to push this little nuisance under the table on the cheap.  As Facebook really isn't hurting for money, and Zuckerburg is one of the most fortunate young CEOs on the planet, I think it is good and fair that ConnectU not get shooed away without receiving its due and proper.