The Story of When Mark Zuckerberg Turned Down Yahoo!

It was a beautiful Monday morning at Facebook headquarters in Palo Alto, California.

It was the summer of 2006, which was roughly 2 1/2 years after Facebook was launched by Mark Zuckerberg and Eduardo Saverin.

The board of Facebook - Zuckerberg, as well as investors Peter Thiel and Jim Breyer - had some urgent business to discuss.

Over the weekend, Yahoo! had made a formal offer of $1 billion to purchase Facebook.

At the time, Facebook was not making any money.

To both Thiel and Breyer, this was an easy decision - take the money and run. A very nice return on their multi-year investment.

Zuckerberg, however, wasn't even entertaining the idea.

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According to Thiel, Zuckerberg started the meeting by saying that the deal discussion was a "formality" and that they "obviously won't be selling".

Thiel and Breyer were taken aback by Zuckerberg's certainty in his decision.

Don't you want to talk about this? they asked.

After all, Zuckerberg stood to make $250 million, and he was just 22 years of age.

Thiel and Breyer also stood to make a killing, as they were early investors in the company.

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Zuckerberg started out his rebuttal by asking exactly what he was supposed to do with a big pile of money.

I'll just start another social media company, he said, and I like my current company just fine.

Thiel and Breyer were both seasoned investors who knew that they shouldn't hang around too long when such a nice profit was able to be secured in a relatively short period of time.

Zuckerberg, on the other hand, was a builder, and he was nowhere close to pondering retirement.

Heck - he was practically still a kid.

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Zuckerberg was smart enough to realize that he had to make a business case as to why they shouldn't sell to Yahoo!

Yahoo! is dramatically undervaluing our company, Zuckerberg said to Breyer and Thiel. They aren't looking to the future - they are looking for a quick fix to help stabilize their business. They were unsuccessful in purchasing Google and Ebay, and now they want to buy us.

Zuckerberg believed in Facebook and believed that the company would be much, much bigger in the future.

For that reason, he believed that the Yahoo! bid was deserving of a rejection.

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In the end, Thiel said that he believes in always backing the founder in situations like this, so he ultimately decided to back Zuckerberg and his plan to continue to go it alone.

This obviously ended up working out for everybody involved (except Yahoo!), as Facebook (now Meta) now has a valuation of over $1 trillion.

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