Why Did Mark Zuckerberg Pay $20 Million in Facebook Stock for Brooklyn Entrepreneur Sam Lessin?

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Photo: Patrick McMullan

On Friday, Lessin, the founder of Brooklyn-based Drop.io, announced that he would be moving to Palo Alto to join his Harvard buddy Mark Zuckerberg, and that Drop.io's service — which let users "drop" files of any kind, making them accessible by web, text, and other means — would be winding down. On its face, the Facebook deal looked like any other "acqui-hire" where a large company buys out a smaller one in order to leverage its founder’s innovative pluck. But MediaMemo's Peter Kafka says Drop.io's investors were paid back close to double the $10 million they invested and all in Facebook common stock, an increasingly valuable commodity as the company's valuation rises. (In contrast, this summer when Facebook bought out the start-up Hot Potato, where Lessin was an investor, only founder Justin Shaffer got any equity.)

Lessin, whose father is Wall Street investor and fellow Harvard alum Bob Lessin, introduced Zuckerberg to New York bigwigs back when the site was still called thefacebook. But according to David Kirkpatrick’s book The Facebook Effect, Zuckerberg said no to the $10 million offer that came out of those meetings. As with Shaffer, who launched “Groups” for Facebook last month, it's more likely that Zuckerberg is betting Lessin will launch the social network’s next big feature. AdAge's David Berkowitz speculates that with Drop.io's background and Facebook recently allowing users to share high-definition photos, that feature will probably revolve around storing multimedia. Like Gmail before it, Facebook could become Internet users' de facto storage center. Puts a little more emphasis on those nagging privacy concerns.

Mark Zuckerberg Really, Really Wanted to Work With Sam Lessin [MediaMemo/AllThingsD]
Why Facebook Gobbled Up File-Sharing Startup Drop.io [AdAge]