They sued Zuckerberg over Facebook and lost. Now the Winklevoss twins have made it big, revenge is in the air. Danny Fortson of The Times reports.
The Winklevoss twins finally have something to shout about. Remember them? They were the square-jawed Teutons, made famous in the 2010 film The Social Network, who whined that their former Harvard classmate Mark Zuckerberg had stolen the original idea for Facebook from them. They sued Zuckerberg, and slunk away with a measly $65m settlement, never to be heard of again. Zuckerberg went on to become the dictator of a $500bn online empire of 2.4bn people, and has been accused of undermining a few democracies along the way. He's been busy.
The twins? Since the Oscar- and Golden Globe-winning film portrayed them as slightly dim "Men of Harvard" outfoxed by a hoodie-wearing nerd, they might as well have spent the past nine years chopping wood as far as most people are concerned.
As it turns out, they haven't been doing that. Instead, the 37-year-olds have got themselves wrapped up in a whole new caper. They reckon that their second act, their next big idea (if you believe Facebook was their first), is even bigger. The former Olympic rowers used their Facebook payoff to make a huge bet on bitcoin, the digital currency they say will replace money as we know it. Gold 2.0, or somesuch.
When they quietly began buying as much of it as they could back in 2012, one bitcoin was worth $7. Today, it goes for $8,000. The Winklevii, as they are known in Silicon Valley, have become billionaires after all.
But how they turned themselves from punchlines in the Facebook story to central figures in cryptocurrency, a wild world populated by crackpots and billionaires, libertarians and criminals, is … surprising.
Perhaps even more surprising than their story is who is telling it: Ben Mezrich, the author of the book upon which The Social Network was based. He is the person most responsible for the Winklevii's unfortunate public image. Part of the reason he wrote the new book, he says, is to correct the record. "I misjudged them," Mezrich tells me on the eve of publication of the book, Bitcoin Billionaires. "I would have loved to have been able to tell their story more fully. I think it's easy to judge them, but I think it's wrong to judge them."
He frames the narrative around that of the Count of Monte Cristo, with the twins as Edmond Dantès, the protagonist who escapes wrongful imprisonment and returns to Paris a rich man, ready for revenge.
Mezrich says it is inarguable that Zuckerberg "genuinely set out to screw them". According to leaked instant messages that have come out since his book was published a decade ago, Zuckerberg was brazen about his plan to "f*** the dating site people over and quit on them right before I told them I'd have it done".
The brothers had asked Zuckerberg to code their dating website, called Harvard Connection, later changed to ConnectU. He agreed, but never finished. Instead, he strung the twins along and then launched a rival site, thefacebook.com, which included some of the ideas they had for their social network, such as requiring Harvard University email addresses to verify identities and build a focused community.
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Zuckerberg says in another message at the time: "You can be unethical and still be legal — that's the way I live my life."
The setup, then, is almost too delicious to believe. Zuckerberg, the one-time boy wonder who Time magazine made its person of the year in 2010 for "connecting more than half a billion people and … changing how we live our lives", is today vilified as an irresponsible automaton who is corroding society. Indeed, Facebook's co-founder Chris Hughes this month turned on his old friend, arguing that Zuckerberg was too powerful and that Facebook should be broken up.
The twins, meanwhile, may still look like they walked out of "high-school bully" central casting, but they are now "rising in this kind of revolutionary form of money" that they think will change the world for the better, Mezrich says. "They're not the archetypal bad guys any more. They're becoming the revolutionaries."
What's driving them? "You know, revenge may not be the right word," Mezrich says. "But their lives are very intertwined with Zuckerberg and how they feel betrayed by him. And that betrayal, it sparks them every day."
The Winklevii are not dummies. When Zuckerberg offered them $65m to settle their lawsuit in 2008, they made a canny choice. Rather than taking it all in cash, they insisted that $45m of it be in Facebook stock. Their high-priced lawyers protested. One said incredulously: "Are you crazy, you want to invest in that putz?!" They did. It turned out to be a masterstroke. That $45m eventually came to be worth $500m as Facebook's value exploded.
The twins, however, still smouldered at Zuckerberg's backstabbing. They were determined to rewrite the narrative. Their plan: to become venture capitalists, to use Zuckerberg's money to seed a new stage of upstarts — perhaps even a Facebook killer. The only problem, they soon found out, was that no one wanted them.
For lots of startups, selling themselves to Facebook, which was well on its way to becoming a globe-spanning monster, was not only possible, but probable. Over burgers and fries at the Oasis, a famed Silicon Valley burger joint, a twentysomething founder broke the news to the twins that neither he nor his peers would touch them. "You think the suits would let [other entrepreneurs] take a penny from the two guys Zuckerberg hates more than anyone else in the world?" he said. "Your dollars might be green, but they're marked."
Foiled by their nemesis again, they retreated to New York. They had given up rowing after competing at the Beijing Olympics but failing to win medals. Then, after it emerged that Facebook had done an independent valuation that meant the twins' settlement was perhaps a couple of hundred million dollars lighter than it should have been, they attempted to get the case reopened. The courts denied their request. All they could do, it seemed, was to be filthy rich and stupidly good-looking.
Cursed, the twins did what any self-respecting person in such a predicament would do: they went to Ibiza. And it was there, amid the din of electronic dance music at the famed nightclub Pacha, that a short, muscle-bound New Yorker accosted them: "Hey, are you the Winklevii?" he asked. He wanted to bend their ear about a "revolutionary" idea — a new take on "the oldest social network on earth". Money.
It was July 2012. At the time, bitcoin was a strange idea that attracted stranger people. It was the first working example of a cryptocurrency — electronic money that could be moved peer to peer with no need for banks, with transactions verified and registered in a shared online ledger called the blockchain.
The idea for this decentralised, stateless digital currency had been introduced a few years earlier, in October 2008, in an obscure white paper published by someone using the pseudonym Satoshi Nakamoto. Lehman Brothers had imploded the month before. The global financial system looked like it might disintegrate. Trust in institutions, particularly banks and the governments that regulated them, was shaken. This alternative system struck a nerve. As did the idea that this new money was borderless and would not be beholden to any central authority. Libertarians were among the earliest adopters. So were arms and drug dealers, who would sell their wares for bitcoin on sites such as Silk Road, a corner of the "dark web" that didn't pop up on Google search.
Very few serious financiers paid it much attention, even if the idea was, at least theoretically, interesting. That was the world of bitcoin when the twins stumbled upon it courtesy of a sweaty Brooklynite at a Spanish nightclub. Back home, he introduced them to Charlie Shrem, a diminutive, pot-smoking, fast-talking New Yorker who lived in his parents' basement. Shrem was the founder of BitInstant, one of the first companies that enabled any punter to pay cash for bitcoin, which was still difficult to obtain. After months of research and some soul-searching, the twins not only invested in BitInstant, but used the company to buy a whole lot of bitcoin.
Their pairing with Shrem, who grew up an Orthodox Jew and was a full foot shorter than his new investors, was an odd one. He saw in them two things: money for his startup and legitimacy. The Winklevoss name may have been mud in Silicon Valley, but in New York they were well connected. They could help bring bitcoin out of the shadows.
The twins saw something bigger: a chance to recast themselves as men of substance. "They really, truly want to make their mark and build something great," Mezrich says. "That's how they sort of see themselves, as people who build something. They really want to make people look at them again, to reassess who they are." And Zuckerberg was always there, taunting them with his success. He was unavoidable. Facebook had just floated with a valuation of more than $100bn. Zuckerberg had, undeniably, built something.
Bitcoin was a risk. By partnering with Shrem, the twins also tied themselves to Roger Ver, a BitInstant investor and convicted felon known as "Bitcoin Jesus". He'd moved to Japan and, as a non-believer in nation states, was in the process of giving up his US citizenship. Ver called bitcoin the "most important human invention since the internet" for its potential to remake the world order and sweep away the institutions that govern it. Bitcoin was going to "free every country on the planet".
Ver's views were not unique. The cryptocurrency world attracted a certain type of anti-establishment zealotry. The Winklevoss twins? They were the Establishment. They just believed bitcoin offered a more efficient way to run it.
And so they dived in. After snapping up an estimated 1 per cent of all bitcoin in circulation in 2012, the twins became missionaries. They talked to anyone who would listen about the virtues of the digital currency. Investment bankers. Captains of industry. Government officials. They did a national tour of sorts, giving presentations on private jets and in oak-panelled boardrooms about the future of money.
Bitcoin, meanwhile, fluctuated wildly but generally ticked upward, from $7 to $100 to $1,000 and beyond. Some of the quirky, fringe characters so central to its foundation in the early days began to fall away. The main bitcoin exchange, Mt Gox, collapsed in 2014 after hackers stole $450m. US prosecutors shut down Silk Road, where bitcoin was the currency of choice. Its founder was jailed for life for money laundering, narcotics trafficking and other charges.
The twins' partnership with Shrem soured. After he blew through their money and the company lost a key licence, BitInstant shut down. The Winklevii ignored Shrem's pleas for more money and, in 2014, he was arrested. He was sentenced to two years in prison for aiding an unlicensed money-transmitting business, charges that were related to Silk Road.
When the price of bitcoin hit $20,000 a coin in late 2017, Wall Street woke up. Even Goldman Sachs said it would set up a bitcoin trading operation. Hundreds of billions of dollars flowed into bitcoin and rival digital currencies, of which there are now more than 2,000.
The twins, apparently, haven't sold a single coin. Based on the $141bn combined value of all bitcoin, as of writing, that means that they are sitting on at least $1.4bn. And they have launched Gemini, which they hope will become the world's main cryptocurrency exchange.
How history remembers them won't change unless their vision comes to fruition, if bitcoin does "disrupt" gold to become a more useful store of value and medium of exchange. If it doesn't, they'll remain the dumb jocks who got played by Zuckerberg. And this gets to the most shocking truth that emerges in Mezrich's narrative.
The 6ft 5in twins chiselled out of stone who grew up privileged, went to Harvard, competed in the Olympics and then became billionaires, see themselves as underdogs. Time and again, the theme rears its head. They want to be taken seriously, but are just too damn handsome, a too on-the-nose caricature of privilege, to be seen as anything else. Mezrich says: "It's very hard to look at these guys and not feel like they're starting so far ahead in so many ways, but that is really how they perceive themselves."
A film is already in the works, Mezrich says, with Armie Hammer, who played both twins in the Social Network a decade ago, hopefully reprising the role. The question is: will anyone want to see it?
Written by: Danny Fortson
© The Times of London