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It's a tale of entrepreneurial flair that provokes awe and envy in equal measure.
A student at Harvard creates a website for the amusement of his fellow undergraduates so they can exchange notes and keep tabs on upcoming events.
It catches on with their friends, and their friends' friends, so he rolls out invitations to other Ivy League colleges and schools and selected corporations. Two years later, the gates are opened worldwide to anyone over the age of 13 with an email address - and when Microsoft eventually purchase a 1.6 per cent share in October 2007, the site appears to have a headline-grabbing value of US$15bn ($NZ29.6bn).
Today, in its fifth birthday week, Facebook has more than 150 million users worldwide, and its founder, Mark Zuckerberg, is rated by Forbes as the 321st richest person in the world.
Not bad going for a college dropout. But aside from Zuckerberg's prodigious business acumen, what has been the secret of Facebook's popularity?
Those who doubt its value to humanity will frequently ask "well, OK, what does it do?"; answering that question concisely and coherently is surprisingly difficult.
But it has, arguably, been the best attempt yet at creating a container for us to bring our real-world friends together in an online community. The more we put into it, the more we get out of it - so Facebook enthusiasts become even more evangelical, while those who half-heartedly dip their toe into its waters remain unconvinced.
Uploading photos, sending messages, playing Scrabble or checking out new music are all things that you can do perfectly well elsewhere online but by rolling up all these things and more into one well-designed, easy-to-use website has meant that millions go there automatically when they open their browser window.
And it hasn't just been a Western phenomenon; an intense localisation programme has meant that its penetration into non-English speaking markets such as Italy, Cuba, Austria and Albania has eclipsed that of its competitors.
Unsurprisingly, its rise to prominence has not been without hiccups. There have been the inevitable lawsuits from Zuckerberg's former college friends who claim that some of his innovations were actually theirs.
Then there's the regular blocking of the site by companies whose IT departments can clearly see the amount of time that employees fritter away on it.
But the more serious issues have surrounded privacy. Facebook insists that you use your own name rather than an alias when you sign up (anyone opting for an obviously fictitious surname, such as Stardust, will have their account suspended) so anything we choose to reveal on the site, from our birthdate, to our taste in music or our enthusiasm for abseiling is inextricably linked to us and stored for posterity - even if we decided to close our account.
As Facebook's value as a company is almost entirely related to its ability to target advertising at us in the sidebar of the website, it could be accused of almost disingenuously persuading us to reveal information for our own benefit and amusement, when, in fact, that information has a cash value.
Facebook's introduction of a system called Beacon, which quietly gathered additional information about us and our purchases from participating sites in order to further hone their advertising techniques, was deemed to be a step too far and resulted in an apology from Zuckerberg and substantial revisions of the way the system operated.
A recent redesign of Facebook, forced through against the wishes of many regular users, was a gamble that neatly summed up the dilemma faced by social networking websites, and indeed Facebook's prospects for the future: how to hang onto users?
Facebook had little choice but to adapt the website to allow more space for content, games, features and advertising but risked alienating users who simply liked things to stay as they were. The gamble appears to have paid off for the time being but Zuckerberg need only look at the history of social networking to know that the site's future is by no means guaranteed.
Friends Reunited created a huge wave of interest in 2001 as people flooded to sign up; today, its occasional emails begging you to pay the site a visit seem like a desperate cry for help. Friendster's boom period came in 2003, but today - at least for users outside Asia - it's something of a ghost town.
MySpace, purchased by Rupert Murdoch in 2005, found itself displaced last year by Facebook as the most popular social networking site; while that could be put down to MySpace's ugly interface or persistent problems with spam, it could equally be the case that, just like our favourite pubs, our favourite clubs or indeed our circle of friends, social networks are ephemeral.
When we get bored, we move on to look for something different. And the explosion of interest in microblogging service Twitter over the past couple of months has undoubtedly been at the expense of some activity on Facebook.
Perhaps we're becoming ambivalent about the multi-faceted Facebook experience, and instead seduced by the brilliant simplicity of Twitter's 140-character-limit messageboard.
The battle to stay in the social networking pole position will hinge around wireless communication and handheld devices. Both Facebook and MySpace are designed to be accessed from a computer, and while mobile versions are available, they're essentially stripped down versions of the websites.
As phones are increasingly able to identify our location via GPS and wireless networks, it's only a matter of time before we'll be able to walk into a party, check our phone, and be told who else in the room shares our interests.
Services for the iPhone such as Brightkite and iRovr are moving down that route, as is Google's newly-launched Latitude tool; if Facebook is to avoid being seen as old hat, it's these challengers they need to be taking on rather than MySpace, which it has essentially already beaten.
None of this, of course, addresses the question of how a business that means so much to so many will actually end up making serious sums of money.
Zuckerberg says that monetizing the business isn't his priority right now, and that will come about three years down the line. The youngest self-made billionaire in history sounds confident. But does he know what he's doing?
- THE INDEPENDENT
