by Steven Bertoni (Forbes Magazine)
Sean Parker rocked the music industry with Napster and unleashed viral marketing with Plaxo. His vision shaped Facebook; so did his paranoia. Now 31 and worth $2.1 billion, he’s just getting started.
Four hours later he’s up, ready to do it all again.
Flighty, manic and unpredictable, Parker grates on investors–he’s been jettisoned from the three companies he helped create, soon after they lifted off. “He’s seen as an unknown quantity, and VCs love for things to be very much in control,” says Facebook cofounder Dustin Moskovitz. But VCs also love big ideas, and Parker has those in spades–LinkedIn founder Reid Hoffman calls him a “big-ass visionary.” And in terms of boardroom scheming, he’s nothing like his fictional portrayal in The Social Network. “The movie needed an antagonist, but that’s not what he was,” says former Facebook growth chief Chamath Palihapitiya. “He’s really the exact opposite of his portrayal in the film.”
Boiled down, Sean Parker is a human accelerant, an idea catalyst who, when combined with right people, has fueled some of the most disruptive companies of the last two decades. At just 19 he blew up the record industry as the cofounder of the music-sharing site Napster ( NAPS – news -people ). Two years later his address book service, Plaxo, demonstrated the potency of digital propagation, something he took a step further as the 24-year-old president of Facebook, helping the social network become the most important Internet company since, well, maybe ever. Yes, all three companies eventually bounced him, but not before, at just 31, he tucked away enough equity to boast an estimated fortune of $2.1 billion. And he’s just getting started.
He’s trying to upend music distribution again, bringing the Swedish music platform Spotify to America. He’s also hunting new startups as general partner at venture firm Founders Fund and reuniting with Napster’s Shawn Fanning to create Airtime, a live video site.
His personal network is astounding, a combination of foresight and fate. Starting as a teenager, when he interned for current Zynga Chief Mark Pincus, Parker has teamed, in one way or another, with the men who now control the modern Internet: Mark Zuckerberg, Mike Moritz, Peter Thiel, Reid Hoffman, Yuri Milner, Dustin Moskovitz, Adam D’Angelo, Daniel Ek, Ron Conway, Ram Shriram and Jim Breyer.
“He can see things most people won’t be able to see for a year or two,” says Palihapitiya. As Shirven Pishevar of Menlo Ventures describes it: “Parker has access to trends and signals that are invisible to many people. For him it’s like hearing a dog whistle.” Parker doesn’t disagree: “I find a lot of things relevant that aren’t necessarily relevant to the world when I’m thinking about them.”
Parker is drawn to big, universal problems and spends years looking for them. “Most of us kind of agree on the thrust of history. The key is to understand how we get there,” says the young billionaire as he rolls his desk chair closer to me in the office of his recently purchased $20 million Manhattan town house. “The transition strategies are more important than understanding what the outcome state will be.”
By focusing on problem selection, rather than rushing out an innovation no one wants like so many trigger-happy entrepreneurs, Parker put himself in position for the string of blockbusters that his critics blithely attribute to sequential luck. Napster was the transition between CDs and MP3s after the Internet made it possible to strip content from its container. Facebook was a vehicle to create a reliable identity in an anonymous online world. Spotify is an attempt to fix the very music industry that Napster helped break a decade before.
“He thinks about where he perceives the world to be going,” explains Spotify founder Daniel Ek. “If he doesn’t think there is a company that will win, then he builds it himself.”
This deep investigative thinking bleeds into everything else in his life. Ask Parker about the genesis of his former company Plaxo and he starts with theories of how real viruses spread across populations. Before he shares the name of his favorite sushi restaurant–prior to one dinner we had in New York he called five to find out which chef was cutting the fish that night–he discusses rice density and the ideal geometric shape for sushi cuts (trapezoids). Question the audiophile about the best brand of headphones and you first learn how sound waves are registered by our tympanic membranes. As the expression goes, ask him for the time and he’ll tell you how to build a watch.
“We talked for what I originally scheduled for an hour, ended up being three hours,” Reid Hoffman recalls about their first meeting back in 2002. Twitter founder Dorsey had the same experience: “It’s rare to find someone who can have those kinds of conversations. … I appreciate any conversation where I can walk away questioning myself and my ideas.”
Thus, Parker’s life becomes impervious to time, a subject friends and business partners acknowledge with a defeated laugh. Peter Thiel calls it Parker’s “absence of dramatic punctuality.” Ek manages Parker by telling him there’s a meeting at 11 a.m. and informing others it starts at 1 p.m. There’s even a name in Silicon Valley for this phenomenon: Sean Standard Time.
“Making people wait and not fulfilling all your obligations feels bad. I probably feel worse about it than people realize, but I don’t do it with malice,” says Parker. When focused on a task, he blocks everything else out and works himself into a trance. The outside world fades; time slips away. “It requires a lot of rescheduling, but I try to focus on things that are the highest value and get those done perfectly.”
Parker’s definition of “done perfectly” is extreme. On the afternoon of the FORBES cover shoot Parker has summoned three full racks of Italian suits. Twenty dress shirts–still in their wrappings–wait on the wicker couch in his West Village town house. Rows of eyeglasses and sunglasses blanket the coffee table, piles of suspenders and ties fill chairs, a shoe store’s worth of wingtips and loafers and boots line the wall. The shoot was scheduled for 4 p.m. Sean emerges at 5:30 flanked by a proper entourage: a clothes stylist, hairstylist, makeup artist, assistant, publicist, tailor and his fiancée, Alexandra Lenas.
During the shoot he changes his wardrobe more often than a Las Vegas headliner. He switches from streamlined suits to three-piece numbers to casual cardigans over designer jeans. He obsesses over the spacing of suspenders and triple-checks that the red in his skinny tie matches the red in his hipster eyeglasses. At one point he breaks for a snack. Ten minutes later he’s in the kitchen, dressed in a dark Christian Dior (CHDRF.PK – news – people ) suit, whisking a bowl of homemade ranch dip. He’s trying to lose weight and is eating only vegetables. The ranch dressing on hand is too runny, so he adds sour cream to firm it up. His assistant (one of three) coaxes him back in front of camera. After hundreds of photos in four locations around the house, the shoot is finished. It’s now 2 a.m.–perfect, calibrated Sean Standard Time.
Sean Parker’s Billionaire Network Starting as a teenager, Parker has teamed with the men who now control the modern Internet.
Two nights later I arrive at his house at 11 p.m. A chartered G450 is scheduled to fly to San Francisco from Teterboro, N.J.–wheels up at midnight, sharp. Parker is out meeting Spotify’s Ek. When midnight hits and there is still no Parker, I get a little nervous. Everyone else yawns. Parker struts in at 2 a.m. He still has to pack and shower. At 3:30 a.m. a Cadillac Escalade is loaded with luggage and take-out fried chicken from Blue Ribbon, a late-night New York chefs hangout, and across the Hudson we go.
We take off at 4 a.m., a half hour before FAA fatigue laws would have grounded the pilots. When I awake to a view of the California desert outside the plane window, Parker is sitting across from me, snacking on a piece of fried chicken, his veggie-only diet already over. “Did you sleep well?”
We land in San Francisco at 9 a.m., where yet another Escalade ferries us to Marin County. Everyone parts ways to sleep for a few more hours before Parker begins his sprint through San Francisco and Silicon Valley to meet with colleagues and pitch potential hires.
PARKER’S PATH TO Silicon Valley began the day his father, Bruce, formerly the chief scientist at the National Oceanic & Atmospheric Association, taught him how to program on an Atari 800. He was in second grade. By high school Parker was hacking into companies and universities (alias: dob, which he chose for its aesthetic symmetry). At 15 his hacking caught the attention of the FBI, earning him community service. At 16 he won the Virginia state computer science fair for developing an early Web crawler and was recruited by the CIA. Instead he interned for Mark Pincus’ D.C. startup, FreeLoader, and then UUNet, an early Internet service provider. “I wasn’t going to school,” he says. “I was technically in a co-op program but in truth was just going to work.” Parker made $80,000 his senior year, enough to convince his parents to let him put off college and join Shawn Fanning, a teenager he’d met on a dial-up bulletin board, to start a music-sharing site that became Napster in 1999.
He never did make it to college, but Napster provided an education all its own. “I kind of refer to it as Napster University–it was a crash course in intellectual property law, corporate finance, entrepreneurship and law school,” says Parker. “Some of the e-mails I wrote when I was just a kid who didn’t know what he was doing are apparently in [law school] textbooks.” Those e-mails, which admitted Napster customers were likely stealing music, would end up as evidence in copyright lawsuits that would eventually shutter Napster. But by that time Parker had already been exiled by management and was living in a North Carolina beach house. “I didn’t understand at the time that when someone asks you to take an extended vacation that’s basically a prelude to firing you.”
While at Napster Parker met angel investor Ron Conway, who was funding another company in the startup’s building in Santa Clara. Conway has backed every Parker production since.
On our first night in San Francisco Parker and I visit Conway on his porch overlooking Richardson Bay. We drink Brunello and nibble on prosciutto. “We’ve gone through hell together,” says Conway, who’s backed Google ( GOOG – news – people), PayPal, Twitter and FourSquare, among others. Napster was less a company than an all-hours circus, a strange tangle of people who thought they joined a renegade social movement rather than a startup. “So much of what I learned at
Napster was learning what not to do,” says Parker, as Conway scribbles on a notepad. He learned to listen to Parker the hard way. “When Sean became president of Facebook, he called me and said, ‘You have to look at this company.’ The killer is that I could have been Peter Thiel,” says Conway, referring to Thiel’s investment in Facebook that made him a billionaire. “But I said, ‘You have to clean up the issues at Plaxo, so don’t introduce me to this Facebook thing.’ ” He sips his wine, shakes his head and laughs: “These are painful memories.”
Plaxo was Parker’s first attempt at creating a real company–an online service that aimed to keep your address book up to date. It sounds boring compared to Napster and Facebook, but Plaxo was an early social networking tool and a pioneer of the types of viral tricks that helped grow LinkedIn, Zynga and Facebook. “Plaxo is like the indie band that the public doesn’t know but was really influential with other musicians,” Parker says.
Once you downloaded Plaxo, the program would mine your address book and e-mail every contact with a message, coaxing them to sign up for the service. When the next person signed up, the software would pirate the new address book and spread further. Within a short time millions of e-mail accounts had been hit with Plaxo pitches. “In some ways Plaxo is the company I’m most proud of because it was the company that wreaked the most havoc on the world,” says Parker. Those experiences later changed the history of Facebook.
There are diverging stories about Parker’s swift exile from Plaxo. His take is that Ram Shriram, a former Google board member recruited to help manage the company, conspired to throw him out and strip him of his stock. “Ram Shriram played this very vindictive game not only to force me out of the company but force me out broke, penniless, impoverished and with no options.”
Shriram would not speak with FORBES, but cofounders Todd Masonis and Cameron Ring share a different story: that Parker was essential in creating the company strategy and raising money but grew bored with the daily grind of running it. Masonis claims that Parker was often absent, and when he was around, he was distracting: “It was the sort of thing where he doesn’t come to work, but then maybe if he does it’s at 11 p.m., but it’s not to do a bunch of work, it’s because he’s bringing a bunch of girls back to the office because he can show them he’s a startup founder.”
Whatever the motivation, Parker’s removal was messy. He insists investors hired a private eye to build a case. There were allegations of misconduct and drug use–claims that went unproven. “It happened poorly; we should have done a better job being up front about it and doing it ourselves,” says cofounder Cameron Ring. “But looking back it was the right decision for us and for Sean.”
Parker was on his own, isolated from his cofounders and close friends. “I felt a complete loss of faith in humanity, impending doom, a sense that I couldn’t trust anybody,” says Parker. He thought of suing but knew the battle could drag on for years. So he let it go. After all, he had already discovered a new company with potential to get really big.
WHEN PARKER WAS FIRST shown Facebook by a friend’s girlfriend (versus the one-night stand depicted in Aaron Sorkin’s screenplay) he was already a social networking veteran, both because of Plaxo and, more directly, as an advisor to Friendster, the ill-fated Facebook forerunner he stumbled across when reporters asked him if it was connected to the similar-sounding Napster. He knew the larger college market was ripe for its own social network–there were several small sites functioning at individual universities–and Facebook, which had already leapt off Harvard’s campus, gave him a play. He wrote to Facebook’s generic e-mail address and later met Zuckerberg and Eduardo Saverin over a Chinese dinner in Manhattan in the spring of 2004.
A few weeks later, by chance, he ran into Zuckerberg and crew on the streets of Palo Alto and shortly moved into Dustin Moskovitz’s room at the rented Facebook house. “It’s the only thing the movie got kind of close to right,” deadpans Adam D’Angelo, Facebook’s early technology chief, whom I meet at the Palo Alto headquarters of his new startup, question-and-answer site Quora.
Just 24, Parker was Facebook’s business veteran. He helped the collegeaged Facebook founders network around Silicon Valley, set up routers and meet benevolent investors like Thiel, Hoffman and Pincus.
“Sean was pivotal in helping Facebook transform from a college project into a real company,” Mark Zuckerberg says in an e-mail. “Perhaps more importantly, Sean helped ensure that anyone interested in investing in Facebook would not only buy into a company, but also a mission and vision of making the world more open through sharing.”
D’Angelo credits Parker for recognizing that design was as vital as engineering. “Our first employee [at Quora] was a designer, and we knew to do that because we saw how important that was at Facebook.” Together with Aaron Sittig, an early Napster friend who would become Facebook’s key architect, Parker helped drive Facebook’s minimalist look. He was adamant that the site have a continuous flow and tasks like adding friends be as frictionless as possible. “We wanted it to be like a telephone service,” says Sittig. “Something that really fades into the background.” Later Parker helped push Facebook’s photo-sharing function. It would be one of his last acts as Facebook’s president.
Although no longer on the Facebook payroll, Parker continued to advise Zuckerberg on strategy and recruit key executives like Chamath Palihapitiya. Sittig says he still helped with the site’s design and was a strong outside influence in the development of Facebook’s “Share” platform, which allowed users to upload news articles, video and other third-party content. Still, it’s likely his greatest contribution to Facebook was his creation of a corporate structure–based on his Plaxo experience–that gave Zuckerberg complete and permanent control of the company he founded.
Parker’s plan fortified Zuckerberg with supervoting shares that resisted dilution during fundraising and armed him with enough board seats to stay in power for as long as he wanted. “Sean was pretty material in setting up the company in a way that Mark retained as much control as he does, both in being able to get high-valuation, low-dilution financing but also in terms of the board structure itself and details of control,” says Facebook cofounder Dustin Moskovitz. “He’d been coming off the Plaxo mess and was sensitive to that.”
This is what makes his portrayal in The Social Network so frustrating to Parker. Justin Timberlake’s Parker is a cruel, cocky opportunist who forces Eduardo Saverin out of the company and robs him of his shares. At Plaxo Parker had endured in real life what the fictional Saverin suffered in the film. “I don’t mind being depicted as a decadent partyer because I don’t think there’s anything morally wrong with that,” says Parker, quickly adding that the partying was exaggerated, too. “But I do mind being depicted as an unethical, mercenary operator, because I do think there is something wrong with that.”
The movie debuted last October to critical and commercial success. It cut Parker deep. “I was a mess at that point because the movie had hit, the depiction of me was so far from reality I was having a hard time psychologically dealing with it,” Parker says. “I was all bummed out, I had just broken up with my girlfriend of four years and I just had knee surgery, so I couldn’t walk.” Before the film’s release he had already been laid up in a suite at the Peninsula Hotel in L.A. for two months. He gained 30 pounds. He was also juggling his duties at Founders Fund, Spotify and startup Airtime.
It got to be too much.Hetooka break from Airtime, his knee healed and a mutual friend introduced him to his future fiancée, the 22-year-old Lenas, a singer-songwriter.
FOR ALL THAT HE has accomplished, Parker remains a hacker at heart, motivated less by money than the drive to disrupt. Hence, he never stopped thinking about Napster. Eight years after it had been sued out of existence he was still searching for a company that could fulfill Napster’s promise of sharing music, but this time in a way that would pay the musicians, too.
Two years ago a friend told him about a Swedish music site called Spotify that offered unlimited, legal songs. He scoured his network for an introduction, and without seeing the product in action, blindly e-mailed founder Daniel Ek, outlining his ideal music platform, hoping Spotify fit the description.
Ek had been a huge fan of Napster, and Parker’s suggestions caught his attention: “This was someone who had spent more time thinking about this than I had done myself.” After a series of e-mails and a test drive of the platform, Parker was sold and tried to invest. Armed with a cash infusion from Hong Kong billionaire Li Ka-shing, Ek wasn’t looking for any more. Parker would have to prove his way into the company. He introduced Spotify to Mark Zuckerberg (a Facebook integration plan was scheduled to be introduced shortly after this article went to press) and helped open doors at Warner and Universal, winning over Spotify’s board: He eventually invested about $30 million.
Parker is also putting money and effort into Airtime, reuniting him with his old Napster partner, Fanning. Parker has been coy about the platform’s specifics but says it will offer communication and sharing in real time–something he thinks is underserved on the Web. Airtime will likely be a site where friends can post videos and react to them–and each other–live. “My pitch is eliminating loneliness,” Parker says. There’s also a random video chat function similar to last year’s voyeuristic flameout, the now defunct Chatroulette. It hits the same thread that has run through all of Parker’s projects: sharing and discovery.
These projects put him constantly on the road. He flies in a monthly loop from New York (base) to Los Angeles (music executives) to San Francisco (Founders Fund), then Stockholm and London (Spotify). In my last meeting with him I asked where he files his taxes. “That’s a damn good question. I don’t even know.”
Our get-together back at his new town house started at 11 p.m. but goes late. Tomorrow Parker will fly to Stockholm to help the design team tweak the invitation process and shore up other features in time for the Spotify Facebook launch. “I need to go to the gym tonight, I got another hour’s worth of e-mail and I have to pack for my two-week European journey,” he says, checking the clock on one of two computer screens on the desk. It’s 3 a.m. “I actually couldn’t honestly tell you whether we’ve been here for two hours or 20 minutes.”
The Script: The Human Accelerant
Sean Parker’s dad taught him to program on an Atari 800 in second grade. By 15 his hacking exploits got him on the FBI’s radar.
Over the next decade he fueled some of the most disruptive companies in tech: Napster, Plaxo, Facebook. All three firms eventually bounced him.
Parker, now a billionaire, is backing two new startups, Spotify and Airtime, that may yet again redefine life on the social Web.