Inside the Strange Fight Over Mark Zuckerberg's Bedroom

Updated on
The Privacy Fight in Mark Zuckerberg's Backyard

The e-mail was blunt: Mark Zuckerberg had no interest in playing nice with the guy from next door.

“How do we make this go away?” a Zuckerberg adviser wrote to his real estate agent. “MZ is not going to take a meeting with him ... ever.”

Now that 2013 e-mail, and others like it, are at the center of property war gone rogue. On one side is Zuckerberg, the billionaire founder of Facebook Inc. On the other is the businessman from next door, a real estate developer who hoped to profit from Zuckerberg’s desire for privacy.

This is no back-fence squabble over who trims the tree. The story laid out in court documents shows how Silicon Valley’s power elite fends off those seeking to force their way into the club and share the wealth.

At its heart are themes that have been with Zuckerberg since Facebook’s inception and popularized via film in “The Social Network,” the fictionalized look at the hoodied man-boy behind the company: brass-knuckle tactics, bravura performances, whiffs of betrayal. Only this time, the fuss is over his lot in a once ordinary Northern California subdivision.

The Winklevoss twins once claimed Zuckerberg, their former classmate and business partner, reneged on his promises. The developer in this case, Mircea Voskerician, also says Zuckerberg broke his word. Zuckerberg’s lawyers say that’s nonsense -- and that Voskerician is just trying to squeeze money out of a billionaire.

‘Good Neighbor’

The facts, in a nutshell, are these:

In November 2012, Voskerician was in a contract to buy the property behind Zuckerberg’s home in Palo Alto, California. He sent a letter to the Facebook chief executive officer saying he planned to tear down the home and build a 9,600 square-foot replacement. It would overlook the back of the Zuckerberg abode, a view that would include the master bedroom.

Only then Voskerician made an unusual offer. Calling himself a “good neighbor,” he proposed to sell Zuckerberg a slice of the property at “100% premium” to afford him more privacy. Within two weeks, they agreed that Zuckerberg would buy Voskerician’s contractual rights to purchase the entire property. Voskerician claims he had a competing offer and that he sold Zuckerberg those rights at a steep discount.

Why would Voskerician do that? This is where the two sides disagree. Voskerician, in court filings, says Zuckerberg promised to introduce him to contacts in Silicon Valley, a valuable endorsement for anyone. Nothing was put in writing.

Zuckerberg’s lawyers deny that and all of Voskerician’s claims. Whatever the case, the developer sued and unless the two sides reach a deal the case will go to trial. If Voskerician wins, he may get the property back.

Inner Circle

The e-mails that have emerged during litigation offer a glimpse into Zuckerberg’s private universe. And it’s clear from the start that his inner circle was livid about their boss’s enterprising neighbor.

In one e-mail, Divesh Makan, a financial adviser to Zuckerberg, called Voskerician’s offer an “obscene proposal.”

In another, Anikka Fragodt, then Zuckerberg’s personal assistant, wrote: “This type of behavior makes me want to punch people in the face.” She added a sad-face emoticon.

Zuckerberg’s wife, Priscilla Chan, lamented: “It’s stuff like this that makes me so sad and angry.” She asked whether Makan could quietly figure out if the couple could buy Voskerician’s entire lot.

‘Extortive’ Tactics

Zuckerberg’s lawyers, in court filings, say the developer employed “extortive” tactics. They cited a Nov. 28, 2012, e-mail that Voskerician sent to his real estate agent in which he suggested the Facebook chief had a chance to buy some privacy.

If “Mark plans to live there long term,” Voskerician wrote, he has “one shot to ensure his privacy is where it needs to be.” He goes on to say the new home would be built “overlooking his backyard/Master Bedroom.”

Voskerician’s lawyer says his client wasn’t trying to squeeze anyone.

E-mails from Voskerician show how much he wanted to gain entry to the rarefied realms of Mark Zuckerberg.

In an April 13, 2013, e-mail to Zuckerberg, Voskerician asked to “shake hands” on the deal and begin the introductions.

“Mr. Zuckerberg, First I am happy that I could maintain your privacy by selling you the Hamilton property,” the Romanian-born Voskerician wrote. “Second, I wanted to meet and shake hands for the transaction and discuss your offering of working with you in the future as you stated you have built Facebook on connections that you have with others in Silicon Valley. One of the reasons I went with your offer other than maintaining your privacy was your offering to help me get my homes, development projects, in front of your Facebook employees and build a relationship with you.”

Sustainable Living

Voskerician also asked for a 30-minute meeting with Zuckerberg to discuss a project involving “modern science based sustainable social living” using an an “open source” model akin to Facebook’s “Open Compute Platform.”

E-mails suggest the Zuckerberg team had zero interest.

Makan, the financial adviser, told Zuckerberg’s real estate agent the Facebook chief was unlikely to meet with Voskerician at all.

“But if it means I have to waste 30 min on MZs behalf I would grudgingly do it if you advised this,” he wrote in an April 2013 e-mail.

Voskerician kept nudging, to no avail. By November 2013, Facebook employees were starting to worry he could cause problems. Zuckerberg’s assistant, Andrea Besmehn, looped in the company’s head of executive protection in the event the standoff “escalates from either a security or PR standpoint.”

‘Light’ Help

Besmehn sent an e-mail later that day on which the case could now turn:

“I just had a quick chat with Mark on this issue -- and he said he does remember saying that he would help this guy in a ‘light’ way,” Besmehn wrote to Makan and others. “Is there a way when we chat with him that we can find out a way for us (not necessarily Mark) to help him with something small? Also…we’ll have to manage this carefully because we don’t want to give an inch and then …”

Voskerician’s attorney, David Draper, declined to comment on the complaint, which includes allegations of fraud, breach of contract and misrepresentation. Zuckerberg denied all the allegations in an October court filing. His lawyer, Patrick Gunn, and Makan’s lawyer, Daniel Bergeson, declined to comment on the case.

While verbal promises can be difficult to pin down, Voskerician’s claim that he had an agreement stands a good chance of being used as evidence, said Miriam Cherry, a professor at Saint Louis University law school.

‘Loose Standard’

The e-mail from Zuckerberg’s assistant saying he recalled agreeing to help Voskerician in a “light way,” while not a first-hand account, “is still convincing as to what his state of mind was,” Cherry said in an interview. California, she said, has a “loose standard” of letting such understandings be used as evidence.

David Min, a law professor at the University of California at Irvine, said the case may come down to whether Voskerician can prove Zuckerberg made a real promise.

“Oftentimes these can come down to a he-said, she-said face-off,” Min said.

However the case turns out, Zuckerberg’s privacy is unlikely to be threatened by other neighbors thanks to Makan, the former Goldman Sachs Group Inc. and Morgan Stanley executive who described his team as “Mark’s family office.” Makan’s clients include Twitter Inc. co-founder Jack Dorsey, Facebook Chief Operating Officer Sheryl Sandberg and her husband, SurveyMonkey.com LLC CEO Dave Goldberg, said a person familiar with some of his clients who declined to be identified because the information isn’t public.

Aaron Zamost, a spokesman for Dorsey, Genevieve Grdina, a spokeswoman for Facebook, and Donna Brown, a spokeswoman for SurveyMonkey, weren’t immediately available for comment.

As Voskerician pressed his demands more insistently, Makan’s firm, Iconiq Capital LLC, snapped up other properties surrounding Zuckerberg’s home, buying one for $10.5 million, another for $14 million and a third for $14.5 million, according to the Santa Clara County tax assessor’s office. Those prices eclipsed the assessed value of the properties, which in 2013 were less than $3.5 million combined.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE