The Face Behind Facebook

Are you on Facebook yet? The site is up to 60 million users so far, with a projection of 200 million by the end of the year.

If you're not on Facebook, here's how it works: you set up a profile page with details about yourself and then decide who gets to see it. Friends use their pages to share personal news, exchange photos, team up on political causes, or just play long-distance Scrabble. It can be a useful tool or an addictive waste of time. Either way, Facebook is having a dramatic impact on the World Wide Web and it's estimated to be worth $15 billion.

As Lesley Stahl reports, sitting atop this growing company and directing an Internet revolution is a young, geeky computer programmer who created the site only four years ago.

"I'm 23 right now," Zuckerberg tells Stahl when asked how old he is.

"And you're running this huge company," Stahl remarks.

"It's not that big," Zuckerberg says.

During her visit to Facebook's headquarters, Zuckerberg helped Stahl set up her own Facebook page, with a profile of her likes and dislikes. They added her friends and family, and within a few minutes, she got a friend request.

"Here's a guy I haven't talked to in two years and I'm so thrilled to hear from him," Stahl remarks.

This is why so many find the site addictive. In a world with no cell phone or e-mail directories, Facebook has become a way to find lost friends.

"It used to be the case, like you'd switch jobs. And then maybe you wouldn't keep in touch with all the people that you knew from that old job. Just 'cause it was too hard," Zuckerberg explains. "But one of the things that Facebook does is it makes it really easy to just stay in touch with all these people."

Of course, if someone tries to "friend" you, you can ignore them. And privacy settings allow you to deny access to your page say, to your boss or your parents.

Facebook's headquarters in downtown Palo Alto look like a dorm room; the 400 employees, who get free food and laundry, show up late, stay late, and party really late.

Zuckerberg, who's made the cover of Newsweek and is reportedly worth $3 billion, sits at a desk like the other software engineers, writing computer code.

"Have you changed your lifestyle? You don't look like you're buyin' really expensive clothes," Stahl asks Zuckerberg, who showed up to the interview in a sweatshirt and sandals.

"No, I'm not buying really expensive clothes," Zuckerberg replies, laughing.

"Are you buying things that you would be…," Stahl asks.

"Yeah. No, I have a little, like one bedroom apartment with a mattress on the floor. That's where I live," Zuckerberg says.

Kara Swisher, who used to write about Silicon Valley for The Wall Street Journal and now has a blog, All Things Digital, has called him "The Toddler CEO."

"What do you think it's done to him, as a person, to be 23 years old…," Stahl asks.

"Well, I think it's hard. I think when all of a sudden you're the smartest person in the world, and you're the meal ticket for everybody, and this is the big hit. This is the new Google at this point," Swisher says. "And so Mark is under a lot of pressure, because everybody wants something from him."

Like the founders of Google, Larry Page and Sergey Brin, Mark Zuckerberg is looked up to in Silicon Valley as a visionary.

"You seem to be replacing Larry and Sergey as the people out here who everyone's talking about," Stahl remarks. Zuckerberg doesn't reply, only stares at her at length.

"You're just staring at me," she adds.

"Is that a question?" Zuckerberg asks.

We were warned that he can be awkward and reluctant to talk about himself, so we turned for help to his Facebook page, which says he's a Harvard alum.

"You're not a Harvard alum," Stahl remarks, looking at his own list of networks.

"That's true. We don't have a setting for dropout," Zuckerberg explains.

He dropped out of Harvard in 2004, where he was intending to study psychology. His mom is a psychiatrist, his dad's a dentist. Zuckerberg was a computer whiz early on, writing software in sixth grade. In his second year at Harvard he built a site where students could rate, or berate, the looks of classmates through ID photos he lifted off Harvard's computers.

"You got into deep trouble from this little prank," Stahl remarks.

"Well, Harvard was just not happy that I was using their images," Zuckerberg says.

"Well, they said you hacked," Stahl says. "Did they punish you?"

"Yeah, I was put on some sort of -- I don't know what you call it," Zuckerberg says.

"Probation?" Stahl asks.

"Sure," Zuckerberg says.

Soon thereafter, he and his two roommates created an online version of the Harvard student directory where kids could message each other. They called it "The Facebook" and launched it from their dorm room. Within four months they had expanded to 40 colleges, and over the summer moved to Palo Alto.

But Zuckerberg had done code writing for some upper classmen with a similar idea, and they have filed a law suit. "Three Harvard students are suing you claiming that you stole their idea for Facebook," Stahl remarks.

"Well, I mean we know that we didn't steal any ideas or code so we're just kind of waiting until that comes out in court," Zuckerberg says.

"In the lawsuit they claim that you were duplicitous," Stahl says. "Are you worried about it?"

"No, I don't really spend a whole lot of my time worrying about that," Zuckerberg says. "I mean we have lawyers at the company who deal with that stuff. And, it's not a huge concern."

Despite his young age, Zuckerberg seems to have made one savvy business decision after the next. "About half my time is spent on business operation type stuff," Zuckerberg says.

He expanded access to Facebook from college students to high schoolers, then in 2006 to adults, his fastest growing demographic. Now he's inviting everyone on the site to create new software and pocket the profits themselves. It's a way to keep the next big thing on Facebook. New programs emerge daily, like Facebook Scrabble.

"I actually have a couple games going on now with my grandparents," Zuckerberg says, laughing. "So, they got on Facebook and we started playing Scrabble together."

So Facebook is changing the way we communicate with our friends, and with our grandparents. It's also changing politics. Every major candidate has a page. Zuckerberg says there seem to be more Republicans on the site than Democrats, and among them, Barack Obama - with his young persons following - is hugely popular; Hillary Clinton is hugely unpopular.

"It used to be, first you went on 'Face The Nation' if you were a candidate. Then you went on Letterman. Now it seems the candidates have to be on Facebook. Are you changing the way candidates are running for president?" Stahl asks.

"Well, I think because politicians can communicate with tens of thousands of people at the same time, it's pretty effective for them in campaigning," Zuckerberg explains.

Facebook is growing so quickly now, there's talk of it becoming a giant slayer.

Charlene Li, an analyst at technology consulting company Forrester Research, thinks Facebook is a challenge to Google.

Li says Facebook is a threat to Google because it could become the first site people go to, to search. Say you want information about a family vacation in Maui. Li says when you check Google, you could get long list of sites. When we tried, it was almost 200,000 hits long. "Versus I can go on Facebook. I can go and ask my friends, and people will write back to me, 'Oh, I've done things, and this is what I recommend. And knowing you and your kids, they would really like doing this.' So, the next time I do something very specific like that, chances are I'll probably go to Facebook," she explains.

Which is why Yahoo! offered to buy Facebook in 2006 for $1 billion in cash. Zuckerberg declined. But then in 2007 Microsoft swooped in and bought 1.6 percent of the company for $240 million.

That meant that Bill Gates valued Facebook at $15 billion, roughly the same as Ford or CBS. Some analysts say that's wildly unrealistic, since Facebook has yet to figure out how to make money off its huge audience.

Asked if it's true that Facebook doesn't make that much money, Zuckerberg tells Stahl, "I think that's a pretty relative thing. But I mean as a private company, we just have the advantage of not necessarily having to report to the outside world all of our financials."

He may duck the question, but there's no getting around the fact that Facebook needs to find a way to generate revenue, and so Zuckerberg is experimenting with ads, trying to cash-in on his users' own recommendations.

Say you write on Facebook that you like a certain movie - that's turned into an ad. Or maybe you like a scarf from Bloomingdale's.

"So this isn't an ad that's going to go to a lot of people. Basically it- when you put that information in our profile that you bought a scarf and that you like that scarf, that's something that your friends might find interesting, right? So what we'd do is we might show that information to your friends a little bit more proactively as an ad. Right…so," Zuckerberg explains.

"But with me in the ad?" Stahl asks.

"Yeah, but that would basically be the ad," Zuckerberg says.

"Okay. But it's almost like an endorsement. Like Michael Jordan for Nike. I become the spokesman for that ad," Stahl remarks.

"Well, that's what you're doing when you're putting that information in your profile," Zuckerberg argues.

The real trouble started when Facebook began using a tracking program called "Beacon" that monitors what you buy on over 40 Web sites, and automatically reports it to your friends, without explicit permission.

"People signed up for Facebook thinking that it was a way to just stay in touch with their friends. And now some of them feel that there's some snooping going on," Stahl says. "Is there any concern you're turning Facebook into something much more commercial?"

"I actually think that this makes it less commercial. I mean, what would you rather see? A banner ad from Bloomingdale's or that one of your friends bought a scarf?" Zuckerberg asks.

But when a Facebook user bought his wife a diamond ring online, the surprise was ruined because Beacon notified all his friends and his wife about it, on Facebook. With stories like that, criticism of Beacon began to build, but Zuckerberg dug in his heels, until he had a full blown PR disaster on his hands, including petitions and bloggers writing the company's obituaries.

"I guess this shows how difficult it is for a company like yours to make money through advertising and protect people's real privacy and their sense of privacy," Stahl says.

"It might take some work for us to get this exactly right," Zuckerberg says. "This is something we think is going to be a really good thing."

Not a real answer to the privacy question, more like the canned response of a typical business executive.

"I mean there have to be ads either way because we have to make money," Zuckerberg says. "I mean, we have 400 employees and you know, I mean, we have to support all that and make a profit."

But three big advertisers threatened to pull out, and Zuckerberg was forced to relent. He agreed to amend Beacon, making it easier for users to turn it off. And he apologized.

"So do you think that Mark failed as a leader in the Beacon fiasco?" Stahl asks Kara Swisher.

"Absolutely. Yes, yes," she replies.

"What were his mistakes?" Stahl asks.

"His mistake was doing it," Swisher says. "

"Doing it?" Stahl asks.

"Doing it, period. His mistake was not explaining it to people. His mistake was not backing off very quickly, when it was clear that it was a problem. I just feel like you see some of these mistakes they're making very early on, and you worry where the judgment is," Swisher says.

Asked if Zuckerberg is a good CEO, Swisher says, "I don't know. I think he's very young."

But those around Zuckerberg say he is learning fast. He might still wear a hoodie and no socks, but he's becoming a suit, as he ponders whether to take his company public this year.

"This would be a good place to announce that," Stahl tells him.

"I think what I can announce is that it is highly unlikely that we will go public in 2008," Zuckerberg says. "And when going public makes sense to do, we'll do that. And maybe that's two years out. Maybe it's three years out."

Asked if he thinks his age is an asset or a liability, Zuckerberg says, "There's probably a little bit of both, right? I mean there are definitely elements of experience and stuff that someone who's my age wouldn't have. But there are also things that I can do that other people wouldn't necessarily be able to."