Introduction: How I Lost 170 Million Dollars by Noah Kagan, Book Summary

How I Lost 170 Million Dollars is Noah Kagan’s story of the nine months he spent as employee number 30 of Facebook. It sheds light on the inner workings of Facebook. It’s appropriate for a young entrepreneur, so keep that in mind. You may be wondering how Kagan came up with the lost $170 million. Noah joined the team as product manager, earning $60,000 plus 0.1 percent ownership, equal to 20,000 shares. His stock options would have been worth $170 million if he’d cashed out in 2014.

“This is the story of those nine months at Facebook, how I got there, how I persevered, and how I kept going forward when it felt like everything that mattered was taken away. I was one of the lucky few outside of the founding team’s close inner circle to join the ranks only a year after the company was founded.”

Facebook hired Noah Kagan as Employee #30 in November 2005, when he was 24 years old. On June 16, 2006, at 11:00 am, nine months after he started working for the company, Kagan was fired. Instead of making $170 million, he made zero.

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Summary of How I Lost 170 Million Dollars by Noah Kagan

In the first chapter of How I Lost 170 Million Dollars, Noah Kagan talks about the jobs he had after graduation and prior to working at Facebook. Although I didn’t enjoy the book, I could understand how demotivating and soul-sucking it can be to work at jobs that don’t inspire you. What are your thoughts about staying in a job that’s boring or draining?

“Mark [Zuckerberg] was always open to listening and making a final decision. His ability to add people and immediately remove people is one of his strongest skills. He removed people immediately who were holding Facebook back and quickly promoted the ones who were helping it achieve success.”

Noah Kagan started working at Facebook in October 2005. Based on what Kagan shared in his book, How I Lost 170 Million Dollars, he never quite fit in with his co-workers at the organization. They were from Ivy League schools, and he was from Berkeley. The pace at which he worked at Facebook was much faster than the pace at Intel. One of the things that is evident in the book is his lack of self-confidence and desperation to fit into the company culture.

I found the following quote interesting. And it’s not something I’ve ever thought about.

“A great way to see what a company values is by looking at the percentage of employees assigned to different departments.”

At the time Noah Kagan was at Facebook, here’s how they allocated staff:

1. 40% engineers.

2. 20% system administrators.

3. 20% customer service.

4. 15% general administrative (accounting, marketing, HR).

5. 5% product managers.

Growth was important to the company, so it made sense that they’d have a lot of engineers. Engineers create stuff. To grow, you have to create features that will resonate with customers. It’s mentioned several times that the company didn’t pay attention to what customers said they wanted until you showed it to them. Instead, Facebook built features that they thought were good. Is it a good thing not to listen to customers?

Mark Zuckerberg made it clear that it was his way. And the company had a top-down approach to operating.

6 Unbreakable Laws at Facebook

1. Never say the word “user.” Ever. Recognize them as people. Zuckerberg felt the word user belittled people.
2. Fix it…NOW! Attention to detail and good grammar matters.
3. Trust yourself. Use the product, so you know how it works and what will work best.
4. People don’t know what they want. I learned this in computer science years ago. Most of the visitors to the site wanted random things. It seems to me there wasn’t a common theme based on what people were asking for.
5. Don’t suck.  Facebook was using Google as the gold standard and aimed to be better than the company.
6. The site can never be down. That means they needed to have the resources needed to ensure that the site could operate 24/7.

“When you make a change, see how the comments stacked up over time: if they faded and usage remained the same, then no course correction was smart. But if the complaints continued over a long period of time, changes might be warranted.”

It appears that Noah Kagan wasn’t given a reason for his firing. But he speculated why he was. One reason was that he gave information to Techcrunch, and they agreed that it would not be made public until the feature went live the next morning. The agreement wasn’t honored and Techcrunch published the information early. Another reason is that he didn’t do a good job on a project he was working on.

If an employee does something wrong, you talk to them about it. You could even give them a warning.

Lessons from How I Lost 170 Million Dollars

• Pay attention to details.
• Precision matters.
• Set goals and clear parameters.
• Have a sense of purpose for why you’re doing what you do.
• Have a “can do” attitude.
• Propose a small test with a specific result and let that make the decision.
• Create a culture that encourages creativity, experimenting with ideas, breaking things at fast speeds.
• Imagine what your company could become.
• Having a work environment you want to work at would appeal to potential employees and make the existing ones that much more proud to be there.
• Hiring great people can make a difference.
• Driving towards a meaningful goal can help motivate a large group of people.
• Build great things and then people will be curious about the person who made those products.
• Solve your own problems when starting a business. You understand the problems the customer and yourself face and the ideal solution versus having to do market research.
• There’s life after a firing. Or after any major setbacks.
• When bad things happen in your life, process the pain and learn from the experience.

Conclusion: How I Lost 170 Million Dollars by Noah Kagan

Working at Facebook and subsequently getting fired, enabled Noah Kagan to learn more about himself. The experience has shaped who he became 15 years later. Kudos to him for starting and operating successful businesses. He always wanted to start his own business, and Noag Kagan has achieved that goal.

Next Steps

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