Billionaire Facebook cofounder Eduardo Saverin – the guy everyone now hates because he's renouncing his US citizenship in order to avoid a lot of taxes – hasn't worked at Facebook since 2005. That's when CEO Mark Zuckerberg diluted his stake and then booted him from the company.

Saverin's exit from Facebook was the central plot of The Social Network.

Maybe you remember this scene?

Today we have a long, detailed re-telling of the true story behind the movie.

The basics: Saverin was tasked with running Facebook's business side while Zuckerberg worked on the product. But instead of joining the company out in Palo Alto, Saverin stayed on the East coast and worked on another startup. Eventually, he started to feel left out, and he froze Facebook's bank account.

To ease Saverin out and limit his say over how Facebook would be funded, Zuckerberg reduced Saverin's stake in the company.

Zuckerberg did this by creating a new company to acquire the old company and then distribute new shares in the new company to everybody but Saverin.

Well now, thanks to a well-placed source, we've come up with something cool.

It's the email then 20-year-old Mark Zuckerberg sent his lawyer giving him the go ahead to draft paperwork that would result in Saverin's dilution.

We love the email because it's an artifact of a young Mark Zuckerberg – a man who has grown up a lot since he wrote it, and will be in our lives for a very long time.

The fun part is where Zuckerberg says to his lawyer: "Is there a way to do this without making it painfully apparent to him that he's being diluted to 10%?"

The full letter:

[Redacted],



This email should probably be attorney-client privileged, not quite how to do that though.



Anyhow, Sean and I have agreed that a price of one-half cent per share is the way to go for now. We think we can maybe almost justify and if not, we'll just deal with it later.



We also agreed that if the company bonusing us the amount we need for the shares, plus tax, is a good solution to the problem of us all being completely broke.



As far as Eduardo goes, I think it's safe to ask for his permission to make grants. Especially if we do it in conjunction with raising money. It's probably even OK to say how many shares we're adding to the pool. It's probably less OK to tell him who's getting the shares, just because he might have adverse reaction initially. But I think we may even be able to make him understand that.



Is there a way to do this without making it painfully apparent to him that he's being diluted to 10%?



OK, that's all for now. I'll send you the list of grants I need made in another email in a second. Sean can send you grants for his people when he stops coughing up his lungs.



Hope you guys both feel better,

Mark

And here's part of the lawyer's response:

…I spent some time discussing the risks associated with making these grants and picking the per share price of common stock. Mark, you and I should discuss these at length to insure that you understand them. I've outlined them below for your easy reference.



The broad categories of legal risk are a) fiduciary duty. As Eduardo is the only shareholder being diluted by the grants issuances there is substantial risk that he may claim the issuances, especially the ones to Dustin and Mark, but also to Sean, are a breach of fiduciary duty later on if not now. I believe that you previously disclosed these future dilutative issuances to Eduardo before the LLC merger. This is what I recommended at the time. Nevertheless, it would be great if there is some way you could obtain a shareholder consent from Eduardo approving these new issuances. It isn't *required* but it would be very advantageous and would go a very long way towards preventing any future claims he might have for breach of fiduciary duty. I mentioned this to Sean and he was going to give it some thought.

In the end, the lawyer was right to worry.

Saverin eventually sued Facebook over breach of fiduciary duty. Facebook and Saverin settled, and he walked away with 4% or 5% of the company. That stake is now worth close to $5 billion.

Meanwhile, Facebook has done pretty well with Zuckerberg running the show with sole authority.

Eight years after its creation, Facebook will raise $15 billion in an IPO this Friday that will value the company at somewhere around $100 billion.