Check out how facebook.com really started

... Zuckerberg wrote a program called Facemash on October 28, 2003 while attending Harvard as a sophomore. According to The Harvard Crimson, the site was comparable to Hot or Not and "used photos compiled from the online facebooks of nine houses, placing two next to each other at a time and asking users to choose the 'hotter' person"

To accomplish this, Zuckerberg hacked into protected areas of Harvard's computer network and copied private dormitory ID images. Harvard did not have a student "Facebook" (a directory with photos and basic information) at the time, although individual houses had been issuing their own paper facebooks since the mid-1980s. Facemash attracted 450 visitors and 22,000 photo-views in its first four hours online.

The site was quickly forwarded to several campus group list-servers,[clarification needed] but was shut down a few days later by the Harvard administration. Zuckerberg faced expulsion and was charged by the administration with breach of security, violating copyrights, and violating individual privacy. Ultimately, the charges were dropped. Zuckerberg expanded on this initial project that semester by creating a social study tool ahead of an art history final. He uploaded 500 Augustan images to a website, and each image was featured with a corresponding comments section. He shared the site with his classmates and people started sharing notes.

The following semester, Zuckerberg began writing code for a new website in January 2004. He said he was inspired by an editorial about the Facemash incident in The Harvard Crimson. On February 4, 2004, Zuckerberg launched "Thefacebook", originally located at thefacebook.com.

Six days after the site launched, three Harvard seniors (Cameron Winklevoss, Tyler Winklevoss, and Divya Narendra) accused Zuckerberg of intentionally misleading them into believing he would help them build a social network called HarvardConnection.com. They claimed he was instead using their ideas to build a competing product. The three complained to The Harvard Crimson and the newspaper began an investigation. They later filed a lawsuit against Zuckerberg, subsequently settling in 2008 for 1.2 million shares (worth $300 million at Facebook's IPO).

Membership was initially restricted to students of Harvard College; within the first month, more than half the undergraduates at Harvard were registered on the service. Eduardo Saverin (business aspects), Dustin Moskovitz (programmer), Andrew McCollum (graphic artist), and Chris Hughes joined Zuckerberg to help promote the website. In March 2004, Facebook expanded to the universities of Columbia, Stanford, and Yale. It later opened to all Ivy League colleges, Boston University, New York University, MIT, and gradually most universities in Canada and the United States.

In mid-2004, entrepreneur Sean Parker (an informal advisor to Zuckerberg) became the company's president. In June 2004, Facebook moved its operations base to Palo Alto, California. It received its first investment later that month from PayPal co-founder Peter Thiel. In 2005, the company dropped the from its name after purchasing the domain name facebook.com for US$200,000.

In May 2005, Accel partners invested $12.7 million in Facebook, and Jim Breyer added $1 million of his own money. A January 2009 Compete.com study ranked Facebook the most used social networking service by worldwide monthly active users. Entertainment Weekly included the site on its end-of-the-decade "best-of" list, saying, "How on earth did we stalk our exes, remember our co-workers' birthdays, bug our friends, and play a rousing game of Scrabulous before Facebook?"

A high-school version of the site was launched in September 2005, which Zuckerberg called the next logical step. (At the time, high-school networks required an invitation to join.) Facebook also expanded membership eligibility to employees of several companies, including Apple Inc. and Microsoft...

Culled from Wikipedia, to read more visit Wikipedia.