Sean Parker, the managing partner of Founders Fund and general entrepreneur, entered the tech world through less-than-noble means. In conversation with Jimmy Fallon at the inaugural NExtWORK technology conference, Parker discussed his origins in the tech realm and where he’s come since then: Helping design, fund and launch companies like Napster, Facebook and Spotify.

At 16, Parker was a “gray hat” in an underground group of cybercriminals who lived for the thrill of digital breaking and entering. “Gray hats are the ones who think they’re doing good, but they’re not,” laughed Parker. “You learn that when the FBI shows up on your doorstep.”

‘Gray hats are the ones who think they’re doing good, but they’re not. You learn that when the FBI shows up on your doorstep.’

After a slap on the wrist from the U.S. government, Parker abandoned his basement-bound hacker friends and entered the music business, much to the distress of record executives. Napster was a project that launched with a grand vision but, strangled by lawsuits, devolved as it sputtered along. Eventually, Napster collapsed, leaving Parker with personal liability and huge debts.

Spotify, which says it is finally ready to launch in the United States, is everything Napster wanted to be, said Parker, but this time the record labels are on board. It allows users all of the world’s music at their fingertips — importantly, without a credit card.

“It makes music viral.” said Parker. “You start to accumulate your library of music. You want that music everywhere — that’s the point where we monetize. If you want portability, mobility, and access, then you buy it.”

As for Apple’s upcoming iCloud service? Parker just doesn’t get it. ”It’s just not that significant,” he said. “All you really do is you take your music to this cloud and it’s there. I don’t know why anybody would do that. And they charge you for it, which is weird.”

As anyone who’s seen David Fincher’s The Social Network will know, Parker was one of the early investors and creative minds behind the now-ubiquitous Facebook. It took a long time to get there, though; first, he and Zuckerberg had to topple MySpace. But he sensed weakness in MySpace from the get-go.

“The whole thing was like fraudulent in the sense that users weren’t representing themselves honestly,” said Parker. “Some of them were existing in a complete fantasy world of their own construction.”

With Facebook, Parker wanted to establish verifiable, accountable identities that followed users from place to place on the web. Mission accomplished: Facebook has become the default representation of people’s identities, both online and often in real life, too.

“You actually don’t want people thinking your product is cool, because then you’re a fad,” said Parker. “You want people using your product because it’s a part of your life, then they can’t stop using it.”