Many Facebook shareholders sold at the IPO. Zuckerberg sold 30M shares and other large investors with huge allocations also sold some. It was calculated, not a free-for-all.

The lockup applies to shares on the open market after IPO. That doesn't preclude someone from participating in the IPO itself.

Got it, thanks for explaining.

Interesting; how is it that employees are able to trade right after the IPO? I thought there was a waiting period for insiders.

not every employee is an insider. Public companies that issue stock to employees can limit the number of people that are made privy to non-public information about the performance of the company, such that some/many employees are allowed to freely trade.