By most accounts, Facebook CEO Mark Zuckerberg really likes Twitter. And as the 20-something CEO of a company that has raised over $750m, it’s only natural that he’d want it, literally. There’s just one problem: when Facebook tried acquiring Twitter earlier in the year, it was turned down. The reason: Twitter didn’t buy into the $15bn valuation Facebook was basing its share price on as part of the proposed deal.
So Facebook has finally done what many do when rejected: you settle for your second choice. And it this case, that means FriendFeed, which it acquired yesterday.
The terms of the deal were not disclosed. The Wall Street Journal’s sources peg the value of the deal at around $50m, $15m of which is being paid in cash and the rest in Facebook stock. Based on the recent $6.5bn valuation Facebook received from its Russian investors, FriendFeed’s Facebook shares, according to the WSJ sources, are worth approximately $32.5m.
For those asking “Friend who?“, FriendFeed is a real-time-oriented service that has won fanfare in Silicon Valley but
has failed to attract the same sort of mainstream attention Twitter
has. Think of it as Twitter’s less-popular little brother.
As part of the acquisition, FriendFeed’s founders will join Facebook in senior engineering and product development roles. The rest of FriendFeed’s 12 employees will also join the Facebook family. According to the official press release and a post on the FriendFeed blog, it will continue to operate as a standalone site while Facebook decides on its future plans, which will ostensibly include some sort of integration of FriendFeed’s functionality into the Facebook experience.
On the surface, this looks like one of those deals that isn’t really necessary. There isn’t any obvious proprietary technology that FriendFeed has and Facebook certainly doesn’t lack the engineering resources to develop just about any feature FriendFeed has that it wants. Ostensibly it’d be easier for Facebook to develop in-house than integrate a third-party’s code. So what is this really about?
In my opinion, Facebook and FriendFeed may be kindred spirits, albeit for different reasons. Both companies have paid a lot of attention to Twitter. In the case of FriendFeed, the focus on Twitter was somewhat natural. Although FriendFeed started out with some tangible differences, for better or worse, it has always been compared to Twitter. So over time, it has morphed into a service more closely resembling Twitter. While I’ve personally questioned the wisdom of this, ignoring Twitter was apparently something easier said than done for FriendFeed. And given that the company has found an exit, it’s hard to argue with its decision.
In the case of Facebook, the focus on Twitter has been entirely voluntary. Mark Zuckerberg loves real-time and as many have reported, what he says, goes at Facebook. Hence it’s no surprise that ‘the stream‘ has become so important at Facebook and Facebook’s recent facelift drew comparisons to Twitter. Of course, Facebook, with more than 250m registered users and gobs of traffic, never had to circle around and compete with Twitter but that’s a moot point now.
So here we are. Facebook, which has chosen to emulate Twitter, purchases a company that felt it had no choice but to emulate Twitter. For the deal to work, 1+1 has to equal 3. Whether it will is anyone’s guess.
Photo credit: topgold via Flickr.