Everyone is obviously talking about the Facebook/FriendFeed deal, but everyone wants to know one key detail: How much did Facebook pay? Now we know: Facebook paid nearly $50 million when you add the $15 million it paid in cash with roughly $32.5 million (based on current valuations) in stock, according to the Wall Street Journal.
The stock is the key part of this deal. Its value is derived from the $6.5 billion common valuation after a recent purchase of employee stock by the Russian investment group DST. But what’s really interesting about the stock is that these are options that vest over a set period of time (”several years,” says WSJ), just as employees in the company get. Compared to the Parakey deal in July 2007, in which the company got only cash and no stock, this seems like a pretty nice deal (assuming that Facebook’s stock eventually pans out, of course).
Another interesting question about this is what Benchmark Capital, FriendFeed’s outside investor, got? It’s certainly possible that they’re taking the cash, while the FriendFeed employees take the stock. Benchmark invested a small part of the company’s $5 million round in early 2008, so a $15 million exit would be pretty solid. But that’s all just speculation, it’s hard to know what Benchmark is getting for sure.
What else is interesting about this $50 million number is that it is 1/10th of what Facebook was apparently willing to pay for Twitter late last year. One big hold up in that deal was that Facebook was offering mostly stock, while Twitter wanted more cash (we heard roughly 20% would have been cash, with the rest coming in stock). Another big problem was that the stock Facebook was offering Twitter was apparently valued based on the ridiculous $15 billion valuation after Microsoft’s investment in October of 2007. The $6.5 billion common stock valuation seems much more reasonable. Too bad for Twitter.
[photo: flickr/tracey o]
Thanks for the report MG. Seems accurate accurate according to my prediction.
That’s exactly what I called in my previous comment. Sounds about right, especially for a talent acquisition of that caliber. Win-Win.
Seems very very cheap compared to Twitter. Very good business in my opinion
Everyone wins in the FF/FB deal. Twitter out did themselves with greed and will end up holding nothing.
Except the lion’s share of the data provided to FriendFeed. Without Twitter, FriendFeed is completely useless. Twitter still holds the trump card.
Greader
isn’t it effing funny how they have more money than that other stream service called twitter now?
I hope Benchmark took $5M cash and the rest in stock. They get back what they put in plus a huge upside with the stock in FB.
I think that’s a steal. I would have paid $50 alone just for FF’s Helvetica theme.
Twitter should have sold when they had the chance. I don’t particularly like the FB + FF pairing since I think FF could have been a major twitter competitor on their own – making them worth even more; however, twitter has to be freaked out over this. Guess the question is now – who is buying twitter tomorrow? The war is on…
none of them stand a chance anyway. should they start to threaten facebook, fb could implement their own twitter version overnight; – and with their massive user base, twitter/ff wouldn’t stand a chance
Facebook already has Twitter’s functionality: status updates.
It’s not as simple as you’d make it sound. Twitter is obviously causing a lot of heat on Facebook or they wouldn’t have even made this purchase. Twitter has as much if not more mainstream media coverage than Facebook has in quite a while.
as has been proved until now, mainstream media won’t keep your users from leaving.
1 million, 5 million, 50 million WHO CARES! I am broke like most people lol… nice to dream though
those guys are very smart. friendfeed wasnt going anywhere , so better to get a few millions for it then in a few years from now try again.
Another $50 million down the toilet.
Nothing is going to stop the decline of FB in the long-term.
Props to the leadership of FF, they’re obviously a group of very smart guys with great leadership and vision for the industry.
In just a few years they maneuvered a small business into good position to be bought out by an internet powerhouse. $50 mil is awesome for a company of 12, however I would be a little wary of how much cash vs. stock they get. They’re locked in for a few years, and facebook could easily be friendster-ed by then
$35 million in overpriced stock = 0.0053% of Facebook. Hardly seems like a good deal for FriendFeed.
Good business for Facebook but how much freedom will they allow the Friendfeed development team?!
That’s a hefty price tag.
Perfect timing to sell. Google Wave is coming next month and Google Reader is just about to get new social features including item recommendations and FriendFeed-like chat features.
Cognitive dissonance much?
In one sentence you make the point that this deal is better than another deal because of the stock, then point out that the real company everyone is excited about WOULD NOT SELL for facebook stock!
I guarantee in the internal analysis of FriendFeed’s owners, they are looking at those stock shares as probably worth about 1/6 to 1/3 of the $6.5bn valuation. FriendFeed was sold for $20-25mn.
Good deal for Friendfeed, they get better technology than what Twitter has, and they have a great network to make it work with.
This deal isn’t great for FriendFeed. They received additional $5 million in funding in 2008, why rush for an exit? Benchmark must have played a large role in forcing the company to liquidate in response to LP complaints.
@Ed Enciso, I completely agree with you. This bubble will not last.
I do not think it is only 50Million, is that too cheap for FF?
Facebook paid 50mil for Robert Scoble’s FriendFeed account, what a great deal.
Too true
Sounds like really a good deal..especially for FB
I wonder at this scale, how much a regular employee can get. Did they make a fortune by joining this kind of non-exit exit companies?
This might actually be the death blow to Twitter. Good call by FriendFeed / Facebook to make this deal.
Why does everyone keep saying this? Most of FriendFeed’s content comes from Twitter.
Twitter’s pulled Facebook so far off their game it’s hilarious. Facebook are so far out into the weeds that they won’t make it back alive.
Now they’ve got huge infrastructure and 1000 employees to support. All that, while Facebook is intent on becoming a status update messaging platform.
That bloated bleeding hog of social network doesn’t have a chance of competing against fleet-footed Twitter.
Your information re: Parakey is inaccurate.
awesome. selling a company for $15m..or $50m…who cares? with no revenues, FF is doing all right, selling on hype an d hope and dreams
Let the battle commence between Facebook and Google for the real time search market. Should be interesting times.
I guessed at $50M haha, It always seems that purchases are in rounded numbers and they had funding of $5M, so I guessed that $50M seemed more likely than $500M
Twitter would have to fight against a giant.
Moreover friend feed is logical as compared to twitter because you know who your friends instead of having tens of thousand of people
So the employees trade 1 illiquid asset (FF options) for another (FB stock). Not the best deal for employees, but could be worse
$50M on 12 heads is sweet.
For a VC, getting $15M on $5M invest is crap. Remember, most VC investments return $0, so the “winners” need to be big.
so is the FriendFeed acquisition the de facto Facebook Twitter?
facebook make me having any friends,smart and genious.