#deals

I Think Facebook Got A Mike Trout-Like Deal On Oculus

I’ve been asked a number of times to expand on my quick thoughts the other day about the Facebook/Oculus deal. And because we clearly haven’t gotten enough opinions on the matter, why not?

To me, it’s pretty simple. Facebook is taking out an option on the future. And, in my view, it’s a pretty cheap option to boot. In some ways, it’s not unlike the deal the Los Angeles Angels (of Anaheim or whatever) just signed with Mike Trout.1

Yes, $2 billion is a lot of money. But it’s also roughly 1/8th of what Facebook just spent on WhatsApp. And it’s roughly 2x what the company spent on Instagram — and that has turned out pretty well so far. One of the better deals this decade, perhaps.2

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I know some of you have been waiting for my thoughts on Dropbox acquiring Mailbox — my apologies, I’ve been sidetracked by SXSW SARS. I also realize I still need to write my longer thoughts about how Mailbox changed my email habits. For now, let me just congratulate the Mailbox team. They built something truly amazing and I could not be happier that the product will continue to live on and grow under the wings of Dropbox.
Many of you know how excited I’ve been about Mailbox over the past several months — and not just as an investor, but as a user. Email has been so broken for so long and these guys were the first ones really thinking outside the — sorry — box. So the success they’ve seen could not be any less surprising. I think Dropbox was very savvy to make this move and I think it seems like a great fit. Now get me a damn iPad client.

I know some of you have been waiting for my thoughts on Dropbox acquiring Mailbox — my apologies, I’ve been sidetracked by SXSW SARS. I also realize I still need to write my longer thoughts about how Mailbox changed my email habits. For now, let me just congratulate the Mailbox team. They built something truly amazing and I could not be happier that the product will continue to live on and grow under the wings of Dropbox.

Many of you know how excited I’ve been about Mailbox over the past several months — and not just as an investor, but as a user. Email has been so broken for so long and these guys were the first ones really thinking outside the — sorry — box. So the success they’ve seen could not be any less surprising. I think Dropbox was very savvy to make this move and I think it seems like a great fit. Now get me a damn iPad client.

When Facebook acquired FriendFeed in the summer of 2009, it was widely-reported to be a fairly straightforward “acqui-hire” deal. The price was more complicated.

$50 million sounded good on paper, but it was believed that only a small amount was in cash, the rest was in Facebook stock. It was Facebook stock which was just valued at $6.5 billion thanks to the DST investment. Some felt that it was overpriced, and as such, not a great deal for FriendFeed.

Boy were they wrong.

Looking at Facebook’s just-released S-1, Alyson Shontell of Business Insider noticed that in August 2009 (the month of the FriendFeed deal), Facebook issued just over 11 million shares of Class B common stock to ten individuals and one entity — this is most definitely the FriendFeed team, their individuals investors, and probably their lead VC firm, Benchmark Capital. 

Today, leading up to their IPO, Facebook is worth just shy of $100 billion. Those FriendFeed shares are now worth around $330 million as a result. In other words, their August 2009 acquisition has shot up just about 7x in value since that time.

Certainly, some of the players have since sold off those shares in subsequent Facebook raises or on the secondary markets and have done well as a result. But those that didn’t have been rewarded very handsomely. 

A 10x exit on paper magically turned into a 70x exit. And counting, by the way…

Now I’ll use this opportunity to once again link to the first post I ever wrote for TechCrunch in April 2009, four months before the deal: You Will Be Using FriendFeed In The Future — But It May Be Called Facebook