The FriendFeed 70x Exit

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

How Does Facebook Make Money?

Great chart by Dan Frommer.

Facebook, like Google, makes the vast majority of their revenue from advertising. But, unlike Google, Facebook has been seeing a meaningful trend towards diversification of their revenue stream.  

Fathoming Facebook

Amidst my snark, there are a few high level things about Facebook’s numbers that I find interesting.

First:

Second:

Third:

Fourth:

I certainly don’t love everything about Facebook, but there’s no denying that it’s an impressive company — one of the most impressive ever built. You have to respect the fact that they have no fear when it comes to completely changing their product on the fly. Most companies would not have the balls to do half of what Facebook has done over the past few years from a position of power. That alone is why I’ve been bullish on Facebook for a long time. 

Obviously, the entire Internet is creaming itself over S-1 filing right now. But I actually don’t think it’s unjustified. When you consider the Google numbers listed above, it’s exciting to think that we’re entering a new era of growth and prosperity for technology companies. It’s exciting not just for Facebook, but for everyone in this space.

The cynics will say these good times won’t last. And they’ll ultimately be right because well, nothing lasts forever. But as the Internet and technology in general continues to be intertwined into the lives of every person on this planet, I can’t help but think this is all just the start of something that we can’t even fathom right now. 

Zuckerberg's S-1 Letter

The most interesting part:

By helping people form these connections, we hope to rewire the way people spread and consume information. We think the world’s information infrastructure should resemble the social graph — a network built from the bottom up or peer-to-peer, rather than the monolithic, top-down structure that has existed to date. We also believe that giving people control over what they share is a fundamental principle of this rewiring.

Which reads suspiciously like: “Dear Google, suck it.”

The symphony of my life.

Microsoft’s Facebook Investment: Smartest Deal Ballmer Ever Made?

Todd Bishop of GeekWire asks the question, I think the answer is “yes” (though the continued investment in Xbox and elements like Kinect should ultimately be close).

To me, there are two things that are most interesting about Microsoft’s Facebook investment.

1) Nearly everyone in the tech press at the time panned the deal as a ridiculous rip-off, sign of another bubble, etc. Those same people are now strangely quiet on the topic — for good reason, they look like huge jackasses.

It just goes to show you that you should never take anything the tech press says too seriously. Way too much is based on the present and there’s not nearly enough thinking about the future. This deal was all about the future.

2) Along those lines, while the return on this investment will be good ($15 billion valuation turning into $100 billion at IPO time — and it will probably be 10x in the near future), this is still not about the money — it’s all about the strategic alliance. Microsoft gave itself an “in” to get access to Facebook’s data. And the deal stopped Google from getting a similar deal.

Microsoft still hasn’t been able to do enough with the relationship to boost Bing, but even that doesn’t really matter. What matters is that Google and Facebook are at odds (or some may say, at war). Microsoft won by not losing.

The Brilliant "Don't Be Evil" Bookmarklet

Kudos to Facebook (with some help from Twitter and MySpace) for having the balls to do this. It’s a bookmarklet that replaces Google’s new “People and Pages” area, the hardcoded social search area, and the search completion drop-down, with organic results. 

In other words, it makes the new Google behave more like the old Google.

There has been a lot of back and forth in recent weeks over Google’s new Search+ functionality — about how “fair” it is, and whether or not it should lead to antitrust inquiries. But the bottom line is this:

Search+ makes Google worse. It replaces relevancy with Google’s own agenda to pump up Google+.

I say kudos to Facebook because while this isn’t an official app they created, they let their key product manager, Blake Ross, work on it and deploy it knowing full well that everyone would immediately tie it to Facebook. That in turn will put some heat back on Facebook, which itself is far from fully open with regard to data — and is gearing up to IPO. 

But again, the key issue here is that what Google is doing with Search+ is making Google worse. This bookmarklet illustrates that in a very effective way. 

John Battelle and Danny Sullivan have more on this, as do others. And be sure to watch the Focus On The User walk-through video, narrated by Ross himself. 

Push Pop Press And iBooks

John Gruber follows up on Daniel Dilger’s earlier report that Steve Jobs not-so-subtly threatened Push Pop Press if they continued down their eBook path. Turns out, according to Gruber’s source, it wasn’t a threat, it was more of a heads up.

This makes more sense given how closely Push Pop Press worked with Al Gore on Our Choice, their first eBook developed for the iPad. Gore, remember, is a long-time Apple board member and was very close with Jobs.

Remember also that two of Push Pop Press’ founders were Mike Matas, a highly regarded designer at Apple (who actually joined the company when he was just 19), and Kimon Tsinteris, a former senior engineer on Apple’s iPhone team.

I’m sure Apple doesn’t do a lot of “friendly heads-ups”, but if anyone would get one, it’s these guys.

And continuing down that path, it also makes sense that Push Pop Press would get sell to Facebook just a few months after their first launch. They probably could have continued to work with Apple on their titles, but Apple being in the game (with their own format) would seem to shrink the market potential for the company as a whole.

Also interesting, this wasn’t a straight-up talent acquisition by Facebook (which most of their acquisitions are). Facebook owns the Push Pop Press technology. Here’s the key statement from the Push Pop note on the acquisition:

Now we’re taking our publishing technology and everything we’ve learned and are setting off to help design the world’s largest book, Facebook. 

Although Facebook isn’t planning to start publishing digital books, the ideas and technology behind Push Pop Press will be integrated with Facebook, giving people even richer ways to share their stories. With millions of people publishing to Facebook each day, we think it’s going to be a great home for Push Pop Press. 

So Push Pop figured out a way to continue to use the amazing technology they invented, but without competing head-on with the still-at-the-time-unannounced new iBooks platform. 

Okay, this is really fucking cool. It’s what the Internet is all about. Nice work Facebook and Bing.
View Separately

Okay, this is really fucking cool. It’s what the Internet is all about. Nice work Facebook and Bing.

When Google Met Facebook

Day 67 of the Google Search+ (Antitrust+) debacle. Today brings a few new entrants, notably Harvard professor and security expert Ben Edelman who argues (yet again) that Google is unfairly pumping their own products. Also joining the discussion is my CrunchFund partner Michael Arrington. 

Michael and I don’t always see eye-to-eye on things (see: Android vs. iPhone — though note, for the record, that we’re now both happy iPhone users). But here I mainly agree with his premise that Google shoving Google+ into Search isn’t insane or evil, it was inevitable. Further, he cites Microsoft’s IE antitrust case as precedent for why these arguments now won’t really matter in the long run.

I agree. Google is going to face legal scrutiny over their actions, likely sooner rather than later. But at best, this will drag on for years and end with Google getting a slap on the wrist (though in Europe it may be more like a punch in the stomach). The end will still justify the means — Google will be better positioned to compete with Facebook as a result of their actions.

But that doesn’t make them right.

Read More

Facebook may be the Google of the future, but Google is the Google of the present.

Eric Eldon makes an interesting case for Google’s Search+ fiasco actually being about baiting the government into looking at Facebook more closely.

But he ultimately concludes that even with such motives, Google’s move probably isn’t a smart one due to the quote above.

Misdirection, Doublespeak, Non-Answers, And Straight Up Bad Decisions

God bless Danny Sullivan. You should read his latest post tonight in which he tries to squeeze some information — any information — out of Google chairman Eric Schmidt about today’s rather disastrous deep Google+ integration into Google Search. Unfortunately, all he gets are bursts of hot air. 

Schmidt tells him that Google would be happy to talk with Twitter and Facebook about integration into the new Search+ features. So why didn’t they do that before, you know, they rolled the feature out? Well, never you mind that. Schmidt refuses to say one way or another if they did or didn’t. “I’m not going to talk about specifics.”

My understanding is that they didn’t. But perhaps more telling is the fact that they didn’t have to.

Both Twitter and Facebook have data that is available to the public. It’s data that Google crawls. It’s data that Google even has some social context for thanks to older Google Profile features, as Sullivan points out.

It’s not all the data inside the walls of Twitter and Facebook — hence the need for firehose deals. But the data Google can get is more than enough for many of the high level features of Search+ — like the “People and Places” box, for example. 

Read More

Twitter Responds To Antitrust+

And out come the knives for Google’s forthcoming search changes that push Google+.

The only words you really need to know in the statement below emailed to me by Twitter: “We’re concerned”…

For years, people have relied on Google to deliver the most relevant results anytime they wanted to find something on the Internet. 

Often, they want to know more about world events and breaking news. Twitter has emerged as a vital source of this real-time information, with more than 100 million users sending 250 million Tweets every day on virtually every topic. As we’ve seen time and time again, news breaks first on Twitter; as a result, Twitter accounts and Tweets are often the most relevant results.

We’re concerned that as a result of Google’s changes, finding this information will be much harder for everyone. We think that’s bad for people, publishers, news organizations and Twitter users.

We’ll see if Facebook responds as well. I’m sure they’re having the disucssion right now as to whether they should ignore this or take their shot. The problem they have is the relationship with Microsoft for Bing social search — but that’s different, it’s an agreement between two independent companies (though Microsoft owns a small share of Facebook via the investment a few years back).

Microsoft is likely in a similar boat. They probably want to say something but they have to think about their Facebook deal — and they have a Twitter deal too. Yahoo may respond, but will anyone really care? I’m sorry, but it’s true.

Meanwhile, look for a Google response to the Twitter response to the Google move…

Update: Sure enough, here’s Google’s response. 

Antitrust+?

Given my post last night, this will probably sound like piling on. But I’m sorry, it’s the first thing that comes to mind. I don’t see how it can’t.

How on Earth is Google going to avoid antitrust inquiries with their new Search+ features announced today? If Facebook, Twitter, etc, have any decent presence in DC, the ball began rolling a few hours ago.

This is the type of case that Senators die for. Google wrapped it in a bow and placed it in one of their laps.

Most of the broader antitrust concerns against Google are bullshit in my opinion. You can argue that they have a monopoly on search, but it’s a natural one. They’ve earned it. They’re simply better at search than their competitors. This has always been true. It remains true.

But when they use that natural monopoly to start pushing into other verticals, things get gray. Travel, restaurant reviews, etc, etc. We see more of it each year. 

Read More

Q:In the past it was hard to measure traffic coming from Twitter, but now that all the Twitter links are t. co links, it must be easier to measure. What percentage of traffic comes Twitter?

Anonymous

It varies day-to-day and month-to-month, but right now, it’s about 10-15%. It’s the largest social driver of traffic here, just ahead of Facebook. 

For comparison sake, Google+ is about half of Twitter right now — even though on Google+ I have 385,000 followers and on Twitter I have 67,000 followers.