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Facebook isn't just popular with its 1.3 billion
(and counting) users.
According to "The Facebook Effect," Fortune editor David
Kirkpatrick's brilliantly-reported book about the company's founding, Facebook
has also always been very popular with executives hungry for a merger or
acquisition.
As early as four months after
Facebook's inception, investors and executives began lining up to beg Facebook
co-founder and CEO Mark Zuckerberg to take their cash and sell the
company. Zuckerberg turned all their offers down, but some
got much closer than we ever imagined.
1. An unnamed NYC financier offered $10 million
Facebook, then TheFacebook.com, went live in February 2004. Just four months later and prior to any outside investment, a 20-year-old Mark Zuckerberg fielded a $10 million offer from an unnamed New York financier. According to Kirkpatrick, Zuckerberg never took the offer seriously.2. Friendster
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One early bidder for Facebook was Friendster,
former Friendster executive Jim Scheinman told VentureBeat in 2007.
“I found a small company out of Harvard that we camevery close to acquiring,” said Scheinman. “A startup no one had
heard of [at] that time, a company named The Facebook.”
The deal was dependent on Friendster
raising another round of funding. Facebook blew up before that ever happened
and Friendster lost its last shot at relevancy.
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Zuckerberg and his Harvard
dorm-mates rented a house in leafy Palo Alto, Calif., during the summer of
2004.
It wasn't long before "a couple
of Google executives came over to see if there might be a way to work with or
even buy TheFacebook," Kirkpatrick reports in "The Facebook Effect."
The meeting didn't go anywhere, but
the issue rose again in the fall of 2007. Google's top ad salesman, Tim
Armstrong, convinced the company's board to let him pursue a deal in which
Google would serve Facebook's international ads.
"The board even approved talks
about buying [Facebook], if it made sense," writes Kirkpatrick. Google never got the
deal, but its offer to invest in Facebook at a $15 billion valuation reshaped
Mark Zuckerberg's company forever.
4. Viacom
Former Viacom CEO Tom Freston
During the Spring of 2005, Facebook (still TheFacebook) was talking to The Washington Post Company about an investment. Out of nowhere, Viacom offered $75 million to buy the company. Zuckerberg would have earned $35 million on the spot, reports Kirkpatrick.
4. Viacom
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During the Spring of 2005, Facebook (still TheFacebook) was talking to The Washington Post Company about an investment. Out of nowhere, Viacom offered $75 million to buy the company. Zuckerberg would have earned $35 million on the spot, reports Kirkpatrick.
Instead, then-Facebook president
Sean Parker used the offer to haggle better terms out of the Post, which
eventually got scooped on the deal by Accel Partners anyway.
Viacom refused to give up. Focus
groups were telling them that MTV viewers were spending more and more time on
the site. In the fall of 2005, Zuckerberg flew to New York to meet with CEO Tom
Freston.
Freston pitched all kinds of synergies
between MTV and Facebook. Zuckerberg wasn't interested. "It was a
no-thank-you meeting," a source tells Kirkpatrick.
In early 2006, MTV boss Michael Wolf
stopped by Facebook one last time. Zuckerberg told him he thought the company
was worth $2 billion.
A couple of weeks later, Viacom sent
Facebook a $1.5 billion offer – $800 million in cash up front, the rest via
payout later.
Facebook almost sold, according to
"The Facebook Effect," but it wanted a bigger
upfront payment. Viacom's CFO was nervous about paying so much for a company
with such small revenues. The deal fell apart. Viacom never came back.
5. MySpace
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Chris DeWolfe, co-founder and chief executive of MySpace, delivers a speech to students during a lecture in Seoul, South Korea, Tuesday, April 15, 2008.
In the spring of 2005, MySpace CEO Chris DeWolfe visited Zuckerberg and his team to "put out feelers about possibly buying TheFacebook," Kirkpatrick reports. Zuckerberg, his president Sean Parker, and adviser Matt Cohler met with DeWolfe, "but only because they thought he was an interesting guy and they were curious about MySpace."
When the two talked, Zuckerberg
asked DeWolfe if MySpace would buy Facebook for $75 million. DeWolfe said no.
When they met again later that year, Zuckerberg raised the price to $750
million and DeWolfe again said no.
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In January 2006, News Corp digital boss at the time,
Ross Levinsohn, flew Mark Zuckerberg and one of his top advisers, Matt Cohler,
to Los Angeles. Levinsohn wanted to buy TheFacebook, but he worried it might
not keep up its growth. "That's the difference between a Los Angeles
company and a Silicon Valley company," Zuckerberg said in "The
Facebook Effect," "We built this to last, and these guys [at MySpace]
don't have a clue."
7. NBC
Kirkpatrick
doesn't offer many details, but apparently NBC execs stopped by for a peek in
2005
8. Yahoo
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In
the summer of 2006, Yahoo decided to offer Facebook $1 billion. Facebook's
investors and many of its executives wanted to sell, but Facebook was about to
launch the News Feed, and if it went well, Zuckerberg figured the company would
be worth way more than $1 billion. After announcing horrible Q2 earnings, Yahoo
lowered its offer to $850 million. Facebook's board took 10 minutes to reject
the lowered offer, according to "The Facebook Effect." In the fall of
2006, Yahoo came back to Facebook and suggested it would pay $1 billion or
more, but by then, Facebook had opened the site to people beyond college and
high school students. Registrations were up from 20,000 a day to 50,000 a day,
Kirkpatrick reports. Even eager-for-an-exit VC and Facebook investor Jim Breyer
was OK with passing on the deal. The one guy who wasn't, Facebook COO Owen Van
Natta, was not long for the company.
9. AOL
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In the middle of 2006, then-AOL CEO
Jonathan Miller decided he wanted to buy Facebook. He even convinced Time Inc.
CEO Anne Moore to come in on the deal before he took it to AOL's parent
company, Time Warner.
His plan: AOL would sell MapQuest
and Tegic. Time Inc would sell IPC. Together they'd offer $1 billion plus.
Time Warner CEO Jeff Bewkes nixed
the idea. Kirkpatrick writes, "He said if they could live
without those properties they should go ahead and sell them, then turn the cash
over to the parent company."
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"Why don't we just buy you for $15billion?" Microsoft's CEO asked Mark Zuckerberg in 2007.
Determined to keep Facebook away
from Google, Microsoft CEO Steve Ballmer offered to buy the company.
Ballmer knew Zuckerberg would never relinquish control over Facebook, so he
came up with a deal based on Hoffman-LaRoche's acquisition of Genentech.
Kirkpatrickexplains, "Microsoft
[would] acquire a small stake in Facebook at a $15 billion valuation. Then,
Microsoft would have the option, every six months, to buy another 5 percent of
Facebook. A complete takeover of the company would take 5 to 7 years."
The acquisition never happened, but
Microsoft did buy 1.6% of Facebook for about $250 million. That deal, which set
Facebook's value at $15 billion, stipulated that Facebook would have to give
Microsoft notice if it ever began to take a buyout offer from Google seriously.
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