Facebook Friendfeed Deal: Details

how does it feel to be Facebook’s unofficial R&D department

This is what Robert Scoble of Scobleizer had sarcastically uttered, while joking with the FriendFeed team in their office a few months ago. Scoble also felt that Facebook was cloning FriendFeed’s features at a rapid pace. Now that the most popular social network in the world, Facebook is officially married to blogosphere’s big boy, FriendFeed, the former is all more powerful. As a part of the agreement all the FriendFeed employees would join Facebook and the four founders would hold senior roles on Facebook’s engineering and product teams. Both the companies would stick to their vision of sharing and connecting with their friends.
Facebook had imitated certain parts of FriendFeed feature set that include the like feature and Facebook new focus on the real-time stream.

Real deal or no deal

FriendFeed co-founder Bret Taylor in a statement said that

Facebook and FriendFeed share a common vision of giving people tools to share and connect with their friends

He further added

We can’t wait to join the team and bring many of the innovations we’ve developed at FriendFeed to Facebook’s 250 million users around the world.

Well, this is not the biggest deal in Silicon Valley as its being hyped.

How much did Facebook pay?

According to the Wall Street Journal, Facebook paid nearly $50 million, which include $15 million it paid in cash with roughly $32.5 million based on current valuation in stock.

The key to this deal is stock. It’s value is derived from the $6.5 billion common valuation.

What’s unique about the stock is that these are options vested over a certain period of time. Similar to what most employees in the company receive.

The next question that creeps in is what the outside investors like Benchmark Capital would receive from this deal. Most probably they are taking the cash while the FriendFeed employees would have the stock. According to the speculation benchmark is supposed to receive $15 million exit.But these are mere speculation.

Still what remains to be compared is the amount. Actually, $50 million is 1/10 of what Facebook was willing to pay for Twitter last year.

Behind the deal: Impact and Implications

With the two services merging what would be the likey changes. Let’s have a look

• FaceBook’s move would be a straight shot at rival Google and not Twitter. For Facebook profit lies in real time search.  FriendFeed has real time search. FriendFeed offers real time search while Google doesn’t.

• Google would be introducing its Wave with some other things this fall. This might be a strong reason working behind the merger.

• Facebook has 300 million users, so the FriendFeed engineering team has a wider scope to make real impact.

• FriendFeed doesn’t feature +Profiles and + Applications, which Facebooks flaunts about. This will allow better service for both.

• Facebook has enhanced security features that can make FriendFeed much more security.

• Friendfeed would also be able to take advantage of Facebook’s sophisticated features, since there are too many uncertainties. This guarantees that no developers would jump into the FriendFeed pool. There are too many uncertainties.

Well, if you are waiting for a great iPhone app or for Seesmic to get FriendFeed capability there seems no distant possibility

What does the deal mean to Twitter?

Twitter’s search is  nowhere comparable to FriendFeed’s. That implies Twitter has to work up to get closer to FriendFeed’s search.

Further, FriendFeed you might do far better filtering and you might look back to the beginning of FriendFeed while Twitter would show you the last few days. On FriendFeed the search is true real time.

Acquisition of talents not product

FriendFeed boasts of a high-flown team that includes those who moved from Google Mail, Google Talk, Google Maps and some of them even designed certain stuffs for Google. Well, Bret Taylor was a part of the team that helped launch Google Maps. The real story is that Facebook made a rather expensive hire of the talented former Google workers.

Facebook provided clear hints that the acquisition was more about talent than product. Facebook founder and CEO Mark Zuckerberg stated that

Since I first tried FriendFeed, I’ve admired their team for creating such a simple and elegant service for people to share information

As this shows, our culture continues to make Facebook a place where the best engineers come to build things quickly that lots of people will use.

Facebook needs such a R&D team like FriendFeed’s if they are to take on the search engine giant Google.

What’s Upcoming for FriendFeed

In one of his blog post Bret Taylor provided stated that FriemdFeed would continue to operate normally for the time being while the two companies would be planning the future course of action.