Monday, August 10, 2009

Acquisition Price - FriendFeed/Facebook

I wish I was always this good... I guessed somewhere around $50 mln in an earlier post today about Facebook's acquisition of FriendFeed.

Turns out I was pretty close according to this post in the WSJOnline late today.

So it didn't take linear algebra to make the guess, but what the heck...


Friendfeed, Facebook (& Google?)

Just saw that Facebook is acquiring FriendFeed. Found this interesting since the Google tree is expanding. Paul Buchheit is one of FriendFeed's founders and the brains behind Gmail. After watching him speak on a panel last Spring, I wrote about Google, employee retention, and entrepreneurship.

FriendFeed is a small shop with only 12 employees according the TechCrunch article. Reminds me a bit on how Yahoo! intergrates new applications through acquisition instead of through internal innovation. Will be interesting to see the financial disclosure on the deal (if ever). Friendfeed was initially funded with $5 million by Benchmark Capital and its own founders.

Some questions pop to mind:

With the "normal" successful exit for VCs at 10x or more, did they get $50 mln for the deal? If so, did Facebook overpay as Yahoo! has been doing? Wonder if they saw an opening to exit for a few bucks less citing lower chances for long-term success and took it to focus on the next venture?

And speaking of Yahoo! and innovation, Steve Rubel has an interesting thought - make FriendFeed the new "Facebook Labs." Why not? Seems the right people are in the place...


Friday, August 7, 2009

Rules for Changing Rules - Romer on

I came across this presentation Paul Romer, Stanford economist (and a former employer). He discusses the idea of creating "Charter Cities" in developing countries that would enable the local population to choose migration and participation in the Charter City while providing a motive of profit for international firms to set up shop.

Using Hong Kong and Singapore as successful examples, it's important to consider cities like Brasilia that have not been so fortuate. During my time in Kazakhstan, I frequently visited Astana, the new capital city under development there and worked on an urban planning project that examined educational resources, infrastructure, and growth planning.

This is where the "rules for changing rules" becomes vital to the success of the Charter City Romer is proposing. When left to isolated government bureaucrats unwilling or unable to grasp the necessary conditions for economic growth, these Charter Cities will assuredly fail. But, if we can reach a level of true ideological understanding and implement proven theories of city and urban planning, there is certainly promise for this concept.