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Facebook + Friendfeed: Acquisition Of The Wrong Kind

By Michael Hickins

Updated on: August 10, 2009 / 5:39 PM EDT / MoneyWatch

Facebook acquired Friendfeed today, lighting up the Twittersphere, where reactions ranged from giddiness to despair at the presumed loss of a favored service. The reasons for the acquisition are muddled (and short-sighted at best), making it a foolhardy acquisition for Facebook, destined to join Skype (eBay), Blo.gs (Yahoo) and Friend Connect (Google) in the pantheon of failed Web 2.0 acquisitions.

Facebook itself can't seem to decide how to spin the deal, illustrating just how poorly considered the deal is, and what little chances it has of succeeding. On the one hand, Facebook CEO Mark Zuckerberg makes much of the "imple and elegant service" invented by Friendfeed founders Brett Taylor, Paul Buchheit, Jim Norris and Sanjeev Singh, putting the emphasis on their product. On the other, the company admits it's still working through "the longer term plans for the product." In other words, Facebook bought Friendfeed first and will ask questions later.

Financial terms of the deal weren't released, so we don't know how much cash Facebook just flushed down the toilet. Forrester analyst Jeremiah Owyang tweeted that Friendfeed sold too early, having "never hit the hockey stick" in terms of subscriber growth. Facebook certainly hasn't bought the company for its customer base (which is actually flattening while Facebook and Twitter's are booming).

There are a couple of prevailing opinions about what Facebook wants to get out of this deal:

Become more like Twitter. Friendfeed has a very powerful search engine, which would provide Facebook with a feature that could rival Twitter's powerful real-time search, which many consider one of Twitter's big-time advantages over Facebook.
Become more like Google. Facebook makes a lot of hay over the founders common background developing key services for Google -- big ones, in fact, like Google Maps and Gmail. We know that Facebook has Google envy, and given its alliance with Microsoft, is very much in the anti-Google camp, and has begun signing up advertisers at what must seem to Google like an alarming rate.

The history of this kind of deal is that four Friendfeed founders will live out their retention bonuses and find something new within the next 18 months that doesn't violate their largely uneforceable non-compete agreements. There is probably as much wistfulness as cynicism in Taylor's Friendfeed posting that, "As my mom explained to me, when two companies love each other very much, they form a structured investment vehicle..."

The eight other members of the Friendfeed team will probably become disillusioned by the Facebook culture, which is probably very different from the one they've come from. Google, which nurtured the four Friendfeed founders, has a well-deserved reputation for allowing engineers to work on side projects. Facebook, on the other hand, is a much more tightly-controlled environment. Zuckerberg may wear flip-flops to conferences, but he's not what you'd call easy-going.

If all Facebook wanted was the search engine, fine. It probably got its money's worth. But if it was hoping for some of those famous synergies, or if elaborating a "longer term" strategy is at all part of this deal, it's going to be a huge disappointment. Tech blogger Robert Scoble remarked wrly on his own Friendfeed that "while I interviewed Facebook and FriendFeed I was standing in front of the Alamo in Texas. Not sure that is a good metaphor."

[Image source: Wikimedia commons]