Why Did Facebook Buy FriendFeed?

So, the news of the FriendFeed purchase by Facebook has spread very quickly. Now, we need to ask the question of why. Why did Facebook buy FriendFeed when they have been “stealing” features for quite some time? In that post two months ago, I mentioned that FriendFeed is innovating and we would see what the future holds:

So, FriendFeed is getting all of its features copied and they are getting very little credit for it. I hope that they continue innovating, because it will eventually pay off. They also have several evangelists in people like myself, Louis Gray and Robert Scoble. As more established sites copy FriendFeed features, FriendFeed has a harder battle to fight. They also have an excellent team, so they are well equipped moving forward. Now, they need one killer feature to reach their tipping point. By the end of the year we will see what the future holds for FriendFeed.

Little did I know that we would be talking about the future of FriendFeed in mid-August. So, why did Facebook buy the cow when they were getting the milk for free? I think there are a few simple reasons.

I am not buying the talent-only argument that we have been hearing about. If that were true, we would not have seen as much copying of their features and interface. More than anything, that copying should have been a flag that people had seen FriendFeed as the innovator. Facebook has been trying to incrementally change the way it works, and I think they realized that some pieces needed a boost.

Honestly, Facebook has some glaring deficiencies. Their sharing interface stinks, and their search is just as bad. FriendFeed is first a content aggregator and second a fantastic search engine. Obviously, things seem to fit there fairly well. The Facebook APIs are also very complicated and do not really address anything regarding the real-time web. FriendFeed has always had a very solid API and their new API release added real-time capabilities. Again, this is another perfect fit.

Overall, this goes back to a point that I made over four months ago:

Now that Facebook allows people to like and comment on other people’s status updates, the real analytics and data mining opportunity will be Facebook. So, when they finally get their status update search ready (and you can be sure that they will), we will see the amount of power that Facebook has. Facebook will be able to sell their data to companies wanting to understand market data. Facebook has the demographic and geographic data in place, and just needs to sell access to the data.

If they include the aggregation capabilities of FriendFeed, and more importantly include their search functionality, they will be a data powerhouse. Once the FriendFeed search is run against the Facebook data, people will be able to see how much power is in that data. Let the data mining being!

If you are in the mood for a lighter view of the FriendFeed purchase, take a look at Louis Gray’s “This Relationship? It’s Complicated” post.

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16 thoughts on “Why Did Facebook Buy FriendFeed?”

  1. Its not just complicated, they are different species. If it didn’t put a crimp in my life, I would be content to watch and wait.

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  4. “I am not buying the talent-only argument that we have been hearing about.”

    If the reports are true of $15M cash and $35M stock, that isn’t outrageously far out of line with the $1M/engineer acquisition rule of thumb.

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  5. frankiecarl,

    Right now we do have to just wait and see what happens. We have not heard anything about plans yet, and likely will not hear for a few weeks at the minimum.

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  6. DGentry,

    I have not heard about the “$1M rule of thumb” and for acquisitions I think it would be hard to really estimate something like that given the varying prices for startups. Also, FriendFeed had VC funding, so some of the money and stock will go to the VC.

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  7. Hey, if I’m one of the FriendFeed developers I’m happy to get bought out since Facebook is stealing all our best work anyway. I guess if Facebook starts pulling in more FriendFeed features then I may actually login to my Facebook account again.

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  8. Simon,

    I did not make myself clear in all of this (here or on FriendFeed itself). I am very happy for the FriendFeed team as this is what any startup wants, a very solid exit. As you say, if Facebook starts pulling in FriendFeed features, it may become a more desirable destination for geeks.

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  14. Why not?

    Facebook has been adopting more and more FriendFeed features anyways.

    This can only be a good thing and not just for FriendFeed.

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