These 10 companies tried to buy Facebook

These 10 companies tried to buy Facebook
Facebook, the biggest social network in the world, now has over 1.5 billion monthly active users. According to David Kirkpatrick’s book The Facebook Effect, the company was a very popular M&A target in its startup years.

As early as 4 months after Facebook’s inception, people with money and people representing companies with money began lining up to beg Facebook co-founder and CEO Mark Zuckerberg to take their cash and sell the company. Obviously, Zuckerberg turned all their offers down. But some offers were much more tempting than you probably realize.

Meet the 10 companies that tried to buy Facebook back when it was a startup…

1. In June 2004, an unnamed financier offered $10 million

January 12, 2016

In June 2004, an unnamed financier offered $10 million
Facebook, then called 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.

“He didn’t for a minute think seriously about accepting,” writes David Kirkpatrick in The Facebook Effect.

2. Friendster also tried to buy Facebook

January 12, 2016

Friendster also tried to buy Facebook
According to some documents Business Insider has seen, one early bidder for Facebook was Friendster. But the deal was dependent on Friendster raising another round before Facebook got big on its own. Never happened.

3. In the summer of 2004, Google came knocking

January 12, 2016

In the summer of 2004, Google came knocking
Mark and his Harvard dorm-mates rented a house in leafy Palo Alto 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.

4. In March 2005, Viacom plopped $75 million on the table

January 12, 2016

In March 2005, Viacom plopped $75 million on the table
During Spring 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. Mark 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).

5. MySpace too wanted to buy Facebook

January 12, 2016

MySpace too wanted to buy Facebook
In the spring of 2005, MySpace CEO Chris DeWolfe visited Mark and his team to “put out feelers about possibly buying TheFacebook,” Kirkpatrick reports. Zuckerberg, his president Sean Parker, and adviser Matt Cohler met with Chris, “but only because they thought he was an interesting guy and they were curious about MySpace.”

6. MySpace’s new parent company News Corp wanted Facebook too

January 12, 2016

MySpace's new parent company News Corp wanted Facebook too
In January 2006, then News Corp digital boss Ross Levinsohn flew Mark Zuckerberg and one of his top advisors, 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,” Mark Zuckerberg says in The Facebook Effect, “We built this to last, and these guys (at MySpace) don’t have a clue.”

7. Viacom came back in 2005

January 12, 2016

Viacom came back in 2005
Viacom hadn’t given up on Facebook yet in late 2005. Focus groups told them that MTV viewers were spending more and more time on the site. So that fall, Mark flew to New York to meet with CEO Tom Freston. Tom pitched all kinds of synergies between MTV and Facebook. Mark wasn’t interested.

“It was a no-thank-you meeting,” a source tells Kirkpatrick.

8. NBC met with Facebook in 2005

January 12, 2016

NBC met with Facebook in 2005
Kirkpatrick doesn’t offer many details, but apparently NBC executives stopped by for a peek in 2005.

9. Desperate, Viacom came back one last time in 2006

January 12, 2016

Desperate, Viacom came back one last time in 2006
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 weeks later, Viacom sent Facebook a $1.5 billion offer – $800 million in cash up front, the rest a 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.

10. Yahoo came knocking in 2006

January 12, 2016

Yahoo came knocking in 2006
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, Mark Zuckerberg figured the company would be worth way more than a $1 billion.

In any event, Yahoo lowered its offer to $850 million after announcing horrible Q2 earnings. Facebook’s board took 10 minutes to reject the lowered offer, according to The Facebook Effect.

11. AOL also took a hard look at Facebook in 2006

January 12, 2016

AOL also took a hard look at Facebook in 2006
AOL CEO Jonathan Miller decided he wanted to buy Facebook in the middle of 2006. 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.”

12. Yahoo came back in 2006 too

January 12, 2016

Yahoo came back in 2006 too
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.

One guy who wasn’t, Facebook COO Owen Van Natta, was also not long for the company.

13. Tim Armstrong convinced Google’s board to let him bid for Facebook in 2007

January 12, 2016

Tim Armstrong convinced Google's board to let him bid for Facebook in 2007
In fall 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 would re-shape Mark Zuckerberg’s company forever.

14. Microsoft CEO wanted Facebook too

January 12, 2016

Microsoft CEO wanted Facebook too
Determined to keep Facebook away from Google, Microsoft CEO Steve Ballmer offered to buy the company in 2007. Steve knew Mark would never relinquish control over Facebook, so he came up with a deal based on Hoffman-LaRoche’s acquisition of Genentech.

Kirkpatrick explains, “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% 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.

15. Facebook did not field acquisition offers after that

January 12, 2016

Facebook did not field acquisition offers after that
One reason: Microsoft’s $247 million investment, which set Facebook’s value at astronomical $15 billion, stipulated that Facebook would have to give Microsoft notice before it ever considered a buyout offer from Google – just about the only other company in the world that could pay so much for a tech startup with no revenues.
Source: http://goo.gl/11gSB8

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