If you guys think that TheFacebook or Facebook is popular and successful because of its millions of users, then probably you are wrong. There is something about the idea which has always been made it popular not only among the users but also among the investors & money-minded people.
Did you know, just four months after the beginning of Facebook, many affluent people (be it investors or any other money-minded person), were so impressed with this idea of Mark Zuckerberg that they actually tried to convince him to take their money and sell the company to them. In the exclusive report of The Facebook Effect, by Fortune’s editor David Kirkpatrick, he had mentioned about the 11 companies who tried to buy Facebook from Mark Zuckerberg, Co-founder & CEO of Facebook.
Let’s see who was that 11 companies, who was interested in acquiring Facebook at that time:
1) Initial Investment proposal in June 2004 of $10 Mn. By an unknown financer:
In June 2004, just 4 months later to any outside investment, Mark got an offer of $10 Mn. Offer from an unknown financer of New York. But as expected, Mark didn’t even think for a minute about this proposal and refused him.
2) Friendster also tried their luck
According to the officials, Friendster was also one of the initial bidders of Facebook. But that was dependent on Friendster raising another round before Facebook got big on its own. And that never happened.
3) IN THE SUMMER OF 2004, GOOGLE CAME TAPPING
It was the time when Mark and his Harvard dorm-mates rented space in leafy Palo Alto during the summer of 2004 when some of the Google Executives came over to see if there might be a chance to work with or even acquire TheFacebook,” reported by Kirkpatrick in The Facebook Effect.
4) IN MARCH 2005, VIACOM Slammed $75 MILLION ON THE BOARD
During Spring 2005, Facebook (still TheFacebook) was in talks with The Washington Post Company about an investment.
And from nowhere, Viacom came in the picture and offered $75 million to acquire the firm.
Mark would have easily made $35 million on the spot, reports Kirkpatrick.
Instead, then Facebook president Sean Parker used the proposal to make most out of the (which eventually got shovelled on the deal by Accel Partners anyway.)
5) BEFORE SELLING TO NEWS CORP IN 2005, MYSPACE WANTED TO BUY ITS UPSTART RIVAL
During Spring 2005, MySpace CEO Chris DeWolfe met with Mark and his team to “put out hints about possibly purchasing TheFacebook,” Kirkpatrick states.
Mark along with his president Sean Parker, and adviser Matt Cohler met with Chris, “but only because they believed he was an impressive guy and they were inquisitive about MySpace.”
6) A HALF YEAR LATER, MYSPACE’S NEW PARENT COMPANY NEWS CORP. CAME UP WITH THE SAME IDEA.
Ross was interested in buying TheFacebook, but he was doubtful it might not retain up its growth.
“That’s the difference between a Los Angeles company and a Silicon Valley company,” Mark says in The Facebook Effect, “We built this to last, and these guys [at MySpace] don’t have a clue.”
7) VIACOM CAME BACK AGAIN IN POST 2005
Viacom hadn’t dropped the idea of acquiring Facebook yet in late 2005. Focus groups told them that MTV audience was giving more and more time on the site. So that fall, Mark travelled to New York to meet with CEO Tom Freston.
Tom suggested all kinds of possibilities between MTV and Facebook, but Mark wasn’t impressed. “It was a no-thank-you meeting,” a source states Kirkpatrick.
8) NBC ALSO CAME TO FACEBOOK IN 2005
Kirkpatrick doesn’t provide many details, but apparently, NBC execs stopped by for a peak in 2005.
9) DESPERATE VIACOM SHOWED UP ONE LAST TIME IN 2006
In early 2006, MTV boss Michael Wolf checked by Facebook one last time. Zuckerberg told him he believed that Facebook was worth $2 billion.
A couple of weeks later, Viacom sent Facebook a $1.5 billion Proposal– $800 million in cash up front, the rest a payout after.
Facebook almost sold, according to The Facebook Effect, but they were expecting a higher upfront payment. Viacom’s CFO was not ready to pay so much for a company with such small revenues. Thus the deal fell apart. Viacom never came back.
10) In the summer of 2006, Yahoo made an offer to Facebook of $1 billion.
Facebook’s investors and many of its members wanted to sell.
But Facebook was planning to launch the News Feed feature, and if it went well, Mark Zuckerberg was expecting the company’s worth would be way more than a $1 billion.
In any event, Yahoo narrowed its offer to $850 million after announcing bad Q2 earnings. Board member of Facebook took 10 minutes to reject the lowered offer, as per The Facebook Effect.
11) IN 2006, AOL ALSO KEPT HIS HARD ATTENTION ON FACEBOOK
Jonathan Miller, CEO of AOL, decided to buy Facebook in the middle of 2006.
He also convinced Anne Moore, CEO of Time Inc., to join him in the deal before he acquires AOL’s parent company, Time Warner. His plan: AOL would trade MapQuest and Tegic. Time Inc would trade IPC. Together they’d offered $1 billion plus.
Time Warner CEO Jeff Bewkes refused the idea. Kirkpatrick writes, “He said if they could live without those resources they should go forward and market them, then turn the cash over to the origin company.”In the fall of 2006, Yahoo came back to Facebook and advised it would pay $1 billion or more.In 2007, Google’s top ad salesman Tim Armstrong made the company’s board agreed to let him proceed a deal in which Google would allow Facebook’s international ads.
“The board even accepted talks about investing in [Facebook], if it made sense,” writes Kirkpatrick.
Google never got the opportunity, but its proposal to invest in Facebook at a $15 billion valuation would re-shape Mark Zuckerberg’s corporation forever.
But by then, Facebook had started the site to people beyond college and high school students.
Sign Up were up from 20,000 a day to 50,000 a day. Even eager-for-an-exit VC and Facebook investor Jim Breyer were okay with passing on the opportunity.
One guy who wasn’t, Facebook COO Owen Van Natta, also not remained in the company.
“WHY DON’T WE JUST BUY YOU FOR $15 BILLION?,” MICROSOFT’S CEO ASKED MARK ZUCKERBERG:
Decided to keep Facebook away from Google, Microsoft CEO Steve Ballmer offered to purchase the company in 2007. Steve knew Mark would never waive his control over Facebook, so he came up with a deal based on Hoffman-LaRoche ‘s purchase of Genentech.
Kirkpatrick explains, “Microsoft [would] take a small stake in Facebook at a $15 billion valuation. Then, Microsoft would have the choice, every six months, to purchase another 5 percent of Facebook. A complete acquisition of the company would take 5 to 7 years in this way.”
Although The acquisition never took place, Microsoft did buy 1.6% of Facebook for about $250 million. That deal, which valued Facebook’s worth at $15 billion, stipulated that Facebook would have to assign Microsoft notice if it ever initiated to take a buyout proposition from Google seriously.
ACCORDING TO THE FACEBOOK EFFECT, FACEBOOK NEVER FIELDED ANY MORE OFFERS…
One reason of Microsoft’s $247 million investment, which made Facebook’s value at gigantic $15 billion. It stated that Facebook would have to assign Microsoft notice before it ever thought a buyout offer from Google, just about the only other corporation in the world that could spend so much for a tech startup with no incomes.
If Facebook ever trades (to anyone besides the public in an IPO), it’ll be to Microsoft or a company that who proposed an offer Microsoft chose not to match.
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