Facebook’s Year in Acquisitions: Ten and Counting

Facebook stepped up acquisitions by tenfold this year, after its first two yielded talent that went on to create the company’s iPhone app and a much more elegant way for third-party developers to interact with the platform.

After turning free cash-flow positive in September of last year, Facebook used its extra spending power to buy 10 companies. They were mostly talent acquisitions — or purchases for engineering talent instead of product or technology — although Facebook did acquire intellectual property in some cases. (If you want to understand how Facebook’s M&A works, Vaughn Smith, the company’s head of corporate development, explained it in this interview from last month.)

Smith told us the company would do “doublish” the number of acquisitions next year, while Mike Brown, who is on his team, said Facebook would do about 15 deals in 2011.

With this year’s batch, a couple trends stood out to us:

East Coast talent: Two of the companies Facebook bought during the last six months hail from New York City. Sam Lessin, a longtime friend of Mark Zuckerberg, left behind his work building private-sharing tools at Drop.io to head to the West Coast. Justin Shaffer, who spent a year building location-based app Hot Potato, also left the East Coast to lead Groups and then Places.

Not all talent acquisitions are created equal: Some of the acquisitions were essentially hires of single founders, product managers or engineers that weren’t seeing widespread traction for their startups. Others were decorated veterans that would have been sought after by multiple companies; the team from Chai Labs helped build and scale Google’s AdSense, for example. The original FriendFeed team had the co-creator of Google Maps and current Facebook CTO Bret Taylor. Pricing for these deals varies considerably and Smith told us that terms are based on how much Facebook thinks the team can impact the company. Nor did Facebook win every acquisition; they lost at least one to Google, which made an offer an order of magnitude higher.

So where are they now?

Octazen Solutions (February): Facebook bought this tiny team in Malaysia known for their expertise in contact importing. Even it sounds boring, contact importing has actually played a very important part in Facebook’s growth over the last five years. Contact importers are software tools that allow you to provide login credentials for an email service like Gmail or Hotmail, so you can automatically import names and email addresses of people you’ve communicated with in the past. Populating Facebook with enough friends so that a new user’s “Day One” experience is smooth is critical to ensuring they stay active on the site.
Where are they now? Octazen’s CEO Kenneth Foo is still working on growth and the team they’ve built still seems to be working mostly from Malaysia. The company introduced an addictive “Find Friends Browser” last month that has infinite scrolling and lets you look for friends based on location, workplace or education history.

Divvyshot (April): The Y Combinator-backed company was focused on making group photo sharing easier. But it only had around 40,000 users, so the acquisition was an opportunity for the team to play with and manage the world’s largest photo-sharing product.
Where are they now? Sam Odio is the product manager for Facebook photos and has helped push out face detection, high resolution photos and a better photo viewer with fellow Divvyshot engineer Paul Carduner and other Facebook talent.

Sharegrove (May): This was essentially a one-man hire of Adam Wolff, who co-founded this seed-funded startup for private conversations.
Where are they now? Wolff is now a software engineer at Facebook.

Nextstop (July): Facebook brought on two seasoned former Google product managers with this purchase. Nextstop was a travel recommendations startup led by Carl Sjogreen, who was the founding product manager for Google Calendar, and Adrian Graham, who oversaw Picasa.
Where are they now? Carl Sjogreen has helped fill Facebook chief technology officer Bret Taylor’s shoes by leading the platform product team. Graham has been working on News Feed and Questions.

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