CNET’s Caroline McCarthy reports that Facebook had offered Foursquare $120 million (presumably a combination of cash and stock, though McCarthy doesn’t specify). Foursquare then asked for “about 25 per cent more,” which is about $150 million. Then, Facebook walked away from the negotiations.
Presumably, there’s more to the story, but that sounds about right.
In May, we had heard that Foursquare CEO Dennis Crowley was trying to get Facebook to make a real bid, as he was considering either selling his company or taking a big investment from a VC firm. The problem, we heard, was that Facebook treats its stock as being worth a lot more than it is.
Either way, Foursquare ended up taking a big VC investment instead, a $20 million round led by Andreessen Horowitz that valued the company at $95 million, and allowed Crowley and cofounder Naveen Selvadurai to personally cash out almost $5 million.
Meanwhile, Facebook has closed its deal to pick up another real-time social networking website called Hot Potato, for a relatively inexpensive $10 million, McCarthy reports.
First, because it’s cheaper. And second, because this was a talent “acq-hire” for Hot Potato founder (and former MLB.com hotshot) Justin Shaffer. Because Hot Potato isn’t a popular service, Facebook can shut it down without thinking twice, and there’s no mess.
That would have been a trickier move with Foursquare, which actually has real users and a community. This way, Facebook doesn’t have to worry about any awkward integrations, and can just focus on building products with its new hire.
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