Photo: Wikimedia Commons
When a startup gets acquired for its talent rather than its product, it can be viewed as a failure.Gowalla, for example, shut down its doors in December and the founders jumped ship to Facebook. Facebook didn’t acquire the service or technology, so it seemed like the founders were admitting defeat to Foursquare and couldn’t find a real buyer.
But sometimes getting acqui-hired can be the smartest move a founder can make. FriendFeed’s story is the perfect example.
According to Facebook’s S-1, Facebook issued 11,052,955 shares of its Class B common stock in August 2009 to “10 individuals and one entity in connection with an acquisition of all the outstanding shares of a company.”
That same month Facebook acqui-hired FriendFeed’s founding team. We can assume, given the matching time periods, all of those 11 million shares went to Paul Buchheit, Bret Taylor, Jim Norris, Sanjeev Singh, and other FriendFeed investors and executives (Facebook can’t comment while it’s in the quiet period).
Then, FriendFeed’s acquisition amount was ~ $50 million, $15 million in cash and ~$32.5 million in stock. Russian investment group DST had purchased Facebook employee stock and the deal valued Facebook at an estimated $6.5 billion.
Today Facebook is worth $94 billion. That means those stock options FriendFeed was given are now worth about $330 million.