Facebook To Make About 15 Talent Acquisitions in 2011

Next year, look for Facebook to make plenty of small acquisitions to beef up its engineering expertise, like it did with Hot Potato and Drop.io this fall.

That was the message from Michael Brown, corporate development manager at Facebook, who said last week that the social networking company would look at doing maybe 15 acquisitions in 2011. He added that the targeted companies “will be a mix of talent acquisitions, where we’re looking for people to run important parts of our product [and] who have a really strong vision.”

Brown gave his prediction while participating in a seminar I attended last week called “Startup Exit Seminar: Early Stage M&A,” that was put on by the startup consulting firm VentureArchetypes in San Francisco, at the offices of Greenberg Traurig.

Below is a video of Brown’s response and what the other panelists—from Yahoo, Google and Twitter—had to say when moderator Nathan Beckord, principal and lead consultant at VentureArchetypes, asked how many deals each expect to do in 2011 (The key question begins at the 3:50 minute mark of the video.) Kudos to Brown for being the only one on the panel to answer the question directly. (For a full transcript of Startup Exit Seminar, click here.)

Brown didn’t refer to any recent deals. But if you recall, Facebook in August bought Hot Potato for about $10 million to help strengthen Places, the location-based feature that the social networking giant launched this year. Hot Potato, a New York-based provider of check-in technology, launched just 10 months earlier with backing from First Round Capital and RRE Ventures.

Altogether, Facebook announced eight acquisitions in 2010, including Hot Potato; Drop.io (another RRE Ventures-backed company snapped up for about $10 million); Divvyshot (a photo management tech company that grew out of Y Combinator and was bought for an undisclosed amount); Chai Labs (acquired for $10 million); and Nextstop (bought for $2.5 million). Facebook’s largest purchase this year was the $40 million it paid to take ownership of social networking patents from Friendster.

Facebook’s acquisition strategy of buying small is not that unusual. In looking back at the M&A activity of 2010, the large acquisitions may be what people remember the most.

Sure, there was the bidding war that erupted as Hewlett-Packard and Dell vied for 3PAR, which HP eventually bought for about $2.4 billion. Then there was the deal that almost happened—Google’s $6 billion play for Groupon, which the deal-of-the-day website turned its thumbs down to.

But there were plenty of small companies snapped up this year. My colleague Mark Boslet just finished reporting on a story for the next issue of Venture Capital Journal (subscribers can look for it on Jan. 1), in which he takes a look at the year’s M&A activity.

What Mark found in his research is that there was a wide gap between deals at the top of the market, such as 3PAR, where acquirers paid big dollars and attractive premiums, and those on the low end. Google, for instance, made 40 acquisitions through the first three quarters of 2010. If you take out the three top acquisitions of the year, the remaining 37 it made had an average value of $17 million.

In other words, small acquisitions may be the way to go in 2011. Good news for startups and their VC backers.

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15 Comments

  • [...] Word of the 2011 shopping plans came up during a presentation by Michael Brown, corporate development manager of Facebook at a seminar last week, according to Thomson Reuters. [...]

  • [...] comments, first reported by peHub, went even further into product categories the company may be focusing on in 2011: “Maybe it’s [...]

  • [...] development manager Michael Brown said it was looking at 15 acquisitions in 2011, according to peHUB. These would be similar others this year, like the Hot Potato and drop.io acquisitions in that [...]

  • [...] development manager Michael Brown said it was looking at 15 acquisitions in 2011, according to peHUB. These would be similar others this year, like the Hot Potato and drop.io acquisitions in that [...]

  • [...] [via] generabanner(‘singlepost_3′);html > body .post h3.socialbar_title { color: #666666; font-size: 12px; border-bottom: 1px solid #CCCCCC; display: block; padding: 0px 0px 2px 0px; margin: 0px 0px 10px 0px; text-indent: 0px; } html > body .post ul.socialbar { list-style: none; list-style-type:none; width: 500px; text-align: left; clear:both; margin: 0px 0px 0px 0px; padding: 0px 0px 0px 0px; background: none; } html > body .post ul.socialbar li { margin: 0px; padding: 0px; display: inline-block; background: none; } html > body .post ul.socialbar a.normal_link { display:block; width: 80px; padding:48px 0px 0px; text-align:center; text-indent: 0px; color: #336699; text-decoration: none; border: none; } html > body .post ul.socialbar a:hover { text-decoration: underline; } html > body .post ul.socialbar li.fb-line { margin: 0px 0px 0px 0px; width: 70px; text-align: center; padding: 0px 0px 0px 10px; vertical-align:top; background: none; } html > body .post ul.socialbar li.bz-line { margin: 0px 0px 0px 10px; width: 80px; text-align: center; vertical-align:top; padding: 8px 0px 0px 0px; background: none; } html > body .post ul.socialbar li.tw-line { margin: 0px 0px 0px 0px; width: 80px; text-align: center; vertical-align:top; background: none; } Condividi questo articolo [...]

  • [...] network. Delta Air Lines offers flight bookings from its Facebook page, …a more… Facebook To Make About 15 Talent Acquisitions in 2011 – Private Equity Hub (press release) – pehub.com 12/18/2010 AllFacebookFacebook To Make About 15 Talent Acquisitions in [...]

  • [...] Word of 2011 purchasing plans emerged during a presentation of Michael Brown, director of corporate development at Facebook at a seminar last week, according to Thomson Reuters. [...]

  • [...] Word of the 2011 shopping plans came up during a presentation by Michael Brown, corporate development manager of Facebook at a seminar last week, according to Thomson Reuters. [...]

  • Sounds to me FB is starting an empire on its own. 15 aquisitions? Nice! (Google, beware!). What we have yet to see, though, is all of the applications running on the same platform — a one stop place. One login for all. Perhaps a potential for security breach, but we gotta start somewhere.

    After all, Walmart pulled it off in real life, so why couldn’t Facebook do it in virtual?

    Cheers!
    ~GG

  • [...] development manager Michael Brown said it was looking at 15 acquisitions in 2011, according to peHUB. These would be similar others this year, like the Hot Potato and drop.io acquisitions in that [...]

  • [...] Follow this link: peHUB » Facebook To Make About 15 Talent Acquisitions in 2011 [...]

  • “Talent acquisitions” are not the same thing as company acquisitions. When you acquire talent, that doesn’t necessarily mean you are acquiring any of the other assets of a company. This could refer to talent pulls of key personell – perhaps as small as one or two people per company. It would be a departure for Facebook to do this many bona fide company acquisitions, especially when you consider how many of its ecosystem partners it has run over with its various feature improvements over the last year. You can make a lot of money working with Facebook, but if you get too close to the machine, it can be risky business.

  • [...] We are all here planning for things for the new year, some say they will make resolutions that wont be broken, some want a new job or life etc. Facebook Inc. is planning to buy almost 15 new companies next year. [...]

  • [...] Lo ha anunciado el director del departamento de desarrollo de negocio Michael Brown en un seminario llamado “Startup Exit Seminar: Early Stage M&A”, celebrada recientemente en San Francisco, en el que se trataron las salidas que tienen las pequeñas compañías de tecnología a través de fusiones y de adquisiciones en una fase temprana de desarrollo. Sus declaraciones han salido a la luz ahora gracias a la grabación del evento del blog sobre privacidad PEHub. [...]

  • Thanks everyone for your comments, well, at least from those of you who are real.
    Dan, it’s great to see you here. I hear what you’re saying, but the example given that he was talking about and referring to was buying a company solely for scooping up the engineering talent at whatever startup they had in mind to purchase. Michael was not talking about hiring away talented engineers form say Google, they want to buy the company and absorb the talent.
    fbKnol, you are correct. We are often more adventurous in our planning than in our execution. Whether they actually make that many buys is anyone’s guess, but they are interested in doing so and that says something.

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