Facebook Nearly Added Twitter To Friends List

nandemoari writes "It seems the world's most popular social networking site was just moments away from acquiring another — and few of us ever knew about it. A Facebook executive has revealed that a planned takeover of Twitter only fell apart because of a disagreement over stock valuations. Despite the rather miserable economy, Facebook is still looking to buy out other firms and says it could make a billion dollars a year from advertising. Peter Thiel, a venture capitalist who put up some of the money behind Facebook, discussed the deal in a Business Week interview. Thiel says the two sides agreed a $500 million purchase price and that Twitter would receive the payment in Facebook stock rather than cash — which is a common solution in large takeovers where there simply isn't the money available for a buyout."

Comments

Websites come and go

[BadAnalogyGuy]

Everyone is so hot for Facebook these days, but a year or two ago it was all anyone could do to not jizz themselves over MySpace. These things come and go, websites get hot, then fade away.

I just got a message from MSN groups that some group I had subscribed to a few years ago was going to be deleted. No big deal, I've moved on and found other places where I can post intelligent comments and engage in lively banter.

There is so little that is static about the Web. Facebook is right to strike now and make as much money as they can while the sun shines, because a year or two from now they will be a bad memory.

Re:Websites come and go

[ravenspear]

I'm not so sure. Yes, that has been true of most other social networking sites. However I think Facebook is more of a unique case. They are the first site I think that could finally get it right. They have consistently thought about how to keep people on board by adding things that enhance the value of social networking to their users rather than just being fancy looking useless features. Facebook has the broadest appeal currently. MySpace was never that popular with older folks (probably because of the mind numbing psychedelic layouts), but they have come to use Facebook.

Something better might still come along, but its going to have to be pretty good, and I don't see it completely replacing Facebook in a year.

Re:Websites come and go

[Anonymous Coward]

My mid-late 30s female coworkers are all myspace. I think they like the pimped out glitter look.

Re:Websites come and go

[McDutchie]

Message boards have existed since the time of the BBS. That's nothing new. But are you posting on the same message boards you were using 10 years ago? 5 years ago? Heck even 2 years ago?

Well, I'm pretty sure I've been on Slashdot for six or seven years now...

Re:Websites come and go

[Animats]

Everyone is so hot for Facebook these days, but a year or two ago it was all anyone could do to not jizz themselves over MySpace. These things come and go, websites get hot, then fade away.

It's not web sites, but social networks which behave like that. As I've pointed out before, social networking sites have a life cycle, just like nightclubs. They open, they may become cool and grow, they become popular, the losers move in, the cool people move out, and they decline. Has-been social networks include AOL, GeoCities, EZboard, Friendster, Salon, Nerve, Tribe, and MySpace. Alexa traffic stats bear this out; most of those peaked years ago; Myspace peaked in Q1 2008.

From an investment perspective, social networking sites have to pay off within a small number of years, or they're toast. Facebook might have gone public several years ago; now it's too late. There were, I think, two tech IPOs in 2008, and those were early in the year.

I expect that almost all the money-losing free services will disappear, or go into zombie mode like Tribe (two employees left) before the end of the year.

Zombie mode, incidentally, is the fate of many venture-funded startups. They can't make anywhere near enough money to pay off their investors, but, after shrinking, they can generate enough cash to cover their current bills.

Amusingly, nightclubs come and go, but strip clubs are forever. Similarly, dating sites have very long lives, much longer than social networks.

Re:Websites come and go

[BrokenHalo]

Amazingly enough, I still have no idea what Twitter even looks like...

Same here. I don't do Facebook either. My wife spends lots of time on it though, and that is plenty to let me know that I don't want any part in it. If I want to contact someone (or them to contact me), I've got more phones than I need, and there's always email. Hell, I have a few friends who still send postcards.

One thing I find a little sad is the demise of the handwritten letter, the type where you could enjoy the anticipation as you opened the envelope. But I'm as guilty as anyone - I don't need more than two hands to count the number of letters I have sent in the last 20 years. There's a lot to be said for keeping life simple; noone really has time to do justice to 1,048,576 friends all at once.

Re:Facebook are a bit too much talk, not enough wa

[elfstones]

No matter how trivial and useless it may be, a lot people use the site. If a lot of people use the site, corporations want to advertise there. Thus the money thing....

Re:Facebook are a bit too much talk, not enough wa

[ShieldW0lf]

Tweeter or Shiver or whatever the hell that inane "Now I'm on the bus and it's raining" service is called...

Hmm..

[OneSmartFellow]

...Twitter would receive the payment in Facebook stock rather than cash -- which is a common solution in large takeovers where there simply isn't any intrinsic value in either company

There, fixed that for you

Twitter has economic value?

[LargeWu]

Last time I checked, Twitter was free to use and does not have advertising. In other words, its income cannot be anything more than a trivial amount. It's true value is probably a lot closer to $0 than to $500 million.

This is how the dot.com boom of the 90's happened. Users != revenue or profitability.

Re:Twitter has economic value?

[Zerth]

It does not have advertising YET. Plus, you can always make a company account and post PR crap(which several companies do already) for the cost of manhours.

Also, it is easily mine-able. Several companies are already integrating twitter into their analytics packages so that you can see whenever someone mentions a keyword(ie Time-Warner), when it appears with other words(ie Time-Warner+internet+sucks), who says it(ie me), and how many people are follow that twit(nobody). You can also map relationships and reach easily, compared to websites, and pinpoint people to consider bribing

Advertising, PR, & research goldmine.

Re:Twitter has economic value?

[LargeWu]

I'll say it again, this is EXACTLY what happened about 10 years ago. Investors started throwing hundreds of millions of dollars at websites without bothering to contemplate the fact that they didn't have a business model, and most of them failed for obvious reasons.

Consider also, that even if Twitter does start to accept advertising, nobody is going to see it. Why? Because a lot of Twitter users (most?) use 3rd party clients, especially the hardcore users. And you know everybody is going to use clients that don't bother them with ads.

Re:Facebook are a bit too much talk, not enough wa

[Lumpy]

90% of the peopel that use twitter never go to the site they use the API to post and read the messages through an application.

Any ad's would not be seen unless they start figuring they will simply spam all the users as ad tweets.

The next day twitter will have no users.

It was mostly worthless facebook stock.

[me at werk]

http://bits.blogs.nytimes.com/2008/12/03/why-twitter-turned-down-facebook/

Who would want facebook stock? It's like being bought with sub-prime mortgages as the payment. "They're worth it, I swear!"

Re:Facebook are a bit too much talk, not enough wa

[eln]

Facebook [...] says it could make a billion dollars a year from advertising

Go on then.

I could say I can make eleventy dollars a furlong from my blog; that doesn't make it true. Only a dribbling moron would base a business decision (such as exchanging their website for stock) on such a claim.

Twitter doesn't know how to make money either. Twitter's best hope is to be bought by some other company so the owners can cash out. Of course, if they're bought by someone who only makes "theoretical" money like Facebook, and only paid in stock, they won't be any better off. However, if they never get bought out by anyone, their theoretical billions of dollars will never materialize into real money, because their service is very difficult to monetize.

Facebook is at least still mostly accessed via web browser, so there's the opportunity for ad revenue there. Twitter, on the other hand, is mostly accessed via small mobile phone apps, where it's much more difficult to advertise without causing the users so much pain that they end up dropping the service.

disagree on that

[Trepidity]

A website with millions of daily visitors has some non-zero intrinsic value, even without considering any potential revenue streams, just due to the fact that there are a lot of people out there who like soapboxes, and something with millions of visitors has value as a good soapbox.

I would personally pay at least $50 for Twitter if nobody else outbid me, just so I could own it and fuck around with it. Probably other wealthy people would pay more for similar vanity or having-fun-with-it reasons.

Re:disagree on that

[SatanicPuppy]

Yea, the intrinsic value is a whopping huge bill for servers and bandwidth and employees. I wouldn't pay 50 bucks for Twitter, because I'd go broke long before I figured out how to monetize it.

Having a zillion page views is nothing but a liability if no-one wants to pay for ads or services.

Re:Facebook are a bit too much talk, not enough wa

[Chyeld]

As inane as it is, you have to admit that when you have Senators and Representatives in DC , it's worth money.

Furby's were inane too.

Re:Advertising revenue

[sootman]

The cost to run an advertising campaign can be from a few hundred dollars to ten million dollars, depending on medium, placement, demographic, etc. And almost always, the revenue stream does grow from a well-done marketing campaign. But there is never a way to prove causation. That is to say, an external factor could have accounted for all the extra business that cannot be accounted for. There is not, and never has been, a direct link between advertising and improved revenue.

Someone once said "I know that half the money I spend on advertising is wasted. I just don't know which half."

Re:Facebook are a bit too much talk, not enough wa

[princessproton]

Furbys were inane too.

And look what happened to them...

Fads are great if you think you will be able to capitalize quickly on your investment, but you don't want to be stuck holding the bag when it's all over. Web fads are even more volatile because, unlike tangible goods, there is no "collector's market" after popularity wanes. All you have is a defunct, devalued service that can no longer command the ad revenue to support itself.

already done

[Trepidity]

"The actual value of a company or an asset based on an underlying perception of its true value including all aspects of the business, in terms of both tangible and intangible factors."

A site with millions of daily visitors has a non-zero intangible value.