I’m a big fan of using sporting analogies for business strategy. From Yogi Berra (“It ain’t over till it’s over” and “If you come to a fork in the road take it”) to Wayne Gretzky (“Skate where the puck is going”). So it’s no surprise that I use sports philosophies when thinking about acquisitions, mergers and other activities.
Yesterday, Friendfeed announced that it had been acquired by Facebook. For both of these companies it makes sense, facebook is trying (almost to their detriment) to compete with Twitter and Friendfeed does have real time search and some great engineering talent. Buying Friendfeed helps facebook and gives the friendfeed folks a nice exit. Personally, I think facebook will open up status and content to people to search wider then just your friends circle, this could open up a nice alternative revenue stream for Facebook.
Dave McClure thought otherwise, and thought that Google shouldn’t have let this happen. Dave’s a really smart guy, who’s blog and presentations I read frequently and quote often, and I have a tonne of his stuff bookmarked on delicious (his start up metrics guide should be required viewing for all). So it was hard to disagree. I think Dave’s probably right (purely on odds if not on logic) so I wanted to make my point and invite him to disagree with more then 140 characters.
Dave said (redacted for the audience which might be sensitive):
“How the F*** does Google let Facebook acquire FriendFeed for any amt of $? GOOGLE U R A BIG F****** LOSER. Absolute #FAIL.”
I wasn’t the only one who disagreed with Dave on this, and we went back and forth a couple of times. He also discussed it with some VCs, one of which, Manu Kumar put it best:
“@davemcclure FF a better fit for FB than $GOOG imho. Also doubt the ex-googlers wd want to return to the mothership. #UnknownMoreAttractive”
That was my thinking as well, why would you want to go back to a company you left in the first place? But let’s explore this from Google’s perspective. Google probably has more users of Orkut then there are users of friendfeed and by a lot of accounts Orkut’s not as nice a product. Google is playing with communication using Google Wave. Google has strong search capabilities. Google has really smart engineering talent. As Fred Wilson might say, they’re doubling down on what they know and can do really well. So why would Goog want to buy Friendfeed? As a defensive manoeuvre? “We’ll buy it so you can’t”, good luck with that.
I’m glad friendfeed got bought by facebook, as a facebook user I’m interested to see what innovation comes out of this acquisition, as a user I’m also glad that Google didn’t buy friendfeed, it’s creating great innovation in more than just one company.
This brings me back to the sports analogy. For Facebook the buy is offense, but for Google buying Friendfeed would have been defence. I believe companies need to be mostly offensive with a dose of good defence. Sure defense wins championships (Celtics last year in the NBA) but like the Oilers of the 80s, most of the Larry bird and Magic years of the 80s and the Bulls of the 90s, great offences build dynasties.
Update: Dave’s calmed down a bit.