Mark Zuckerberg Really, Really Wanted to Work With Sam Lessin
Facebook's acquisition of online storage start-up Drop.io last week looks like the standard-issue “acqhire”: Big company buys a small company because it wants its employees, but doesn't really care about the business they've built.
Context & Ripple Effects
Drop.io announced on its own blog on October 29, 2010 that Facebook had acquired most of its assets, and MediaMemo reads the deal as the template case of an 'acqui-hire': Facebook wanted Sam Lessin and his team, not the file-storage business they had built. A confirmed detail behind the headline is that Zuckerberg personally pushed for the deal because he wanted to work with Lessin.
The timing matters: the purchase landed in a crowded Facebook news week that included the company's disclosure of inadvertent User ID sharing by platform developers — wait, no such link belongs here — a disclosed browser-related User ID leak, a special mobile event announcement, a new friend-interest ad-targeting patent filing, and continued attention from The Social Network's dramatization of Zuckerberg. Against that backdrop, a quiet talent buy shows what Facebook was optimizing for: people over product lines.
First-order effects
- Sam Lessin and the Drop.io team move into Facebook, while the file-sharing service itself loses its standalone path since only most assets — effectively the people — were acquired.
Second-order effects
- Founders of small web services now have evidence that a personal relationship with a buyer like Zuckerberg can be the deal currency, shifting exit strategy from scaling a product to positioning a team.
Third-order effects
- If the pattern holds, early-stage web M&A increasingly prices companies on their people rather than their revenue, turning small acquisitions into recruiting mechanisms dressed as purchases.
The trend: Web-industry acquisitions are decoupling from the businesses being bought, with large platforms paying primarily for founders and engineering teams.