Was it Microsoft who establised Facebook ?

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Facebook is growing and beating the speed of any other social networking portal day by day. People are registering themselves, chatting, discussing about it at every corner of the internet way. But Facebook is not just popular bcoz of its everyday growing users ( currently total 500 Million+ users). According to Nicholas Carlson, editor of BusinessInsider, there were 11 companies who played an important role for gaining Facebook such an exposure.Top of all, it’s really surprising, it was Microsoft who outplayed rest all the companies and made Facebook out of reach from most of the companies.

An interesting story behind the success of Facebook and how Microsoft helped Facebook to transform its image from 1.5 Billion to 15 Billion company:

  1. As early as 4 months after Facebook’s inception, people with money and people representing companies with money began lining up to beg Facebook cofounder and CEO Mark Zuckerberg to take their cash and sell the company. Obviously, Mark turned all their offers down. In June 2004, much before outside investment, Mark fielded an offer of USD 10 Million from an unknown investor.
  2. Very shortly it was Friendster who was also interested in Facebook. But this acquisition was based on next round of funding for Friendster. It never went through.
  3. Summer of 2004, it was “Big Elephant” Google offered a ride to Facebook. At that time it was “TheFaceBook.com”.
  4. Spring of 2005, Facebook was talking with Washington Post company for investments. To surprise all, from nowhere Viacom offered USF 75 Million for Facebook acquisition.
  5. In the spring of 2005, MySpace which was monitoring the rising glory of Facebook, tried checking nerves of Facebook and indirectly offered some unknown figure for Facebook acquisition. Facebook never got interested in that deal.
  6. In January News Corp wanted showed interest in buying Facebook with half hearted feeling. Ros Levinshon, News Corp Boss was not completely convinced with the future growth of Facebook.
  7. Viacom never gave up. MTV told Viacom that their viewers are spending more and more time on Facebook. This made Viacom to check sense of blood from Facebook. Viacom boss flew to meet Tom. Tom never got interested.
  8. In early 2006, MTV boss Michael Wolf stopped by Facebook one last time. Zuckerberg told him he thought the company was worth $2 billion. A couple weeks later, Viacom sent Facebook a $1.5 billion offer – $800 million in cash up front, the rest a payout later. Through few sources, it was confirmed that Facebook was almost sold with a condition of higher upfront payment. Deal felt apart. Viacom bosses never turned back.
  9. Struggling to regain its popularity, Yahoo gave a thought to buy Facebook in summer 2006. Yahoo offered Facebook USD 1 Billion. Facebook investors and many of it executives were interested in this deal. Facebook decided to evaluate Yahoo offer after the Newsfeed RSS launch which was due shortly. They decided this to check the popularity of Facebook further which may turn back with better offer from Yahoo. But after announcing horrible Q2 earning, Yahoo lowered its offer USD 850 Million, which Facebook considered rubbish.
  10. Now it was turn for AOL. In mid 2006, AOL decided to buy Facebook. Their Plan : Time Inc  and AOl  together they would offer USD 1 Billion. Deal never got through.
  11. Yahoo comes back again in fall 2006 with its offer of USD 1 Billion. By then Facebook was having registration of 2,000 – 5,000 per day. Eager to exit, Facebook investors and executive wanted this deal to happen besides one. It was Facebook COO Owen van Natta.
  12. Hey Its Google again. Google again reconsider to buy Facebook. This time Google never got a deal but offered a strategic investment in Facebook with a evaluation of USD 15 Billion.
  13. Keeping a close eye of Google’s move Microsoft CEO Steve Ballmer offered to buy the Facebook in 2007. Steve knew Mark would never relinquish control over Facebook, so he came up with a deal based on Hoffman-LaRoche’s acquisition of Genentech. Ballmer somehow wanted to have direct/indirect influential control over the Facebook to keep Google away from Facebook.The acquisition never happened, but Microsoft did buy 1.6% of Facebook for about $250 million. That deal, which set Facebook’s value at $15 billion, stipulated that Facebook would have to give Microsoft notice if it ever began to take a buyout offer from Google seriously. This was the turn which gave Facebook much needed hike and exposure in the investment market.Microsoft’s $247 million investment, which set Facebook’s value at astronomical $15 billion, stipulated that Facebook would have to give Microsoft notice before it ever considered a buyout offer from Google – just about the only other company in the world that could pay so much for a tech startup with no revenues. If Facebook ever sells (to anyone besides the public in an IPO), it’ll be to Microsoft or to a company that made an offer Microsoft chose not to match.


Giving a thought on all the sequences of buying efforts from various companies, Facebook never got evaluation of more than USD 1.5 Billion. But it was Google who just showed interest and evaluated higher. Following to which, Microsoft not only increased the hype of Facebook by 8 times but also freeze the expectations of various future investors for Facebook. Shall we understand that predominance in IT between Google and Microsoft is becoming sweet portion for rest of the companies!!




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