FriendFeed — The Geeks’ Real-Time Network Facebook Bought for Its Brains

FriendFeed was the real-time social aggregator that the technology industry’s early adopters loved and almost nobody else used, and on April 9, 2015 Facebook — which had owned it since 2009 — finally switched it off. Launched in 2007 by four former Google engineers, FriendFeed pulled a person’s activity from dozens of services — blog posts, Twitter updates, photos, bookmarks, any RSS feed — into one live, continuously updating stream, and then layered fast conversation on top of it. Comments and likes appeared instantly; a popular thread could surface and ignite a discussion in real time. For a particular kind of user — bloggers, developers, journalists, the people who lived on the leading edge of the social web — it was the best conversation tool of its moment.

It was also, commercially, a service ahead of its audience. FriendFeed’s user base was small, intensely engaged, and disproportionately influential, but it never crossed into the mainstream, and it had no obvious path to the scale or revenue that would make it a standalone business. So in August 2009 Facebook acquired it. The reported terms — roughly $47.5 million, split as about $15 million cash and $32.5 million in Facebook stock — were never officially confirmed; Facebook’s announcement said only that the financial terms were not disclosed.

What Facebook bought, in the end, was less the product than the people who made it. The acquisition was widely understood as an acqui-hire: FriendFeed’s four founders — Bret Taylor, Paul Buchheit, Jim Norris, and Sanjeev Singh — and their team joined Facebook in senior engineering and product roles, and over the following years helped build large parts of Facebook’s infrastructure. Bret Taylor became Facebook’s chief technology officer; Paul Buchheit, who had created Gmail and coined “Don’t be evil,” went on to Y Combinator. The team’s fingerprints ended up on the real-time News Feed, the Like button, and tools that outlived FriendFeed by more than a decade.

FriendFeed the service, meanwhile, was kept on life support — left online but undeveloped for nearly six years, its small community slowly thinning, until Facebook announced on March 9, 2015 that usage had “declined steadily” and it would shut the service down. On April 9, 2015, FriendFeed went dark. It had been acquired not to grow, but to be absorbed — and it had done its real work the day its founders signed on.

Bebo — The $850 Million Teen Network AOL Spent Into Bankruptcy

Bebo was the teenage social network that briefly ruled the United Kingdom and Ireland, and in 2013 the company that owned it filed for bankruptcy and was bought back by its own founders for $1 million. Launched in January 2005 by the husband-and-wife team Michael and Xochi Birch in San Francisco, Bebo combined profiles, comments, and a customizable, scrapbook-like aesthetic that landed perfectly with teenagers. Where MySpace was loud and Facebook was, in 2005, still a college-only walled garden, Bebo was the friendly, expressive network where British and Irish teens spent their afternoons. At its 2008 peak it claimed on the order of 40 million registered users and, for a stretch, overtook MySpace to become the most-used social network in the UK.

Then AOL bought it, and the story turns from a teen-network success into the textbook case of acquisition value destruction. On March 13, 2008, AOL acquired Bebo for $850 million in cash — a price that handed the Birches, who held the majority stake, a fortune, and that the BBC would later rank among the worst deals of the dotcom era. AOL bought at the worst possible moment, just as Facebook was opening to everyone and beginning to pull the entire social world into its orbit. AOL had no coherent plan for what it had bought, invested little, and watched Bebo’s users drain toward Facebook.

By 2010 AOL had given up. In June it sold Bebo to the investment firm Criterion Capital Partners for an undisclosed sum reported to be under $10 million — a loss in the neighborhood of $840 million on a two-year-old purchase. Criterion fared no better; under its ownership Bebo kept shedding users, and in 2013 the company filed for Chapter 11 bankruptcy. The closing twist arrived on July 1, 2013, when Michael and Xochi Birch bought their old network back out of bankruptcy for $1 million — the same network they had sold to AOL, five years earlier, for $850 million.

What users lost was a network they had genuinely loved, dismantled not by a better product alone but by years of corporate neglect that hollowed it out while Facebook waited. Bebo would be relaunched repeatedly in later years, but the social network that meant something to a generation of UK and Irish teenagers had been bought, broken, and bankrupted long before. It is the clearest object lesson in tech of how to turn $850 million into $1 million.