Leading social network Facebook tried to buy popular micro-messaging service Twitter a few weeks ago, BoomTown reports, confirming a previous suggestion of the deal. It apparently didn’t work out because Facebook offered Twitter $500 million in stock at its preferred-stock valuation of $15 billion, not its common-stock valuation of somewhere between $4 billion and $5 billion. Twitter wants more equity — and cash — according to Swisher.
Facebook may have offered up to $100 million in cash, The Deal hears. Which still wasn’t enough. Meanwhile, Facebook may only be making between $250 million and $300 million this year, mostly from ads, while Twitter is making next to nothing. Nor is Twitter’s path to revenue clear.
Neither company seems especially focused on revenue, though. That’s because both companies think they’re in the midst of capturing the future of communication, with growth rates that seem to prove it. Both companies hope to make lots of money, later.
Facebook sees itself as the central provider of “social context” about the world around you. It dominates real-world communities like college campuses. Twitter, on the other hand, is increasingly at the center of information-sharing around the web. It is the only other company that appears to be seriously competing against Facebook in its self-proclaimed mission of helping people share more information with each other.
Facebook’s Twitter obsession?
The negotiations, which began in mid-October, broke off in early November, around the time an acquistion offer was previously mentioned — when John Battelle interviewed Facebook chief executive Mark Zuckerberg at the Web 2.0 conference. In hindsight, that conversation revealed not only why Facebook might want to own Twitter, but how it sees Twitter as a rival. Here’s the excerpted transcript (starts at 22:14 in the embedded video, below):
JB (screenshot above): Is Twitter just a feature of Facebook?
MZ: Oh that’s tough. I think they’re doing really good stuff. I’m really impressed by what they’ve done. Is it a feature? I think that they’re building something pretty cool.
JB (shaking with excitement over the following): Is there a build-buy spreadsheet in [Facebook chief financial officer Gideon Yu's] office around Twitter?
MZ (blushes): Build-buy spreadsheet? I don’t think the CFO makes analyses of building stuff. We’re a building-driven company….
JB (interrupts): Help me out, whose office is it in?
MZ: ….It’s an open-floor plan. We have status updates and wall posts and all these things, too. [Twitter has] a very elegant model.
JB: Is it a partner for Facebook Connect.
MZ: Yeah.
So Zuckerberg was impressed by Twitter. Here’s why. Facebook is a full-blown social network that includes features for uploading photos, sharing links to articles, listing detailed biographical information, and much more. Twitter, meanwhile, is almost entirely focused on sharing information — Facebook’s self-proclaimed mission. You post short (140 character) messages responding to the site’s question of “What are you doing?” If you want to share anything else — say photos on Flickr, videos on YouTube, news articles, or whatever — you can just post URLs directing your Twitter friends to those sites. Twitter’s user profiles are extremely limited: Just your chosen name, location, website and a short bio.
While Facebook wants to encompass real-world communities, Twitter doesn’t bother. The result seems to be that entire college campuses, companies, large portions of cities, and other geographic communities are on Facebook, while large portions of, well, early-adopter tech geeks are on Twitter. Facebook has more than 120 million users, and is growing fast around the world. Twitter has an unknown number of users, mostly because many access the service through its application programming interfaces (APIs) and not the web interface itself. It’s certainly a small fraction of Facebook’s.
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