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Facebook’s start-up acquisition highlights value of perching on major tech platforms

Tuesday, 11 October 2011 | By Michelle Hammond
Tech start-ups have an opportunity to complement social media and IT platforms rather than rival them, experts say, following Facebook’s acquisition of Q&A social service Friend.ly.

 

It’s been revealed that Facebook has acquired Friend.ly for an undisclosed sum, in what appears to be a talent buyout. The California-based start-up was founded in 2010 and is led by Ed Baker.

 

Friend.ly is a Facebook application, enabling users to create a more accurate profile by asking them a series of site-generated questions. Users can also compliment each others’ answers.

 

Because the service has access to a Facebook user’s account information, it has a distinct advantage over competitors like Formspring.me.

 

As part of the deal with Facebook, Friend.ly will continue to operate as a separate service, while its 10 staff will work on new projects at Facebook.

 

According to Facebook, Friend.ly has created a “really compelling” way for people to enhance their profile and meet others through answering questions.

 

“We’ve admired the team’s efforts for some time now, and we’re looking forward to having Ed and his colleagues make a big impact on the way millions of people connect and engage with each other on Facebook,” the company said in a statement.

 

Foad Fadaghi, research director at technology analyst firm Telsyte, says as tech giants continue to look for new ways to innovate, there is an opportunity for start-ups.

 

“A good example is the [Apple] App Store where billions of apps have been developed. Likewise, Facebook and some of the others are a great starting point,” Fadaghi says.

 

Fadaghi says start-ups often develop complementary platforms for existing companies, increasing their chances of getting noticed by “the builder of the original mousetrap”.

 

“There are a few incubator-type companies that are focused on that kind of space, such as Startmate,” he says.

 

“A lot of their businesses are not focused on becoming the next Facebook but building something that Facebook does or another IT company does.”

 

“Typically, the guys that start these companies have prior knowledge or experience in the field. They may have even worked for the company they intend to be acquired by.”

 

“It can be difficult for developers who don’t have that prior knowledge [of the original company] to develop the right offering, so I would advise having a member of the board or an advisor that does have that prior knowledge.”

 

Startmate co-founder Niki Scevak agrees that building complementary platforms for existing companies can be a valid entrance strategy for start-ups.

 

“You only have to look at things like YouTube, which started through MySpace... After the initial foothold, they could form more direct relationships with their users,” he says.

 

Other notable examples include online payment system PayPal, developed for eBay, and Twitter third-party app TweetDeck.

 

“Facebook in particular has built their company around providing a platform for other start-ups... They’re aiming to bring that social layer to any application, whether it’s on the web or other devices,” Scevak says.

 

“It’s easier to tap into that distribution platform [than compete with it].”