Mark Zuckerberg: 'We Buy Companies To Get Excellent People'

Startups: if you're looking to be bought out by Facebook, you might want to polish your site's "About Our Team" page.

Speaking to an audience at Y Combinator's Startup School last weekend, Facebook CEO Mark Zuckerberg said that "Facebook has not once bought a company for the company itself. We buy companies to get excellent people."

Facebook's chief is on the prowl for top talent. And scooping up that talent has recently meant absorbing the companies they run. Before this year, Facebook had acquired just two companies in its history. It now owns seven, including Hot Potato and Nextstop, both of which were acquired in July. As TechCrunch's MG Siegler points out, the Nextstop deal was all about Facebook's "unquenchable thirst for top talent."

Facebook's strategy hasn't changed much since its first acquisition, in 2007, when Zuckerberg snatched up Parakey, a startup run by Mozilla Firefox co-founders Blake Ross and Joe Hewitt. With Parakey's two leaders under his wing, Zuckerberg enlisted Ross to spearhead Facebook's internationalization, and Hewitt to build Facebook's mobile apps. The social networking company went on to enjoy huge success in both the international and the mobile markets.

But buying a company doesn't ensure its top brass will follow. So how does Facebook convince the best and brightest to join its growing empire? Perhaps it's the company's $33.7 billion valuation, according to The Financial Times. Or, as Zuckerberg put it last weekend, "A lot of the best people come to Facebook because of the culture we have and because we have enormous leverage ... I can't think of another company where each engineer services more than a million users."

Watch Zuckerberg explain why Facebook buys startups:

Comments

[arthurb3]

12:06 AM on 10/23/2010

The real Zuckerberg comes out! So he pirates other companies to steal their intelectual resources?

[TOS100]

11:03 AM on 10/21/2010

Because there aren't enough "excellent people" in the cold, looking for work already?

[Julia Bailey]

11:17 AM on 10/21/2010

No, actually. I know a lot of companies that are having real hard time finding people. And I know a lot of people out of work who aren't able to do the jobs.
There are no unemployed configuration engineers for example.

[hu.man]

02:57 AM on 10/21/2010

Zuckerberg is on a tear. He gives away his secret to success but to duplicate what he is doing is nearly impossible because it is all in how the idea is executed.

His youth probably works against him in terms of getting public approval. This was the first time I saw him speak. I will not think of him the same way as before. Looks like he will be leading the next big wave of software technology ala Google and Microsoft.

[tangolas]

02:21 AM on 10/21/2010

Farmville = slavery

http://corbettreport.com/mp3/2010-10-20%20Max%20Keiser.mp3

[Kimiko Austin-Rijs]

11:39 AM on 10/21/2010

LOL!

[arthurb3]

12:08 AM on 10/23/2010

Yes! I have a friend that spends all his time on Farmville. His apartment is dirty. He never hangs out and talks to live people- only Farmville blogs, ect! No social skills!

[tangolas]

12:26 AM on 10/23/2010

while the world around us crumbles. sheer madness......
http://newknewwhirld.wordpress.com/2010/05/29/virtual-insanity-exploring-the-farmville-craze-and-how-the-computer-world-is-becoming-real-life/

[joeythes]

12:16 AM on 10/21/2010

Perhaps entrepreneurs have a choice whether they want to sell or not? It's their talent and skills to sell.

[TheRevV]

10:52 PM on 10/20/2010

Can't any "free-marketers" see this is the endgame strategy of all big businesses operating without regulation?

In a free market without safeguards like trust-busting, businesses compete until one develops a winning strategy. That business grows increasingly large. Smaller businesses compete, but eventually smaller businesses cannot overcome a business which grows so large it has the capital to buy the competition. The biggest company dominates in perpetuity. Then that company turns on the consumer, and the consumer has no choice but to suck up whatever that company sends down the pipe. The only variation to this plan is when several large businesses get together and agree to set prices and NOT compete with each other, then offer deals within a few dollars of their so-called "competitors" (see: Big Oil, Big Insurance). The end result is, ironically, NO competition. NO "free market."

Checks and balances MUST apply to businesses which grow so large they can gobble up any competition. That's not socialism. That's fair.

[WeCanDoMore]

11:26 PM on 10/20/2010

f and f.

[TheRevV]

11:40 PM on 10/20/2010

Thank you. Zuckerburg's practices are brilliant for a CEO AND a detriment to the rest of us because it FORCES us to accept his product or else. Freedom to advance innovation improves us as a whole. Corporations who can stifle that to increase their profits by buying up innovators not only defeats the principles behind "entrepreneurship" and "free market" based on the idea of "a better mousetrap" (if you get my drift) holds us back because innovators get squashed. When "free market" overreaches to the point it can stifle competition it's no longer a "free market."

[Kayvan Ghavim]

08:56 PM on 10/20/2010

...and we got that idea from the robber-barons of the 20s!

[PartyPartyParty]

07:48 PM on 10/20/2010

"......and then we lay them off."

[TMMA]

05:43 PM on 10/20/2010

And what happens to the people at the companies you aquire that you do not deem "excellent" Mark? Kick them to the curb?

I quit FB after seeing Social Network.

[SGMD1]

02:07 PM on 10/21/2010

499,999,999 other people didn't, so I'm sure Zuckerberg won't shed any tears over your departure

[StanAccrington]

03:55 PM on 10/20/2010

I don't trust that kid. I just don't trust him.

[hypnotoad72]

07:04 PM on 10/20/2010

He's just being a "good CEO"...

I don't think anyone trusts him these days...

[glow-in-the-dark]

12:06 PM on 10/20/2010

Actually, from all the things I've heard him say this is about the most sensible thing so far. He's right - sometimes that's the best way to get go-getters instead of office chair padding.

It's also the main reason I personally no longer use recruitment companies - they really do not have a clue, and for selecting CVs on the basis of a tickbox process (which doesn't give me the right people) it's cheaper to just have admin staff do the sifting..

[hypnotoad72]

07:03 PM on 10/20/2010

But did he say what he said for the right reasons? Or to get people on his side, given the mountain of distrust his happy little company has cultivated?

[Cryostatic]

07:33 AM on 10/20/2010

So, instead of simply trying to better-deal someone into your company, you simply buy the company, and give them the choice of "work for me, or quit".

There's something intrinsically wrong with this.

[Richard Lauren]

09:06 AM on 10/20/2010

History has shown-up what men like Zuckerberg are capable of. This will only get much worse before people see reason.

[Albert Amato]

10:28 AM on 10/20/2010

It is better to buy the whole company rather than cherry pick key employees that puts the company and other employees out of business or out of a job.
That perspective is definitely valid.

[Cthulhu On Call]

03:09 AM on 10/20/2010

This may be the most ridiculous explanation I've ever heard for buying up startups.

I'm sure they can find good people without any problem.

It's like saying that you bought a Major League Baseball franchise so that you could go to the games for free.

[petegrif]

03:44 AM on 10/20/2010

it's not ridiculous at all
the kind of excellence he is talking about includes vision and entrepreneurial flair, not just engineering expertise, and these are rarer than you might imagine.

[Cthulhu On Call]

01:31 PM on 10/20/2010

LOL.

They're buying up their competition. It's what monopolies do when they don't want to compete. "Hot Potato" was a social networking site.

But hey, if you see that as "vision and entrepreneurial flair" don't let that get in your way...

[Albert Amato]

10:30 AM on 10/20/2010

Bad analogy......it is like buying the whole team so that everyone is on the team.....without stealing the major stars.

[bryanzth]

06:57 PM on 10/19/2010

"First week, or first month...." You complete a project in so short a time?

Well, whatever, but you guys want blood out of a turnip... And blood is left on the floor, too, I guess.

BZ.

[middleoftheroad]

03:56 PM on 10/19/2010

I have to admit, I like listening to him speak. If people studied is presentation they would make impressions in job interviews.