Zuckerberg Shares Facebook’s Secret Recipe For Acquiring Companies

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Facebook CEO Mark Zuckerberg received a concerning message from former Oculus CEO Brendan Iribe during the weeks leading to the Zuckerberg’s decision to purchase Oculus for $2 billion. Google was also interested in acquiring the VR startup.

Facebook beat Google twice

In 2014 during Facebook’s two-week negotiation process to purchase WhatsApp for $19 billion, the same kind of situation occurred. Another competitor (believed to be Google) offered WhatsApp more money. However, Facebook ended up closing deals on both Oculus and WhatsApp within a period of just a few weeks, beating Google twice, notes Business Insider.

On Tuesday during a public testimony in Zenimax’s lawsuit against Oculus, Zuckerberg gave some insight into how he approaches buying other companies.

Zuckerberg’s acquisition strategies

Business Insider summarized those approaches into four headings.

Build relationships: The CEO explained that he mostly approaches large and important acquisitions by establishing a friendship with the founders of the companies.

“In reality what is happening with all of these, in Instagram and WhatsApp and Oculus, they are kind of things that we’ve been thinking about for a long time,” Zuckerberg said.

He added that for years, he has been building a relationship, at least in the WhatsApp and Instagram cases, with the people involved and the founders of the company.

Shared vision: The main reason Zuckerberg was able to buy Oculus for less than the $4 billion, according to the CEO, was because he pitched a same vision between the two companies. The Facebook CEO said the most essential thing was aligning and getting excited about a shared vision and about how they are going to work together.

“If they built the hardware and we built the experiences, how that could be better than either of us working separately,” Zuckerberg said.

Scare tactics: Zuckerberg admitted that he sometimes scared small startups by making them imagine how hard it would be for them to run their business alone. It is uncertain whether he used that tactic on Evan Spiegel, who turned down Zuckerberg’s $3 billion deal to purchase Snapchat a few years ago.

Act fast: When Zuckerberg’s top dealmaker, Amin Zoufonoun, warned him that doing legal due diligence on Oculus over only one weekend had “some risk,” the CEO told him to continue “pushing forward until they have something they can sign on a moment’s notice.”

“When you’re making deals and it is a competitive situation, you often don’t have a lot of time,” Facebook CEO said.

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