The Review Blog

Facebook has just acquired mobile commerce startup Karma, which makes apps for gifting friends and family. The terms of the deal are undisclosed but 16 employees of the startup will be joining Facebook. The purchase will help Facebook build up monetization prowess on mobile platforms — an area that it had said it’s admittedly weak in. The price was not disclosed.

With the deal, Facebook gets two extremely experienced leaders in building and monetizing mobile apps. Karma’s chief executive Lee Linden and its co-founder Ben Lewis were behind Tapjoy, a company that became a huge force in distributing and making money from mobile games. Both he and Lewis were product managers at Google and Microsoft. Linden and Lewis have known each other since they were kids and have been building companies together for a couple years.

Note: This was a real product acquisition, not a lower-priced, talent-based one. Karma had done one venture round with Sequoia Capital, Kleiner Perkins Caulfield & Byers, Felicis Ventures and the CrunchFund. The sense that we’re hearing from social product industry sources is that Karma will get Facebook’s 901 million users at its feet and more power behind building partnerships with other brands.  It’s not clear whether Karma will be left alone to run autonomously like Instagram or whether it will become a Facebook-branded product. Last year, Facebook acquired an early group messaging app called Beluga and turned it into Facebook Messenger.

This acquisition makes sense for a couple of reasons. Facebook needs all the help it can get in making its mobile platform produce revenue. Linden and Lewis built Tapjoy into what became a $100 million annual runrate business for app distribution and monetization. Now they’ve turned their attention toward mobile commerce. Facebook hasn’t figured out how to make money from mobile apps quite yet. It’s starting to show sponsored stories in the mobile news feed, but it doesn’t have that many opportunities to make payments revenue from third-party mobile developers because it’s blocked from taking a revenue share on iOS. Android offers some possibilities but it’s quite complicated to build a rival app ecosystem like Amazon has done over the past few years with the Kindle.

Facebook has tried its hand at gifting before, although it was the virtual kind. It abandoned its gifts store in favor of working on a more broad-based virtual currency offering called Credits that would power purchases of virtual gifts and goods from other developers. It also has tried direct commerce with its Groupon competitor Deals, but obviously that is a very expensive model to operate and scale if you look at Groupon’s margins.

But the physical good gifting that Karma specialized in could be a perfect fit. Facebook already knows who your friends, when they have birthdays, and their interests. It could suggest gifts to give and who to give them too, let users pay with their credit card or credits, and take a healthy cut.

We had heard a few weeks ago that Lewis was considering taking personal time to travel the world and step down from running Karma with Linden, but apparently we were wrong. He is definitely joining Facebook with the rest of the team.

Facebook said in a statement: “We’ve been really impressed with the Karma team and all they accomplished in such a short time. This acquisition combines Karma’s passion and innovative mobile app with Facebook’s platform to help people connect and share in new and meaningful ways.”

Karma also had a post on its own blog:

We founded Karma with the goal of adding the sentiment and meaning back into gift giving. That’s what Karma is all about. That’s what the Karma team set out to achieve.

Over the last year, we’ve built a new e-commerce platform from the ground up. We’ve been honored to partner with amazing brands to create a curated catalog of products. We made those products instantly giftable in a brand new way. And we harnessed the power of Facebook’s social network to ensure you never miss a chance to show someone you care. The phenomenal response and feedback we’ve heard from customers has more than exceeded our expectations. And we’re just getting started — today we take social gifting to the next level.

We’re thrilled to announce that Karma has been acquired by Facebook. The service that Karma provides will continue to operate in full force. By combining the incredible passion of our community with Facebook’s platform we can delight users in new and meaningful ways. As we say … only good things will follow.

Simply put, together we can celebrate life’s important moments in ways we could not before. A word of heartfelt thanks to our partners, customers, and our incredible team for helping us share Karma with so many people.

Sincerely,
Karma Co-founders Lee & Ben

The underwriters of Facebook’s $16 billion debut on NASDAQ fought to the finish to keep the company’s shares above last night’s final price of $38 a share. Shares closed at $38.23 today. Sources tell us that the syndicate of banks underwriting the deal have been putting in buy orders to keep its price afloat. It’s not necessarily a bad outcome for Facebook as the company didn’t leave any money on the table, but bankers on the wealth-management side of the underwriters are sure to be unhappy. Plus, the company’s tepid premiere is killing the performance of tech stocks across the board.

Basically, what we hear is that the underwriters including Morgan Stanley, JPMorgan and Goldman Sachs, just got too aggressive in the final days before the IPO about pricing. Earlier this month, the company was slated to open at a $28 to 35 price range, but that range was pushed up to $34 to 38 a share. Then Facebook priced at the very high end at $38 last night.

“The only thing keeping it at $38 are support mechanisms,” a source tells us. “There just wasn’t the institutional investor demand that people thought there would be.” They added that about 20 percent of buying orders seem to be coming from retail investors (e.g. regular people), which is “unprecedented.”

Because prices are being held up to avoid a negative finish, shares might dip lower into early next week. Already, we’re seeing the impact on other stocks across the board. Zynga is down 13.4 percent to $7.16. LinkedIn is down 5.9 percent to $99.02. “They’re all in the shitter because now they look expensive since Facebook didn’t go anywhere,” we’re told.

From Facebook’s perspective, the company shouldn’t care. The company and its early shareholders raised $16 billion at the very best price they could, leaving no money on the table for the underwriters’ wealthy clients to scoop up and sell for a quick profit.

Indeed, CEO Mark Zuckerberg has warned investors from the very beginning that Facebook was originally not meant to be a company. He even said today before the market opened, “Going public is an important milestone in our history. But here’s the thing: our mission isn’t to be a public company. Our mission is to make the world more open and connected.”

Gillmor Gang – Gabe Rivera, John Taschek, Robert Scoble, Kevin Marks, and Steve Gilmor. Recording has concluded.

In case there was any confusion after Facebook’s eight years in business and its recent geographic expansions, it was cleared up today: Facebook’s home and heart lies in Silicon Valley.

TechCrunch TV saw that first-hand this morning at NASDAQ’s Marketsite in New York City’s Times Square. We were on hand there for the ringing of the NASDAQ opening bell, but as expected, Facebook’s founder and CEO Mark Zuckerberg took advantage of the option to ring it remotely from his company’s Menlo Park, California headquarters.

NASDAQ is a fully digital stock exchange, unlike for example the New York Stock Exchange, so it doesn’t have a physical trading floor and the bell-ringing is really just a ceremonial gesture. Nevertheless, there were throngs of reporters, some die-hard Facebook fans, and a few bewildered-looking tourists gathered in Times Square around the NASDAQ Marketsite to see the action.

An Eerily Quiet Times Square

But as you can see in the video embedded above, that “action” was negligible. NASDAQ played a short, two- to three-minute simulcast of Zuckerberg before and during the ringing of the bell on massive television screens, but there was no sound from the event piped into Times Square — so for the duration of the broadcast the crowd fell eerily silent, just watching the screen together. There was a brief countdown shown, but no one called out the numbers or anything. New Year’s Eve it was not.

My colleague Anthony Ha found the scene at Facebook’s headquarters this morning to be “underwhelming,” but from where I stood it looked like a downright rager compared to the environment in NYC. In fact, I’m pretty sure this was one of the only occasions I’ll be able to say with near certainty that Menlo Park, California was a louder and more bustling place than Times Square.

The Power Shift From Wall Street To Silicon Valley?

Someone could easily see the whole event as a let down, but after thinking about it a bit I actually feel like it was the opposite. The scene at NASDAQ today strikes me as just the latest sign of an ongoing shift in power from the finance industry to the technology industry — from the proverbial Wall Street to the proverbial Silicon Valley.

Now, I don’t mean that literally, of course. We all live digitally these days, so power is by no means not actually moving geographically from East to West (or even being centered in the United States at all.) But it is a palpable shift in mentality. So for those of us who work and live in and around the tech industry, the silence in Times Square this morning represents something very exciting indeed.

~The Best Of TechCrunch’s Facebook IPO Coverage~

Video & Photos: Facebook CEO Mark Zuckerberg Rings In The NASDAQ Bell

No IPO Pop Here: Facebook Trades Slightly Higher At Around $40

Facebook’s Key Executives And Shareholders: What Is Everyone Worth?

Zuckerberg Receives Hoodie, Says “Our Mission Isn’t To Be A Public Company” In Pre-IPO Remarks

How Facebook Hacked The NASDAQ Button

Zynga Shares Go On Wild Ride During Facebook IPO — Big Fall, Then Recovery

Facebook Says Haters Gonna Hate, Likers Gonna Like

Is The Avengers worth your money? Do the disc-blasting Nerf guns leave a welt? How do you pull a Pebble and rein in $3 million on Kickstarter?

In this week’s TC/Gadgets webcast, we answer all this and more. John and Matt argue over the value in one of this summer’s tent pole movies, The Avengers. John finds it boring, while Matt thinks “it’s fun for everyone.” And while I can’t say I’ll be buying a ticket to The Avengers any time soon, I can say with great certainty that I’ll be at one of the opening day showings of Prometheus.

Who doesn’t love space, right?

The gang also discusses Nerf’s disc-blasting guns, and how they may or may not be used at this weekend’s Disrupt Hackathon. Last year we saw a raucous group of hackers start an all-out war with bungee darts. None of the TC editorial staff was injured (nor were the hackers), but this year we’ll at least have some Nerf Vortex and Vulcan guns slung over our shoulders. You know… Just in case.

In the words of the recent Game Of Thrones trailers, “War is coming.”

Finally, but likely most importantly, Matt, Chris, John and I offer up some tips as to what we cover on Kickstarter. Matt is done with iPad cases, and though I echo the sentiment, I’ll probably be more willing to make exceptions than he. John prefers the “little tweaks” to things we already use and enjoy, like the automatic bike light that knows when you’re moving.

I encourage a strong video, as marketing is a huge driver of any business. But the geeky stuff has its place too — Chris thoroughly enjoyed the electron microscope project that significantly reduced the cost of looking at really, really tiny things.