Facebook On Its Way To Eating Hot Potato

Some pundits actually coined the word “acq-hired” to describe Facebook’s “late stage negotiations” to buy Hot Potato, a barely year-old startup founded by entrepreneur Justin Shaffer. Hot Potato grew to be pretty hot by simply allowing its users to message each other about a real-time event they were in, be it a concert, a football game or the same party. Hot Potato’s edge was it provided a function that both Facebook and Twitter haven’t taken advantage of yet.

Hot Potato is a perfect buy for the Zuckerberg-owned social site. First, the infusion of talent into Facebook is a plus-plus. For Hot Potato founder Justin Shaffer to launch an innovative real time messaging service late last year and grow it into a serious acquisition ten months later belies his talent. His “product sense” and vision is a welcome addition in Facebook’s future plans. Also, by acquiring Hot Potato, Facebook has the opportunity to make its presence felt in the NY Tech scene.

Second, Hot Potato is still too small to make a difference. Funded by a shoestring $1.4 million from VCs, Hot Potato’s potential may be achieved as a product in sync with Facebook operations. A ballpark figure of “$10-15 million” was mentioned as pretty darn cheap compared to another recent Facebook offer like the one for Foursquare.

via Business Insider