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Facebook Is Just So Bad In Investing In Companies
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During the weeks leading up to Mark Zuckerberg’s decision to buy Oculus for $2 billion, he received a concerning message from then-Oculus CEO Brendan Iribe.

Google was also interested in buying the VR startup.
A similar situation occurred during Facebook’s two-week negotiation process to acquire WhatsApp for $19 billion in 2014. A rival tech giant that’s believed to have also been Google offered WhatsApp more money to steal the messaging app out from underneath Zuckerberg.

Facebook ended up successfully closing deals on Oculus and WhatsApp within a period of just a few weeks, beating out Google twice.
Zuckerberg gave rare insight into how he approaches acquiring other companies during a public testimony in a Dallas courtroom on Tuesday. He was there to testify in a lawsuit against Oculus by video game publisher Zenimax.

Here are Zuckerberg’s four main acquisition strategies, which Business Insider obtained through a court transcript of his testimony:
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1. Build relationships first
While Facebook ended up conducting its legal due diligence on Oculus over just one weekend, Zuckerberg explained that he usually approaches big acquisitions by first establishing friendships with the founders of the companies he’s looking to scoop up.

“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,” he explained.
“And I’ve been building relationships, at least in Instagram and the WhatsApp cases, for years with the founders and the people that are involved in these companies, which made is so that when it became time or when we thought it was the right time to move, we felt like we had a good amount of context and had good relationships so that we could move quickly, which was competitively important and why a lot of these acquisitions, I think, came to us instead of our competitors and ended up being very good acquisitions over time that a lot of competitors wished they had gotten instead.”
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2. Have a shared vision
Zuckerberg said that the main reason he was able to acquire Oculus for less than the $4 billion its team originally wanted was because he pitched a collaborative vision between the two companies that everyone bought into.

“The most important thing was aligning and getting excited about a shared vision and about how we’re going to work together. Or if they built the hardware and we built the experiences, how that could be better than either of us working separately,” he said.
“If this [the deal] is going to happen, it’s not going to be because we offer a lot of money, although we’re going to have to offer a fair price for the company that is more than what they felt like they could do on their own. But they also need to feel like this was actually going to help their mission, right?”

The shared vision has to go both ways too, Zuckerberg explained.

“There’s a lot of anxiety in these deals, right?” he said. ” I mean, if you’re going to pay $19 billion for a company or $2 billion for a company, you clearly have to really believe in it.”
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Snap CEO Evan Spiegel, who’s company is preparing for an IPO that could value its business at $25 billion.

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