Facebook’s $2B Oculus Deal Happened Over The Last Five Days

Facebook’s deal to buy Oculus VR for $2 billion happened relatively quickly and the negotiations were hammered out over the last five days, according to sources familiar with the deal.

Mark Zuckerberg had been by Oculus’ offices just once before to hang out earlier this year. He played with the company’s DK2, or second development kit.

Both Spark Capital, which led the company’s $16 million Series A round, and Andreessen Horowitz, which led the company’s $75 million Series B round, have an equal stake in the company, according to the source. Venture capitalist Marc Andreessen, who sits on Facebook’s board of directors, recused himself from the negotiations.

“For whatever reason, he got the religion,” a source involved in the deal said. Oculus’s headset has already seen 75,000 orders for development kits, Zuckerberg said on an investor call.

Zuckerberg explained that he felt that Oculus represented an entirely new post-PC and post-mobile platform.

Indeed, after not moving quickly on other earlier deals, perhaps Zuckerberg felt that he needed to be more pre-emptive.

Because Facebook doesn’t own its own mobile operating system, it has had to pursue a more horizontal strategy by building several standalone mobile apps and creating a social layer across third-party apps. But because mobile phones can also be connected by the address book, other competing mobile social networks like Snapchat have been able to rise up quickly and accumulate hundreds of millions of users.

According to other sources familiar with the $19 billion WhatsApp deal, the company’s leadership on the messaging product had been urging Zuckerberg to buy WhatsApp for at least two years. But because both companies didn’t get serious until this year, WhatsApp had already accumulated nearly half a billion users and came with a significantly higher price tag.

“I don’t think you should expect us to do multiple multi-billion dollar acquisitions at this rate,” Zuckerberg said on the call. “We think that WhatsApp is one of the rare companies that will reach 1 billion people and those companies are really valuable. Also, there are not that many things that are candidates to be the next major computing platform. This company Oculus has a clear lead to do this.”