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Facebook buys Karma app

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The newly public Facebook (s FB) says it is buying Karma, a mobile social gifting app. The news was released via Karma’s blog. As we first posted, Karma was founded by Lee Linden and Ben Lewis who in their past life were co-founders of Tapjoy, that was acquired by Offerpal Media after reaching more than $100 million in revenue. Investors in Karma include Kleiner Perkins Caufield & Byers, Sequoia Capital, and Evan Williams and Biz Stone’s Obvious Corp.

In a blog post, Lee and Ben write:

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.

The deal terms were not announced. Facebook plans to keep the service alive. A Facebook spokesperson said this is an acqusiton and not an acquhire.

“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.”

Facebook has gotten fairly aggressive in its acquisitions of mobile applications and acquired Instagram for close to a billion dollars. Karma is quite a stunning app and I have become quite a fan. In fact, I thought this could be the next When Karma launched we looked at the company and here is what we wrote:

What’s nice about the Karma app is that users can send gifts almost instantaneously, without having to enter their billing information before doing so. You also don’t need to have the address or contact info of the recipient — they enter that information when they choose to accept a gift.

It also allows users to send a personalized note to people they’re gifting, either by SMS, posted on their Facebook walls, or by email. Those receiving gifts can even choose between options or swap out something they’ve been given if they’re not thrilled with what was initially gifted to them.

One of the more interesting aspects about the Karma mobile experience isn’t just that it makes gifting by phone ultra-easy, but that it helps to highlight the news around friends and family that actually matters. There’s so much noise on Facebook that it’s difficult to tell now when a friend is having a birthday, or if someone got engaged or is having a baby. The Karma app, by contrast, uses semantic analysis to determine events that are worth gifting people for.

4 Responses to “Facebook buys Karma app”

  1. Jim B.

    Time to play with the monopoly money I guess. Karma sounds good on paper, but in reality, it is anything but useful. First, you have to buy an overpriced item from their catalogue. A $50 pint of ice cream or a $25 homemade candy bar are just two examples. Not novel at all. Second, if I’m going to spend that much on a gift, then they better be a close friend/family. No way I can afford to do ‘little’ events. Third, I have to pay shipping fees so the cost adds up pretty quick. And fourth, I can’t make this a group gift….have others chip in. The only social aspect is that the gifting is done through Facebook. Wow.

    For the past few months, I’ve been using EventSmart ( which is really what social gifting should be. It’s free, the recipient can buy anything they want, and I can invite others to chip in. You can also contribute as little as $5 for anything. For example, recently a close friend’s son had several surgeries on a broken leg. I started a gift, chipped in some money and then invited some mutual friends who contributed as well. EventSmart collected the contributions and then let my friend’s son transfer the funds onto a gift card. He ended up buying some video games through Amazon. No fees. No overpriced items from a limited catalogue. Several people all contributed. I’m a believer!

    Karma is good marketing with no substance. I’d never use their restrictive service for overpriced junk. Hope Facebook didn’t pay that much, but when it’s monopoly money, maybe it doesn’t matter.