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.

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 and Kleiner Perkins Caulfield & Byers. The sense that we’re hearing from 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. 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 bad outcome for Facebook as the company didn’t leave any money on the table, but bankers 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 they 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.”

If only Facebook IPO day were a little less of a snoozefest than it is now. If only it had Zuckerberg impaling investors while riding a bull rampaging through a city. Or an elevator to space. Or Zuckerberg bouncing Ronald McDonald and the Hamburglar off a giant scale. But sadly, our surrealist dreams will never be realized.

We will just have to settle for the ho-hum performance of Facebook’s shares so far. In the meantime, you can watch this re-enactment from NMA TV or Next Media Animation, that Taiwanese animation subsidiary that riffs off current events with 3D animated videos that look like what the lovechild of Salvador Dali and Reddit would make. Oh, and did we mention that their parent company invests in tech startups too?

Well, they warned us.

Yesterday, Facebook PR was telling reporters that when the company went public this morning, there wouldn’t be much to see at the Menlo Park headquarters. Nonetheless, I made the drive down from San Francisco, and I wasn’t alone. When I arrived at around 6:30 a.m. Pacific, the small parking lot set aside for reporters and news vans was already full. Facebook provided coffee and breakfast, as well as a portable bathroom.

The only thing missing? Facebook executives or employees. (Also, heat lamps.) Reporters were largely left on our own, aside from a few PR folks who seemed more tired than we were and who assured everyone that really, no one from Facebook would be coming out to speak to us. We were reduced to checking with colleagues who were getting the real news, eating the donuts offered by Bloomberg reporter Doug MacMillan, and gawking at the passing cars. (There seemed to be more people leaving the office than arriving, and some of them gawked back at us.)

Eventually, some non-Facebook folks — including Menlo Park Mayor Kirsten Keith, Greylock Partners’ David Sze, and Chegg CEO Dan Rosensweig — wandered into the press parking lot, where they were swarmed. I don’t think anyone expected anything surprising or provocative, but we were just desperate to connect with anyone who had been inside. As we dispersed after another mob interview, someone muttered, ”Great, now we all have the same quotes.”

Meanwhile, it sounds like most Facebook employees have already gone back to work.

Facebook shares popped from $38 to $42, a 10.5 percent increase that values the company at $115 billion. While the price is going to fluctuate a lot today, there’s a crowdsourced bet from Twitter users on FacebookIPOClosingPrice.com that the company will close at a $54 price and a $135.7 billion valuation.

Bloomberg noted a premarket offer for Facebook in Frankfurt was at $70. Another report from ZeroHedge has Facebook at roughly $101 a share, which would value the company at a $300 billion valuation even before the start of trading.

Yesterday, the social networking giant priced its IPO at $38 a share, at the very top end of its revised $34 to $38 price range. That makes it the biggest tech IPO in history. Facebook offered 180,000,000 shares of stock in the offering while early shareholders including Peter Thiel and Accel Partners are selling more than 200 million more shares. This is the biggest recent IPO since Zynga, which saw its shares pop 10 percent on its opening trade of $11, giving the company a $7.7 billion valuation.

Facebook’s opening trade on NASDAQ has been delayed. We don’t know why, but we’re hearing mixed reports involving both unexpectedly high demand from retail investors and problems with canceling orders. As we explained in a post about 20 minutes ago, the underwriters of the deal are meeting and trying to set an opening price.

But because of unexpected changes in demand, it seems market makers are having issues settling on an opening price. They have the option of delaying the offering in five-minute increments until they can find a final price.

This is not terribly uncommon and it’s happened in very recent, popular IPOs like Splunk, according to Bruce Aust, who is NASDAQ’s executive vice president and head of the global corporate client group. Early word is that we’re looking at a $42 price, or a pop of just over 10.5 percent. That would give Facebook a $115 billion valuation.

Today’s Facebook IPO is a momentous, historical occasion. It’s set to be the biggest tech IPO ever, and the third largest IPO in U.S. history, second only to Visa and General Motors. The company that was once just a glimmer in the eye of a Harvard student named Mark Zuckerberg raised over $16 billion yesterday as shares were gobbled up by hungry investors, and that $38 share price point is expected to increase as the stock starts trading around 11am today.

Do you know how much money that is?

That’s more than nine Google IPOs, the cost of buying Napster 132 times in 2008, and enough to buy Mark Zuckerberg plenty of executive hoodies — 266,266 to be exact.

And how did I calculate this madness, you ask? I didn’t. A new website just popped up titled “Facebook made more money than”, and it looks a helluva lot like a Facebook page (fittingly). The site is sourcing facts from the web to provide a little added perspective on just how much $16 billion is worth.

Check it out here.

Here’s one more for the road, just to nail down the nearly unimaginable sum in your mind:

The $16 billion netted by Facebook before the stocks begin trading is more than the value of 66 sets of Winklevoss twins.

Facebook shares are supposed to go live on the NASDAQ market in about 20 minutes. But what happens in the next crucial 15?

We caught up with NASDAQ’s Bruce Aust, who is the executive vice president and head of the global corporate client group there. After several years of carefully courting the company’s management, NASDAQ beat out rival New York Stock Exchange for Facebook’s hand. NASDAQ is usually is the exchange of choice for most tech companies like Google and Apple, but NYSE has snuck away with a company or two in the last year like LinkedIn.

Companies generally go live after market opening at around 10:30 or 11 a.m. Eastern, he said. About 15 minutes before shares start trading (e.g. right now!), the underwriters of Facebook’s offering like the offering’s lead Morgan Stanley get together and discuss current market orders, he said.

“The market makers have a chance to work on price discovery to find the opening price,” he said. “If there are more orders coming in than they expected, they may choose to delay it in five minute increments.”

This has happened in very recent, popular IPOs like Splunk. So while Facebook is expected to go live at 11 a.m. Eastern, it could get delayed if there is insanely high demand. Over the past few days, the market makers have had a chance to sort out orders at Facebook’s final price of $38 a share. But right around market opening, many new orders often flood in amid the hype.

It can be a little unpredictable. But after that opening price is settled, Facebook will move forward just like any other stock traded on the exchange.

“Once we’ve got the buyers and sellers matched off, it’s off to the races,” he said.

This is awesome. At 9:30 AM ET, Facebook CEO Mark Zuckerberg posted what’s bound to be a historical status update to his Facebook Timeline. The post simply reads: “Mark Zuckerberg listed a company on NASDAQ. — with Chris Cox and 4 others.”

The post went live just as Zuckerberg rang the NASDAQ Opening Bell.

Since the CEO was busy actually ringing the bell, Facebook configured the update to auto-post for him. If you want to know how it was done, read this.

Facebook chief executive Mark Zuckerberg didn’t travel to New York’s Times Square for the company’s big day. He did it unconventionally like you’d expect a hacker would.  He opened the bell remotely from the company’s Menlo Park Headquarters after Facebook employees had just finished a long, all-night Hackathon — their 31st. They played midnight hockey and worked on extra projects, as you can see from photos we re-posted here. (It’s Facebook’s version of Google’s 20 percent time, if you will).

Just ahead of the 6:30 PST open, the company’s employees got together again in the main headquarters “Hacker Square” in front of a big stage where he rang the bell. Unlike Zynga CEO Mark Pincus in last December’s IPO, Zuckerberg didn’t give any remarks. He was flanked by chief operating officer Sheryl Sandberg, vice president of product Chris Cox and Elliot Schrage, who is Facebook’s vice president of public policy and communications.

It was the culmination of an eight-year journey that began in Zuckerberg’s Harvard dorm room. But it’s the company first step in what will be a very long life. Facebook is the most anticipated IPO of the last eight years after Google. It’s the largest tech IPO in history because the company stubbornly waited so long to go public.

When the market finally opened, he had signed a statement to be shown in Times Square. It read, “to a more open and connected world.”