Is Plaxo ready to sell to Facebook?

Is Plaxo ready to sell to Facebook?

It's curious that rumors of a Plaxo sale exploded at the same time that Robert Scoble got his Facebook account suspended using a secret, unreleased tool for extracting data from Facebook. Curious, too, that Plaxo is so eager to milk the incident for good PR. While a battle of words takes place in public, we hear that quieter talks are happening behind the scenes: A sale of Plaxo to Facebook. A clash between the companies' backers, though — the powerful VC Michael Moritz and the rising VC star Peter Thiel — could sink any deal.

Technically, the sale makes sense. Plaxo's chief platform architect, Joseph Smarr, is an engineering rock star, with many fans among the Valley's brainiac collectors. And Facebook CEO Mark Zuckerberg is said to admire other members of Plaxo's engineering team. The process of synching multiple address books, Plaxo's specialty, is more complex than it sounds, and would save Facebook some trouble as it tries to become more of a hub for its users' online activities on and off the Facebook site.

Bringing the investors to terms, however, would prove troublesome. Michael Moritz, of Sequoia Capital, is said to be eager to get a stake in Facebook, however small, so it can claim to have had a hand in its success. It's a move he played skillfully in the first bubble when he merged a failing online bank, X.com, into Peter Thiel's PayPal.

Thiel, now a Facebook board member and venture capitalist in his own right, remembers that maneuver all too keenly, and believes Moritz got the better of him in the deal. Then, too, Moritz forced Sean Parker, now a partner in Thiel's Founders Fund, out of Plaxo; he next joined Facebook, and while he didn't stay long, he still owns a substantial stake in the company. Any deal that reunites Sequoia, Thiel, and Parker would produce a moment of boardroom drama the likes of which we haven't seen in a long while.

The talks aren't advanced, and haven't even reached the point of naming numbers. But Facebook's lofty $15 billion valuation gives it a currency for acquisitions. Will Plaxo take Facebook's paper? The decision, if it ever comes to that, will rest in part with Thiel. How delicious it would be to have Moritz at a disadvantage.