Twitter execs have often expressed a desire to improve their relevancy and discovery efforts so that the service’s constant stream of updates does not overwhelm users. Now, long after stating the priority, they’ve hired a team to make that happen.

Twitter co-founder Biz Stone had served as an adviser to Fluther, which had been backed with $600,000 in funding from angel investors including Ron Conway, Naval Ravikant, Marc Andreessen, Ben Horowitz, and FF Angel. Three-year-old Fluther had launched its own site, which focused on matching people with questions to experts with answers, as well as on a white-label tool for others to offer Q&A.

Along with announcing the acquisition, Twitter made the stunning disclosure that it now has three times as many employees as it had last year. The company said more than half its team is dedicated to engineering and operations.

Twitter has for most of its existence had plenty of funding, but it started staffing up seriously only in the past year or so, despite recurring problems with uptime. The company just raised $200 million at a $3.7 billion valuation in a round led by Kleiner Perkins.

Topguest, a check-in loyalty service that was founded just five months ago, has gotten $2 million in Series A funding, as well as nabbing well-known Facebook investor Peter Thiel as an adviser.

Investors in the round include: Thiel’s Founders Fund, as well as angels such as Ron Conway, Keith Rabois, Jeff Clavier and Naval Ravikant.

Topguest is exiting its beta phase today with partners that include Virgin America, Hilton, Wyndham Worldwide, Kimpton and others.

Using Topguest, those companies can offer deals, making large travel and hospitality loyalty programs social by plugging them into smartphones and geolocation.

Users check in with their existing services–such as Foursquare, Twitter, Facebook Places and Gowalla–in order to get benefits such as air miles for your Virgin Elevate account and hotel points for Hilton HHonors.

Topguest is competing in a crowded market, where a lot of such services are offering many kinds of deals.

The San Francisco start-up is most like another service aimed at retailers called Shopkick, where you get points when you check in to its mobile app.

Topguest said the differentiator is that it links into geolocation services already in use, instead of requiring another different check-in and offers points in already existing loyalty programs.

[UPDATE: Google confirmed the deal in a blog post, which you can read below, as well as in interviews BoomTown did today with execs at DocVerse and Google.]

Continuing its acquisition spree, Google has snapped up DocVerse, a start-up that allows users of Microsoft Office documents to collaborate in real-time on the Web, said several sources.

Sources said the price was in the $25 to $30 million range.

Founded by two ex-Microsoft (MSFT) execs in 2008, Shan Sinha and Alex DeNeui, San Francisco-based DocVerse has raised only $1.3 million in venture funding from Baseline Ventures, Harrison Metal and Naval Ravikant.

It’s yet another shot across Microsoft’s software bow by Google (GOOG), along with a range of other digital arenas such as cloud computing and mapping.

Google has been pushing its own cloud-based Google Docs, but it struggles against the Office juggernaut. Thus, a link with Office via DocVerse is a smart move.

Jonathan Rochelle, group product manager on the Google Apps team said that while some perceive the search giant as trying to compete directly with Office (a claim I openly scoffed at during the interview), Google did hear from customers that it wanted cloud-based functionality with Office.

“We heard from customers that there is a great need for help in the cloud,” he said. “This acquisition helps users move over the to cloud and expands our product.”

DocVerse CEO Sinha said his small company–under 20 employees, who will be moving down to the Googleplex HQ in Mountain View, Calif., immediately–had been talking to Google for a while.

“We were gaining traction in the product in large enterprises…so, it made sense, because we have a vision of a world of Web-based collaboration,” he said.

While Sinha said he admired what Microsoft had done with Office, he noted there is a need for more, and a hook-up with the powerful Google will help DocVerse do that sooner.

“Microsoft is doing a lot of great things for its customers who use its stack of software,” he said. “But we see a whole other world interested in the Web-based approach that is not being served very well right now.”

For its part, Microsoft has committed itself to moving its hugely popular productivity suite–which includes Word, PowerPoint and Excel–into the cloud, in order to protect its software hegemony.

Why? Simultaneous group-editing and collaboration online is clearly the future of Office.

In fact, yesterday, Microsoft CEO Steve Ballmer made a significant statement related to cloud computing in a speech, noting, “This is the bet for the company. For the cloud, we’re all in.”

In an interesting side note, this is the third company that Harrison Metal has invested in that has been acquired by Google over the last several months. Other sales have included AdMob for $750 million and Aardvark for $50 million.

There had been a post in TechCrunch back in December that the deal was nearly done, but it was apparently not completed until now.

Here is the blog post on the deal from Google:

Google Docs welcomes DocVerse

Friday, March 05, 2010 at 10:48 AM

?The future of productivity applications is in the cloud. We’ve always believed the web is the best platform for creating and sharing information, and Google Docs has already helped millions of people become more productive. But we recognize that many people are still accustomed to desktop software. So as we continue to improve Google Docs and Google Sites as rich collaboration tools, we’re also making it easier for people to transition to the cloud, and interoperate with desktop applications like Microsoft Office.
?
For example, we recently made it possible to use Google Docs to store and share any type of file that you have on your computer, not just the ones you create online. Today we’re excited to announce another step towards seamless interoperability: we have acquired DocVerse.

DocVerse is a small, nimble team of talented developers who share our vision, and they’ve enabled true collaboration right within Microsoft Office. With DocVerse, people can begin to experience some of the benefits of web-based collaboration using the traditional Microsoft Word, Excel and PowerPoint desktop applications.

A huge “welcome” to the DocVerse team and their customers! Current DocVerse users can keep using the product as usual, though we’ve suspended new sign-ups until we’re ready to share what’s next. Stay tuned!

Posted by Jonathan Rochelle, Group Product Manager, Google Apps team

[Updated with new details about deal, including who worked on it and info on a cash component.]

About three weeks ago, Facebook and Twitter ended several weeks of serious talks, in which Facebook was offering to acquire Twitter for $500 million of its stock, which also included a cash component.

While rumors of Facebook’s interest were brought up in an interview with Facebook CEO Mark Zuckerberg at the Web 2.0 Summit a few weeks ago, some shot down the idea as silly.

Quite incorrectly, as it turns out, since top execs at both Facebook and Twitter were right then at the tail end of discussions, which were initiated by the privately held Facebook in mid-October, about bringing the two together.

Those talks, sources on both sides said, are now over.

So why did the deal break down?

Well, as is usually the case, over price–was $500 million worth of Facebook stock actually worth $500 million?–and the typical concerns about integration and costs.

But, more important, it seems, was a feeling among Twitter investors and execs that the start-up should still take a shot at building its revenues–there are none right now–as well as it had done at building its growth.

“It’s more about timing,” said one person familiar with Twitter’s motivations. “There is a strong feeling that there is still an opportunity–even with the economic downturn–to blow this thing out.”

Still, combining the world’s fastest-growing social-networking site with what is quickly becoming the best-known microblogging service is actually a natural fit.

That’s especially true given that Facebook–for all its powerful online social connections–has seen Twitter race past it in innovating in the “status update” arena.

While some sources at Facebook said Zuckerberg was becoming frustrated by the buzz Twitter was getting–a market that should have been dominated by Facebook–others at the company said he was interested in buying Twitter because of his respect for its progress.

Indeed, at the Web 2.0 interview, Zuckerberg called Twitter an “elegant model” and said that he was “really impressed by what they’ve done.”

Indeed, with about six million registrations, as reported in October, up 600 percent over the last year, the San Francisco-based Twitter–launched in 2006–has had impressive growth.

(It has also been plagued by technical issues, which are–to be fair–decreasing.)

In any case, for those not familiar with it, the premise of Twitter is dead simple: A registered user logs in via the Internet or a mobile phone and answers the “What are you doing?” question the service asks in only 140 characters or fewer.

It’s quite a clever idea, although–so far–not a money-making one.

To try to goose that, Twitter’s board replaced the engineer who created Twitter, Jack Dorsey, with another founder, Evan Williams, who had served as its chairman and chief product officer.

The more experienced Williams (pictured here) had already built one company–Pyra Labs, which created the Blogger blogging service–that he sold to Google in 2003. He also started the audio and video search site Odeo, where Twitter was actually born.

Still, its investors have not come down on Twitter to hold back its growth efforts, and have handed over $20 million to the start-up so far. In its last round, Twitter was valued at $98 million.

Its funders include: Union Square Ventures, Charles River Ventures, Digital Garage, Spark Capital and Bezos Expeditions, backed by Amazon Founder and CEO Jeff Bezos.

In addition, well-known Silicon Valley figures, such as Marc Andreessen and Ron Conway, have also invested. Interestingly, Andreessen is also on Facebook’s board.

Other private investors include FeedBurner Co-Founder (and now Googler) Dick Costolo, former Epinions Co-Founder Naval Ravikant and former Googler Chris Sacca.

Twitter needs all the investors it can get, since it has no revenue, although it has been exploring things like charging business customers and adding advertising into the consumer service.

Lack of revenues was an issue for Facebook, said sources, especially related to fees Twitter pays for delivery of its messages to cellphones.

While the issue has been manageable in the U.S., Twitter cut off its SMS support in some international markets this summer because of too-high costs.

But, if Twitter was offered to Facebook’s 120 million users, Facebook execs estimated that it might have to deal with huge SMS fees–up to $75 million annually.

“Facebook has its own revenue-generating challenges,” said one person close to the company. “As much as Twitter would give them a lift in the status area, it was still a worry.”

Not enough, said several sources, to stop Facebook from making another approach at some point in the future. “We’d hate to see Twitter go to another company,” said one source.

Indeed, while all are even more price-conscious than Facebook, large companies that could also be interested include: Google (GOOG), Yahoo (YHOO), Microsoft (MSFT) or a large telecom company, such as Verizon (VZ).

If it had completed the deal to buy Twitter, it would have been Facebook’s most significant acquisition by far.

Zuckerberg and Williams did meet and get along well, but the deal was primarily negotiated by Spark Capital partner Bijan Sabet (Spark is a Twitter investor) and Facebook deal guy Dan Rose.

But in this time, at least, the Twitter side was still not interested in selling at the price Facebook had offered.

The $500 million offered was in an all-stock form, said sources on both sides, at the $15 billion valuation that came from the Microsoft’s investment in the company last October.

The Twitter side felt that figure was inflated and the shares should be valued at the lower figures that have also been reported for Facebook’s true valuation, more in the $5 billion range.

That would have given the deal a $150 million price tag, which was seen as too low, especially since it was in Facebook stock and not cash initially.

In fact, Twitter wanted cash, which some sources say was offered by Facebook in the $50 to $100 million range, in addition to stock, but taking too much stock was still a major issue.

There are other ways the pair could have approximated a safer choice for Twitter, via warrants, of course, or other methods.

But, said several sources close to Twitter, the primary reason for not selling was because its board simply did not want to yet or perhaps ever.

Said one source: “The question is, is it really a good idea to sell on the first chance you get?”

Well, for Twitter, we’ll just have to wait and see about that, of course.

[Photo of Evan Williams by Joi Ito. Licensed under Creative Commons 2.0 By-Attribution license.]