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Facebook Shouldn’t Be Allowed to Buy Tbh
- corobo 9y ago> “When we met with Facebook, we realized that we shared many of the same core values about connecting people through positive interactions. Most of all, we were compelled by the ways they could help us realize our vision and bring it to more people.” At this point I read gushy messages like this as "We made this app specifically to be purchased by Facebook". From that perspective they were never a competitor to Facebook so in this specific case no big deal that Facebook bought them out
- jonny_eh 9y agoYa, this app doesn't seem like it has much legs. But then again, I said the same about Instagram and Snapchat when they first launched.
- yeukhon 9y agoRight, Tbh is bought only because FB is trying to retain those < 20 years old right now. However, I raise my eyebrows when I think about "never a competitor". So why buy Tbh anyway? Sorry to be rude if at all... I am betting Tbh will eventually go out of business if FB doesn't acquire Tbh. Snapchat can build similar product too, like FB and Instagram built Story to compete with Snapchat's.
- robryan 9y agoHedging against that small chance they get really big. Why risk another snapchat if these guys getting traction can be bought off cheaply now.
- Freak_NL 9y ago> So why buy Tbh anyway? It doesn't have to be a potential competitor to pre-emptively buy, it just has to have access to the teenager demographic.
- corobo 9y agoIf you see a site like Facebook haemorrhaging users from a specific demographic, target that demographic successfully with anything vaguely social and I'd bet cash money Facebook will scoop you up within a couple years. I don't know if this Tbh site actually did that on purpose, but I wouldn't be surprised in any way if they did.
- snarf21 9y agoAs tbh fades in popularity, they will roll this into FB (and Instagram and WhatsApp and......) as a feature and hook these users that are less FB addicted into their ecosystem. Also, Facebook is an advertising company. They now can push a lot more teen and tween brands to advertise bigger campaigns.
- htormey 9y agoFB thinks about apps like tv channels. If you look at the top 10 free apps all of them are owned by either Facebook, google or Snapchat (they own Bitmoji). TBH was the only app in the top 10 not owned by one of these 3 so the acquired it. TBH could be a feature of either Facebook or Instagram in the same way that most of the history channels content could be just shows on other tv channels. These things exist or will continue to exist as separate entities because it’s more profitable that way.
- onion2k 9y agoMost VC companies don't see tech startups as 'unicorns in waiting'. They see them as '5 years growth hacking and 3 more rounds until a 10x acquisition'. At this point in time for the majority of founders the only reasonable exit strategy in tech is selling to an existing company. Putting 'getting to IPO' in your pitch deck won't work. If you're serious about building something successful then aligning with a potential buyer really early and pushing your company to be something they'll both notice and want to buy makes a lot of sense.
- debaserab2 9y agoIf that's true, than I think Silicon Valley as we know it (knew it) is dead. Who are the modern day unicorns?
- TeMPOraL 9y agoIt's not dead while the ad industry money still flows in. We need to rein in them if there's to be any hope for things getting better.
- KGIII 9y agoIf you rein in the ad industry, you're just going to be stuck with a bunch of ICOs. Kinda bleak, really.
- adventured 9y ago> than I think Silicon Valley as we know it (knew it) is dead Didn't you hear? It died with DrKoop.com, eToys, Pets.com, Webvan, et al. Silicon Valley has been a constant target for that premise for four decades. It's nothing more than people wishing for ill upon something because they dislike it, entirely separating what's actually likely to happen from what they want to have happen. Here's what is actually going to happen. Silicon Valley is overflowing with capital, experience, talent and a high tolerance for risk. There is no hint that any of those things is in meaningful decline today. Over the coming 20 years, new tech giants will be created there. Then someone will be saying the exact same thing you just said, just as 16 and 25 and 37 years ago.
- manigandham 9y agoYes this is PR speak. These companies have 2 possible exits: 1. Get big enough to build and scale an ad network and other services 2. Get bought by an existing scaled network Option 2 is far easier which is why startups/VCs optimize for it. FB benefits by letting them do all the experimentation and then acquiring when they have proven traction, effectively gaining control of the new users for less money than competing outright, while the founders get a nice payday and move on. What gets really interesting is when the same VCs behind FB are the ones kicking off these new experiments, a nice little money machine once you're in the loop.
- vog 9y agoI hope this doesn't sound too snarky, but ... If option 2 will become illegal in the future, would that mean that startups would have to optimize to turn into real companies? You know, that kind of company that need to be profitable on their own? And perhaps, but only perhaps, with a sustainable income?
- chronicy292 9y agoNo, because as a startup founder and now investor, I would work day and night to find another "loophole" for easy money. There are hundreds of thousands of people who think like this Sustainable income? If you're getting a check for $10 million, do you care?
- deleted 9y ago[deleted]
- pdpi 9y agoThe point is that, as a society, we should care. And that means putting in the right checks and balances that at the individual level we still care.
- amigoingtodie 9y agoSmall kids do not need, nor should they have, smartphones.
- cocktailpeanuts 9y agoThere are indeed many founders who specifically build companies just to cash out through acquisition, but from my experience there are way more founders who don't come from this point of view. What really happens is these founders are focused on the product and don't really think much about the business model. This is understandable and actually much better than MBA types who spend months planning for stuff without even building, but the problem is there isn't really a good business model for these types of companies. The only viable option is ads, and even this has been monopolized by big techcos so it's not easy. Most founders don't even get to worrying about this point because their companies never take off. But the ones that do, come to a point where they need to make a decision whether to sell out or to find a viable business model. Like I said, finding a viable business model is increasingly becoming difficult for consumer apps that rely on ads, so these companies tend to cash out. From outside it may look like a bunch of "tech bros" hoping to strike it big with minimal effort but that's mostly not the case if you look inside. If you're curious, look up what this TBH company went through before having this "overnight success".
- jerrre 9y ago> The only viable option is ads I know I must get with the times or whatever, but man this is sad. Essentially every consumer social app creator is just working for the ad industry, or for free.
- Joe-Z 9y agoBut that's just the price they pay for working in an overcrowded market segment. The upside they have is that their work is (compared to a lot of other programming jobs) fun and hip. If you want to make money with what you're doing you need to be either really good/marketing-savvy/popular or pick something that most people consider 'boring'.
- zerkten 9y agoThe 'boring' things (i.e. the enterprise market) is also 'harder' most of the time because they require a broader range of skills and greater perseverance. You can validate and get growth in a freemium model, but then the hard work to get real sales process begins.
- bko 9y ago> We made this app specifically to be purchased by Facebook This will encourage more niche social networks for the purpose of being bought and Facebook's acquisitions will be costly, both financially and operationally. I don't think acquiring competitors is an effective long term strategy
- wsinks 9y agoCisco has acquired 200 companies since its foundation. It's not their only strategy, but it does keep the company half competitive.
- SmellyGeekBoy 9y agoIt seems to have worked out pretty well for Microsoft.
- EGreg 9y agoMore like "Ooh we had no idea but when FB approached us it suddenly became clear we had soooo many shared values, it just made sense that FB would buy us."
- jliptzin 9y agoWhen I read statements like this what I actually see is the following: "When we met with Facebook, we were impressed with the huge pile of cash that they offered us. Most of all, it was very green and crisp, and smelled like cash it supposed to smell, so we were compelled by the ways this cash could help us realize our vision of getting rich."
- jonknee 9y agoI read it more like "Facebook made it clear they could duplicate our app in a weekend, then extended a take it or leave it cash offer".
- hetspookjee 9y agoI bet they're technically capable of duplicating, maybe even by you on your own, same goes for Snapchat. Yet they don't, because just like a lot of the social apps that are succesful, it's not the technical innovation that makes it valuable, but the network of people that support it, and I think just as important, eventually being able to monetize it (Remember Vine?) Also the already stored data makes it quite the treasure. Even if every user instantly stops using it, it'll still be very valuable due to the existing data (if they keep it). Too stray off-topic though somewhat on a self-created tangent: There's an app called Flitsmeister in the Metherlands (and abroad but several countries banned it) that keeps on growing. I wonder when they will be bought out. Not necessarily for the active social network behind it, but rather for the data that is already there. I believe such a vast amount of historic data is hugely valuable on it's own. I wonder by who, when and for how much they will be bought out.
- Omnius 9y agoYou say that like it's a bad thing.
- jim_dow_jones 9y agoIt's a bad thing when you're not being honest. "...we shared many of the same core values..." Why not just say, "They made us an offer we couldn't resist. ( ͡° ͜ʖ ͡°)"
- amrrs 9y agoThis article raises a very fair point of M&As happen in such a way to bypass Antitrust intervention and how FB has been constantly succeeding in not letting the next FB come up. Seems Mark has learnt a lot from what Yahoo! failed doing.
- Scea91 9y agoDoes anyone know of a situation where a company was not allowed to be sold to another company and then it went bankrupt in a few months/years? I think they would have a right to feel wronged in that case. I myself see value of Antitrust interventions, but I also believe in not intervening in the market unless it is absolutely necessary. Since I haven't heard about Tbh to this moment, I don't think that this is the case.
- rahoulb 9y agoThough the point made in the article is by then, when the app has lots of attention, it’s too late (using the office of fair trading and Instagram as an example)
- nikcub 9y agoThere were attempts at airline mergers just before 911. US Airways and United were going to merge but the deal didn't get approved. Both ended up filing bankruptcy some point later, and since then the airlines have largely merged from a very diverse field into American, Delta, SW and United. The other example is in investment banking - previously the retail and investment banks weren't allowed to merge and many of them got into trouble. Today, after the financial crisis, the industries have consolidated around 4 or 5 major large and broad banks.
- WillPostForFood 9y agoWorldcom / Sprint merger was blocked by regulators and Worldcom went bankrupt a couple years later. Another good one was Blockbuster / Hollywood video which was blocked in 2005, and it didn't end well for either side.
- taneq 9y agoFor anyone else who wondered, Tbh is apparently some kind of mashup of YikYak and SurveyMonkey which lets you send warm fuzzies anonymously to your friends.
- amigoingtodie 9y agoWhen explained like that, it sounds brilliant.
- Animats 9y agoFacebook's next target: Craigslist. There's a new "Local Products" section.
- jacobush 9y agoAh. Finally Craigslists strategy of leaving money on the table may hurt them.
- isatty 9y agoThis'll really suck.
- Animats 9y agoWait until Facebook gets into rental real estate.
- ballenf 9y agoIs cragslist usable where you live? Last 5 times I've gone there looking it's 98% dealers in every category, especially the non-dealer ones. If I want to buy from a used ______ shop, I wouldn't be on Craigslist. And in certain categories, your legitimate ad (anything Apple in particular) will get insta-flagged because it's competition. And then you'll get a call from the likely flagger, who's a dealer trying to score a cheap deal and resell. They post the same ad 5-10 times a day, so there's no hope in weeding them out. Craigslist evidently doesn't really care, so I have to wonder if thefacebook (tfb) can do a better job. All the startup reselling apps are filled with soiled couches and old gym bags. They're like going to a yard sale after all the good stuff is gone. This is in the US southeast, so I'm sure it's different on the coasts. Regarding tfb buying tbh... the antitrust laws are in dire need of reinterpretation from the Supreme Court whether it's in this case or something substantial it doesn't matter.
- astdb 9y agoShoutouts to Snap
- shubhamjain 9y ago> All social networks should be required to enable social graph portability — the ability to export your lists of friends from one network to another. Again Instagram is the perfect example: the one-time photo-filtering app launched its network off the back of Twitter by enabling the wholesale import of your Twitter social graph. This reminds me how importing your email contacts was major component for Facebook—or any social network at that time, for that matter—to grow its network. It made sense then since all your communication (weather with friends or family) happened over email; email was your social graph. It's scary how Facebook now holds the key to every (close) connection you might have with Facebook, WhatsApp, and Instagram.
- WillPostForFood 9y agoI think people forget or weren't around when Facebook was aggressively importing not just email, but anything with a contact list (like AOL IM), then would spam the entire list. They got away with stuff that wouldn't fly today.
- jraby3 9y agoMessenger still pulls crap like that.
- isolli 9y agoLinkedin is the worst, in my experience. I was repeatedly shocked to find people in my suggested contacts list that should never have been there.
- TremendousJudge 9y ago>They got away with stuff that wouldn't fly today Linkedin manages to be even worse than facebook in that regard, even today
- user5994461 9y agoThe facebook app is gathering all contacts on your phone for many years, they didn't wait for whatsapp.
- sschueller 9y agoAre 5 million users really that much these days for a free app? Especially with the enormous amount of people who own a smart phone.
- pavlov 9y agoConsidering Tbh's constrained target age group and geography -- North American teenagers -- it sounds like a decent amount.
- avip 9y agoThe more interesting question is how many users is 5MM "users". It could be anything between 5K and 5MM.
- deleted 9y ago[deleted]
- wellboy 9y agoYes, it's a lot. If you can create an app and get 5 million users on it that people are using frequently, then you can sell it for around $20/user-$30/user. This is around the standard number for social network apps and somewhat lower for games and apps without a network effect.
- taneq 9y agoHow is that number generally justified? Marketing opportunity, data collection? It seems like a lot per user.
- y04nn 9y agoI don't think the acquisition price is base on the number of users but the potential users in the future and the value of each user. Considering the growth mentioned in the article and the young user age, it's not that surprising.
- jondubois 9y agotbh is obviously a trendy app with a short shelf life. Based on the descriptions, I don't think it should last much longer than the 'Yo' app. There is definitely something wrong about Facebook using its position of power to buy up crappy companies for millions without suffering any ramifications whatsoever. It's definitely costing shareholders something but the sheer power and inertia of Facebook means that the loss is imperceptible in the grand scheme of things. Facebook really can print money out of thin air it seems. I actually think that if Facebook did not buy Instagram or WhatsApp; both of them would have died out. Even Kevin Systrom alluded to this when he was asked if he regretted selling Instagram to Facebook. Just wait and see what will happen with Snap... Assuming Facebook doesn't buy it. It looks like Zuckerberg never makes bad deals but I think that it's just the inertia of Facebook that makes it impossible for a deal to go bad. Whenever I read about a Facebook acquisition, I roll my eyes because it tends to be very random... And yet it seems to always work out. Even the software tools and frameworks that Facebook pushes out are instant runaway successes. Even Google doesn't compete on that field despite having much more experience in this area... And as a developer, I think that Google tools and frameworks are better too.
- lmm 9y agoMaybe Facebook just executes better than Google? Having talked to people who work at both about the languages and tools they need, it seems like Facebook is a much better environment to be a developer in.
- jen729w 9y agoI still use 'Yo'. For one very specific thing: telling my gf, who lives directly over the road, that I'm leaving the house and that I'll meet her out front. Nevertheless, there it is.
- randomblob 9y agoA hopeless romantic...
- coldtea 9y agoWhen the 20000000 other available options won't do, Yo is irreplaceable!
- Phenomenit 9y agoHow is this a competitive market if the big five buy all competition before they become a threat? And then they release articles saying that small companies don't matter. The small companies are the only ones who add something to the market.
- rf15 9y agoit's clearly about the competition between startups to get bought! ...but yeah this neither particularly fair, competitive nor free in the market sense, is it? We should definitely work towards improving the current laws against anti-competitive behaviour.
- deleted 9y ago[deleted]
- ComodoHacker 9y agoInteresting point: >prohibiting the permissionless sharing of personal information in fact entrenches Facebook’s position. Take, for example, Europe’s vaunted GDPR law: as I explained in the Daily Update, data portability that, for privacy reasons, excludes the social graph (because your friends didn’t give you permission to share their information with other services) makes it that much harder for competition to arise.
- hienyimba 9y agoEveryone fails to recall the Startup had been struggling for almost 7yrs. The buyout was a big Hail Mary move for their long-suffering