
Snapchat reportedly buys Bitstrips for roughly $100M - rezist808
http://recode.net/2016/03/24/snapchat-is-buying-bitstrips-the-company-that-turns-you-into-an-emoji/
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hanniabu
When I heard how much this company was bought for and I've never heard of them
before, I had to check them out. I fielded the app and followed all the
prompts and I have to say they did a pretty good job worth this so far. I can
see this gaining a lot more adoption, especially from this news like it has
done for me.

One reason I can see the evaluation being so high is the advertising power.
There's a lot of ways they're already generating revenue(or should be) from
their advertisement of featured movies. They have a bunch of different outfits
like superman and batman for that new movie, and some contextual ones
pertaining to zoolander and others in the theaters or coming out soon. And for
those saying these are just emojis, that is incorrect. I wouldn't call these
imojis. What Bitstrips provides is more of images with an avatar of you in
them. Those avatars are also pretty customizable.

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smt88
Note that this was probably 100% equity (or close to it) so the Bitstrips
people may have gotten far, far less than $100M if Snapchat's valuation is
still as delusional as it used to be.

~~~
jpeg_hero
and they got common stock, ie buried under an avalanche of preference

~~~
neil1
That's not actually entirely true. Snapchat is known for having only
preferences for seed/A round investors.

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look_lookatme
If you look at the demos for Bitmoji they probably skew _older_ than snapchat.
Snapchat is in the unenviable of position of needing to grow marketshare
amongst older people (until they figure their UX this will continue) so I
suspect they are working incrementally up (in age) to capture demos.

Also bitmoji is very easily monetized. And custom keyboards in iOS was an
incredible boon to their business.

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bsamuels
i look forward to hearing an explanation as to how snapchat will make this
purchase produce at least 100MM in revenue

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fosk
Your statement is not accurate in business terms. The valuation for an
acquisition is not directly related to the revenue generated by the
company/product acquired, but also by market conditions, cost of building it
in-house, time-to-market cost of building it as opposed to having right now
(this also gives a strategical advantage with competitors), and the quality of
the team who will now join SnapChat, among other factors (like, but not
limited to, multiple acquisition offers at the same time from different
companies which in turn triggers an auction, thus a higher price).

Edit: Plus the company has probably been acquired with an almost all-stock
deal, which given the current valuation of SnapChat at 16B (imho inflated at
this current point in time, but with potential to grow in the future), makes
it very cheap too.

~~~
forgetsusername
> _but also by market conditions, cost of building it in-house, time-to-market
> cost of building it as opposed to having right now (this also gives a
> strategical advantage with competitors), and the quality of the team who
> will now join SnapChat, among other factors_

Which all only matter insofar as their ability to produce revenue. It's odd
how this is overlooked in the SV community. Who cares if it's a "deal" because
it would cost $101 million to "produce in house" if it will produce no
revenue?

I'm making no judgement on this deal, but this idea in general.

> _multiple acquisition offers at the same time from different companies which
> in turn triggers an auction_

You bid what you think it's worth, period. What others think it's worth is
irrelevant. Do these businesses not have somebody in house doing these sorts
of calculations? They show up to the auction with no plan?

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ec109685
You mean profit, right? If it costs them 500M to make 100M, that still
wouldn't earn back what they paid (obviously as the parent said, there is more
to the deal than just future revenue/profit produced).

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marcoperaza
My instinct is that this is more like Facebook's Instagram purchase, killing
the competition by buying them, than an actual investment. Snapchat's value is
the amount of time that people spend looking at it, i.e. opportunities to show
ads. Any other social media fad is an existential threat.

But again, just an instinct, and I've never used any of Bitstrip's products.
Anyone more informed, please chip in.

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vecter
Instagram was one of Facebook's best investments ever. People think that
Instagram is worth between $10-30B now. Their ARR is already exceeding half a
billion and still growing. If Zuck saw this coming, he was a genius. If not,
he just got mad lucky.

~~~
look_lookatme
I agree. Instagram is bigger than Twitter.

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cft
It still does not mean it's worth 20-30bn. These are fads, that may decline
after they run for a few seasons before they make that kind of money.

~~~
vecter
What specifically are fads? Mobile app install ads or mobile video ads?
Extremely unlikely. That market will only continue to grow as consumption on
mobile continues growing. Ad money goes where the eyeballs are, and the
eyeballs are moving to mobile. You are wrong, this is not a fad.

~~~
marcoperaza
The high valuations for these companies can only be explained by the
expectation that they will maintain their market-share for years to come. But
the fact that they're willing to throw so much money at buying out the
competition is, to me at least, a red flag that their market position is
actually fragile. When Facebook bought Instagram for a billion dollars, they
weren't interested in any of Instagram's engineers, technology, or
infrastructure, just in defending market-share. Other than for the bad optics,
everyone at Instagram could have retired shortly after the deal for all they
cared. The threat was eliminated. This isn't a sustainable practice. I can't
help but feel the whole thing is a game of hot potato. Greater Fool Theory in
action.

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psycr
Wow! Massive news for the Toronto tech community. We don't have too many deals
this size.

Congrats everyone at Bitstrips!

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beedogs
I haven't seen anyone use Bitstrips since at least 2013. I thought it was
finally dead. How on earth can this company be worth $100m?

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mmanfrin
Bitstrips existed for like 2 months. I haven't seen one in maybe 4 months now.

What a blind waste of money. This is Zynga buying Draw Something all over
again.

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rgbrenner
_Bitstrips existed for like 2 months_

the company was founded in 2007

[http://company.bitstrips.com/about.html](http://company.bitstrips.com/about.html)

[https://www.crunchbase.com/organization/bitstrips](https://www.crunchbase.com/organization/bitstrips)

~~~
noamhacker
I joined in summer 2008 and made 900+ comic strips over a couple years. they
had a tiny yet awesome community (this was all before it was big on facebook).

~~~
ljf
Argh sorry my fat fingers down voted you when I was trying to update. Sorry
about that!

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cb21
How is this not basically throwing 100 million in the trash? No way freaking
Bitstrips is worth that much.

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andrewfromx
politely disagree. Look into how much it's used and the quality of the art.
Every friday I get a push notice about the new bitmojis released. 100 million
is great deal.

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dublinben
Bitstrips was nothing but a fad.[0] This is an amazing cash out for the
creators.

[0]
[https://www.google.com/trends/explore#q=bitstrips&cmpt=q&tz=...](https://www.google.com/trends/explore#q=bitstrips&cmpt=q&tz=Etc%2FGMT%2B4)

~~~
berberous
Yes, but check out Bitmoji. [0] I don't know anyone that uses Bitstrips, but
everyone I know uses Bitmoji. And every week they have new ones promoting the
latest movies, and it's honestly the main reason I know what movies and shows
are out.

[0]
[https://www.google.com/trends/explore#q=bitmoji](https://www.google.com/trends/explore#q=bitmoji)

~~~
brianwawok
I used it for 2 days and deleted. No one I know uses it. Maybe hot with the
tween crowd?

Instagram makes money because it shows ads. Are people going to buy Pepsi
t-shirts for their Bitmoji and make Pepsi money? I don't see the path to
money.

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morganvachon
I noticed it was mostly people in my generation (mid 30s to mid 40s) who used
Bitstrips during its flash in the Facebook pan a couple of years ago. As for
Bitmoji, I've never seen that in use myself (in fact, never knew about it
until this article) but then I don't text/chat that often outside of IRC and
Hangouts.

