There are strong rumours going around of Yahoo either being acquired by Alibaba or Softbank.
By picking up a share of a very trendy and popular mobile service like Snapchat, this is just more confirmation that they're aiming to be acquired by Softbank. It might have almost nothing at all to do with Snapchat as a business.
As someone of the "Facebook generation", I have to say my mind was blown by this video. Thanks for sharing.
I feel there is clearly a trend line one could draw here in the evolution of social networking and social media. Since the initial era of social networking, friction was reduced (e.g. Instagram / Twitter) and now it's moving to be both frictionless and ephemeral (Snapchat).
It's interesting because the trend almost leads you something like life broadcasting (e.g. Justin.tv) - but we've already been there. I wonder what the next phase will be.
WHOOOAAA.... I didn't know about the story feature. I thought it was still just a glorified MMS with an alleged unrecoverable-delete-in-10-secs feature.
As someone who really respects and likes Snapchat, I had no idea the impact it was having on modern culture. I could not have come up with this experience.
It seems like their planned future is to share sponsored snaps with their users. I'm not a fan of this. While I like the idea of snapchat, I have enough problems with their app already... Much more annoyance and I'll just ditch it.
I think Snapchat is a cool company, and they showed their technical wisdom by building their original messaging service with Java atop App Engine, so they could scale effortlessly and just focus on the product. While this might not sound like wisdom per se it certainly shows more competence than all the tech companies building on top of garbage like node.js or whatever flavor of the month tech mouth-breathers happen to be hyping at the time, and then months later releasing a blog post about how they had to switch their entire architecture to an actually capable system, as if doing stupid things that cause you headaches later and wasting time fixing your broken garbage when you could be working on the actual product instead of doing things right the first time is some kind of engineering feat.
They have 100 million + users(not as small as it seems in these days of throwing around huge numbers), see:
The offers and valuation they got I assume are based on(aside from their huge funding rounds) the usual vastly overblown targeted userbase analytics advertising blah blah.
I say vastly overblown because the revenue potential based on the targeted ads hooplah really isn't what its made out to be. To put this in perspective, Facebook has 10x Snapchat's users and made around $8 billion in revenue last year, so a little over twice of its bid for Snapchat.
So unless they planned on putting extra special magic fairy dust ads on Snapchat(a platform of which its dubious what kind of ads will be successful/viable on, if any) after acquiring it, there are better companies out there that they could have acquired if they wanted to increase their earnings.
I think specifically Facebook's offer wasn't based on Snapchat's earning potential, more on the fact that Zuck seems to get antsy when the Facebook empire loses face(pun not intended) to any other platform in the least. He paid $1bil for Instagram when it had 30 million users, way more than it was valuated at at the time. The press made it seem like he alone spearheaded both offers, and that Facebook's board/other execs were barely involved in the decisions.
Google allegedly attempted to outbid Facebook for Snapchat, offering $4bil, which struck me as odd, seeing as their better known recent acquires included a machine learning firm and a company that makes smart home products. I thought Google had learned it's lesson in the social space after the colossal failure that was Google+.
"Separately, this week Yahoo continued its acquisition spree of small startups with the purchase of another mobile messaging company, MessageMe, according to two people familiar with the deal."
This is why activist hedgefunds are lining up to destroy Yahoo and make a buck. The board clearly complained about Marissa bailing out failed silicon valley startups for millions. Messageme was an unoriginal product created by people with a favorable track record but the actual product had nothing to offer users except growth hacking by using the facebook friends graph api. Spending millions on this aquihire makes no sense.
What Yahoo needs is a core product that is a big win, Marissa said Tumblr would bring this, but instead we have seen competition on mobile increase and time across social media and blogging apps fragment. We have seen them lose their weather app monopoly on ios and yahoo mail on mobile is not gaining traction. Across the hot core areas being, search, social, cloud services, document services, smart hardware and artificial/assisted intelligence, yahoo is nowhere to be seen. Yahoo needs to seize the initiative and focus on a core competency and win big.
Snapchat at a $10 billion valuation has too much risk for someone that needs a big win. It really seems like snapchat investors are running some kind of pump and dump scheme the way they pushing this valuation. As things stand Snapchat has to go public to make good on a $10b valuation.
Ah yes, Yahoo investing in another company with no hope of actualizing it's valuation by actual revenue (as opposed to investors bloating it until an IPO).
"Revenue" isn't the only thing that companies compete for.
Many of these online services companies (Google, Facebook, Yahoo) compete for user timeshare - e.g. you're awake 16 hours a day, how many of those hours are spent under company X's umbrella?
Tumblr had doubled their number of blogs and grown their userbase by 1/3 since being acquired. The jury is still out on whether it was a good or bad investment.
I read Tumblr was a few weeks away from running out of cash at the time Yahoo bought them. While I agree the jury is still out on the Tumblr/Yahoo acquisition, I do think they could have bought a nearly insolvent company a bit cheaper than they did.
That being said, maybe they did get it on the cheap if WhatsApp went for $19B.
Exactly. How do you know the price they acquired Tumblr for wasn't its "insolvent" price? There was probably competition for the deal - passing in the hope of getting a lower price is dangerous if you know other players might snap up Tumblr.
People seem to not take into consideration the concept of staying in the game. Facebook bought WhatsApp for the users, not necessarily to become Facebook users but to prevent them from becoming users of a competitor. Yahoo needs to make acquisitions so they can stay relevant and connected, otherwise they may not have any chance of succeeding in a much bigger way with all of their offerings.
That's actually the opposite of that concept. WhatsApp actually solved a real problem and aligned closely with Facebook's overall strategy (communication).
WhatsApp definitely solved a problem when they launched and they did an incredible job, but I'm not sure what I'm missing, what problem were they solving when Facebook bought them That Facebook couldn't? I'm not saying it was a bad investment - I think it was smart, but to me it just seemed like Facebook Messenger and WhatsApp were competitors by the time Facebook bought them.
Weren't they recently valued around $10b[1]? They'd need to grow a lot to make Alibaba-level money on Snapchat. And Snapchat would have to really find a way to monetize eyeballs without losing them.
how does yahoo actually generate revenue now?
the only people I know of that mainly use Yahoo mail are in countries like India where ads are worth next to nothing, and nobody uses Yahoo search. Is it just from ads on their properties?
Fairly straightforward: They sell ads (80% of revenue). 75% of them are to folks in the Americas. There is roughly a 50/50 split between search ads and display ads.
The Yahoo search engine is more popular than every product made by a YC company. Combined. Its chief draw is that it is on people's home page or in their toolbar.
But the answer to your question is indeed "other properties". Finance, News, Sports, Fantasy Sports are consistent category leaders (or make it into top 5 in their respective categories).
For what it's worth I have actually started using Yahoo! for the first time again in years. I really like the Aviate home screen replacement for android, which got me hooked on News Digest app, and now I'm using IFTTT to push pictures to flickr automatically because you get 1GB free storage and flickr really has the best photo viewing experience out there. It's way better than Dropbox, Google Drive or Amazon Cloud for looking at pictures.
My mistake. My head immediately went to "acquisition" instead of "investment." Nonetheless, it is interesting how these investment decisions (and valuations) are made.
First Tumblr and now this. Yahoo should stop playing 'save a VC'.