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.
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.
On the flip side, it's possible that they got the "$100M" number because they know that they options aren't worth as much as they say on paper, and thus they asked for a higher paper value in order to compensate.
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.
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.
>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?
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).
A $100 million purchase doesn't have to generate " at least" $100 million in revenue to be justified. Sometimes, purchases are strategic and can be made to deny your competitors resources (defensive patents, people, tech, etc.).
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.
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.
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.
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.
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).
Bitmoji has been in the top 500 for US iOS apps for over a year, and steadily growing. It's been about rank 50 for the past couple months. The Android app isn't quite as strong but is getting better. It's not really comparable to Zynga / Draw Something.
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.
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.
While somewhat humorous, I think you all are being a bit harsh. I'm as curmudgeonly as anyone else born in the '70s, but why begrudge a company whose age can be measured in weeks having a tremendous windfall?
It appears a young company launched with a great user experience, and great engagement metrics. They got a premium for that. The deal terms aren't public, but we know it was a mix of cash and equity (probably skewed toward equity).
Didn't the founder of SnapChat turn down a ~$15B+ offer? I think this company will be a major contender in social media.
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.
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.
>> "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."
Why would Pepsi want you to pay to wear their ads on your character? They pay Bitmoji to create a shirt with 'Pepsi' on it, users wear it and send it to friends, and now they're sending your ad to eachother.
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.