Facebook's Plan To Let Companies It Buys Live Independently is Over

Jon Russell, writing for TechCrunch: Mark Zuckerberg was quick to realize that Facebook, the largest social network in the world, doesn't have a monopoly on all users nor can it bank on holding its position as top dog forever. Thus he instituted a policy of buying up promising rivals and integrating them into the Facebook 'group' in a strategy designed to be a win-win for all. But by leaving Facebook in abrupt fashion this week, Kevin Systrom and Mike Krieger -- the founders of Instagram -- have shown that the social network's vision of letting acquired businesses operate independently simply isn't feasible. [...] The original idea is a best-of-both-worlds approach: a company's finances are infinitely secured and it can grow as needed inside the Facebook 'family,' with access to resources like engineering, marketing, admin, etc. That was also the plan for WhatsApp, but founding pair Jan Koum and Brian Acton managed four and three and a half years, respectively, at Facebook following their $19 billion acquisition in 2014. VR firm Oculus, another billion-dollar purchase, lost co-founders Palmer Lucky (political scandal) and Brendan Iribe (reshuffled) three years after its deal.

Re:

[DontBeAMoran]

Zuck: Yeah so if you ever need info about anyone at Harvard
Zuck: Just ask
Zuck: I have over 4,000 emails, pictures, addresses, SNS
[Redacted Friend's Name]: What? How'd you manage that one?
Zuck: People just submitted it.
Zuck: I don't know why.
Zuck: They "trust me"
Zuck: Dumb fucks

Re:

[DontBeAMoran]

VR is good for games.
AR will be good for everybody.

3,000% growth is pretty good for a "failure"

[raymorris]

Buried in the 16th paragraph of the 17-paragraph story:

--
Instagram went from 30 million users pre-acquisition to over one billion today, while WhatsApp has more than 1.5 billion active users up from 450 million at the time of its deal.
--

Growth of over 3,000% and 300%. What a failure.
SIX YEARS later, one of the founders decided to retire.
  The entrepreneurial founder decided they wanted to be entrepeneur again, not run an established company.

The average tenure of a CEO is 8 years, so these leaders stuck around about as long as one would expect in any structure generally.

Having them go on to other things isn't necessarily a bad thing, either. Like these founders, I enjoy starting companies, and I'm starting to not suck at it. I don't enjoy running a company after it's stable, and I'm not good at that. The people who started a company from zero aren't always the best people to be running a stable company later. For one, their appetite for risk and excitement probably isn't a good match.

Re:

[alvinrod]

I think there's some question as to what degree those acquisitions were successful because Facebook left them alone and largely autonomous. Continuous triple, let alone double digit growth is not possible over the long run and eventually you want to be able to transition into a stable company that can keep their product strong. You're right that not everyone who helped start the company is the best person for that, and one could even argue that their talents are being wasted if they're not out trying to mak

Re:

[Penguinisto]

Nota Bene: users != revenue.

Now if their revenue increased at the same rate, that would be impressive... I don't doubt that their revenue did increase, but by how much in absolute dollars/yen/rubles/whatever over that period of time?

Revenue from $1.5 million to $x billion

[raymorris]

WhatsApp form 10-Q revenue ar the time of aquisition was about $1.5 million.
Facebook doesn't officially report the revenue of each app, but a recent analysis in Forbes estimated when revenue of $5 billion when the changes are complete in 2020.

Re:

[tokengeekgrrl]

But how many of those users are just spam or fake bot accounts? Seems like once Facebook buys a company they essentially become yet another spam machine of whatever nonsense generates CTR (that's at best, at worst they help distribute malicious payloads).

https://www.nytimes.com/2018/0... [nytimes.com]

"Dovetale said that, on average, 16.4 percent of the followers on Instagram’s top 20 accounts were fraudulent.

Sylo, which requires influencers to share access to their public and private post statistics, said it had r

Because when I think win-win for all

[rsilvergun]

I think of the dominate player in a space buying up all potential competition with little or no regulatory oversight.

Re:

[Opportunist]

Why do you think the inside is any nicer than the outside?

Re:

[fibonacci8]

Why do you think the inside is any nicer than the outside?

You're right, facebook is toxic on the outside as well.

I am altering the deal, pray I do not alter it any

[Anonymous Coward]

I am altering the deal, pray I do not alter it any further.

Re:I am altering the deal

[DontBeAMoran]

https://www.youtube.com/watch?... [youtube.com]

Worthless

[Anonymous Coward]

- have shown that the social network's vision of letting acquired businesses operate independently simply isn't feasible

Bullshit.

All it's shown is that the now-billionaire founders of those companies don't like playing second fiddle to Zuck.

And being billionaires, they don't have to hang around for a paycheck - although they probably hang around for a few years because of golden handcuffs. [wikipedia.org]

Re:

[serviscope_minor]

Bullshit.

You need ot rewite the sentance to reveal the true meaning. "feasible" in this case means "not heavily monetized enough" and "not creepy enough with your data".

Basically they're going to pull them all closer put in more ads, od cross-app user analytics and basically make them nothing ohter than different interfaces to facebook.

I strongly suspect though that the reason people prefer instagram to facebook is because it isn't facebook. I recokon we'll see declining users of those other services within

Re:

[drinkypoo]

If a company is for sale, it's probably because they don't have a route to profitability. If they did, they'd get some investors and follow that route. Therefore, if Facebook buys some company, they probably can't operate it independently... and make a profit. And since Facebook is in the business of making money, it doesn't make sense for them to do anything but roll the other business into their normal operations.

News flash ...

[Anonymous Coward]

Giant greedy corporation buys other corporations and expects to milk those corporations for all they're worth.

I mean, who is surprised by this?

Facebook wants data and ad revenue, they have no interest in the privacy policies or plans the companies they buy had before that.

You sold your company to Facebook for an assload of money, don't expect they'll let you do anything you want forever thereafter. Now we have newly minted billionaires whinging they no longer have creative control because the other asshole

retire BorgBill

[Anonymous Coward]

Zuck should definitely replace Gates in the Borg icon.

Family

[Errol backfiring]

A family featuring an organization diagram with a lot of positions crossed out is usually called a syndicate.

Inevitable

[Nidi62]

It's inevitable that an acquired company cannot maintain it's independence within a larger organization. Eventually the founder/leader of the acquired company will feel constrained, unable to pursue their own vision, or find themselves at odds with the other leadership. As for the leadership of the overarching organization, they will always make sure that their position, their vision takes precedence. They will rein in a subordinate company that is growing to fast/strong and affecting the core business (

Happens all the time...

[CohibaVancouver]

But by leaving Facebook in abrupt fashion this week

When a company is acquired, it's almost always the case that the senior managers / founders move on to something new after a "transition period."

Usually the staff in duplicated admin roles are the first to go (HR / Accounting) followed by those that depart after sales and marketing merge - Senior execs are next.

Happens over and over and over again the same way - And will continue to do so.

Fakebook,twitter, instagram et al

[p51d007]

The world would be better of, IMO, without the likes of twitter, Fakebook, Instagram and the like. How much false information, from both sides of politics have ignited such hate and discord in the USA, for one, but around the world? Now, with them "scrubbing" content THEY deem bad, it's just going to make it worse.

facebook is the new yahoo

[NynexNinja]

Yahoo had a long history of buying up companies for billions of dollars and then never doing anything productive with those investments. Facebook is the new Yahoo.

Bye bye Instagram

[IGnatius T Foobar]

I use Instagram because it doesn't have the toxicity of F*c*book. If Instagram turns into F*c*book I'll stop using it, and so will most other people.