Snapchat reportedly buys Bitstrips for roughly $100M | Hacker News Reader

Snapchat reportedly buys Bitstrips for roughly $100M

recode.net

81 pointsrezist80850 comments

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.

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

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

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.

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

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.).

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).

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.

I agree. Instagram is bigger than Twitter.

Hopefully more profitable.

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.

When this tech bubble pops so many people are going to be screwed. 20-30bn for a business that spends more money than it makes, riiight.

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.

A fad by definition is short lived. Instagram has been around 5.5 years. I would not call that short lived.

I was just going over this thread to compare reactions:

https://news.ycombinator.com/item?id=3817840

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

Congrats everyone at Bitstrips!

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?

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.

That might be true for Bitstrips but not for Bitmoji, which is by the same company as indicated in the article.

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.

Bitstrips existed for like 2 months

the company was founded in 2007

http://company.bitstrips.com/about.html

https://www.crunchbase.com/organization/bitstrips

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).

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

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

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.

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=...

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

Yes, but scale is important too https://www.google.com/trends/explore#q=bitmoji%2C%20bitstri...

Because the Y-axis on Google Trends is so quantifiable?

https://www.google.com/trends/explore#q=bitmoji%2C%20bitstri...

Based on your logic, since Bitmoji has over 1% the Google Trends presence of Snapchat, it is worth over 1% of Snapchat's valuation.

Everyone you know uses Bitmoji? Really? I haven't even heard of it until now. What sort of people do you know?

Movie and show promoters apparently.

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 don't begrudge them. I don't even know them. I was answering the question that was asked.

Without deal terms or other public information, there's not much to talk about.

Me neither. This is definitely not an Instagram. Not even remotely close.

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.

Have you used Bitmoji? They have a ton of product placement and are likely making good revenue from it already.

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.

My mom and aunts all have Bitmoji's now. They're fun alternatives to standard text/emojis, especially if the characters actually look like you.

Adding Bitstrips to the trend for comparison: https://www.google.com/trends/explore#q=bitmoji%2C%20bitstri...

politely disagree on the quality of the art. but considering they're emojis, there isn't much room to work with anyway

It's probably Snapchat equity instead of cash.

I know far more people on bitmoji than snapchat. The people I know use it with almost every text/iMessage.

I am in my 30s fwiw.

Seems like a reasonable purchase if somehow they can convert these people to snap chat users.

Also, I would say over half of my friends using bitmoji have given them money, including myself.

Furthermore, every big movie ( currently the new batman/superman ) has a deal with bitmoji.

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