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What's missing from this piece is a broader historical perspective. This pattern of conglomeration happens in almost every industry, e.g. the "Big Three" automakers.

It doesn't have to be bad. Seven of the top 10 pharma companies are over a hundred years old. They are highly concentrated. But there's never been a better time to be a biotech startup. Life science startups are going from founding to billion dollar IPO in <18 months. The near lock the big pharma companies have on distribution allows the startups to focus on innovation. It's hard to build a hundred billion dollar drug company today, not so hard to build a mere $1B company.

The same is true in food. Kraft, Mondelez, etc. have huge market power, but are also active in the M&A market, paying $300M for Krave Jerky, $600M for RXBar, and $700M for Blue Bottle—all in the last 18 months or so.

These patterns aren't that different than what we've seen with Facebook acquiring almost all upstart competitors. This isn't great for billion dollar VC funds, but it's not clear at all its bad for entrepreneurs.

It's so common, it's called industry consolidation.

Right, but in pharma and food brands, it’s an evergreen process. For the past 20 years, a lot of breakthrough drugs have come out of start-ups. When they get to a certain phase in FDA trials, the winners get bought up by the big players, because nobody in their right mind wants to carry the overhead to ship one drug. Meanwhile, new startups are always forming.

Same with food brands - there are always new food companies shipping a single new product in a hot new market like kombucha, or kale chips, or iced coffee. They build a following and get bought, but new brands are incubating at the front of the trend curve.

The point is, there’s a steady state in some industries where start-ups are better at capturing trends and moving fast, while big companies have the expertise to scale and meet regulatory requirements. One side needs the other.

I think consumer services, platforms, and software hit deep market saturation many years ago. All this to me sounds like consumer plays.

Right now the innovation has again turned to business software and services. I see most of the intersecting things in tech playing out in corporate offices instead of on my phone or my home computer nowadays.

I think it’s easier and definitely more headline grabbing for articles like his to focus on the consumer stuff. The real story now though I feel strongly is in the business space.

You're looking at the features rather than the true value of these apps, the users. Snapchat has the biggest reach into the most impressionable market, teenagers. That's why it is valuable.

That's actually kind of grandparent's point - if your only "innovation" is managing to market to a slightly different set of users, you have no moat, and a big company with some engineer-hours to spend can duplicate what you've done for every market segment you haven't reached yet.

The same teenagers also don't have much spending power now. And besides, teen trends change pretty quickly, so their main targets are teens it does not bode well.

Well, as these teenagers grow older, their market segment then becomes young adults.

That is the key transition. Once they start greying, users will perceive any new platform as unwelcome change. But until then, you have to eventually give them better reasons for staying than just "this is younger and wilder than that other thing".

Facebook's ticket for growing up in lockstep with their core user generation was coordination and communication for loosely coupled groups with some real life connection. People who move into a new development, the "parent cohort" around a daycare class, new hires who joined a company at roughly the same time and so on. All that is young adult stuff that fits well with what Facebook offers.

Nonpermanent asynchronous video messaging? If interpersonal exchange is always a blend between information propagation and entertainment, Snapchat seems dangerously lopsided towards entertainment. That is good for getting people excited (quick growth), but probably not so good for long term retention. MySpace was similar.

That's why it is valuable.

Changing "impressionable" to "manipulable" makes this point clearer.

Snapchat is valuable from a monetary perspective, but actual real value is little to none. No one is going in 10 years will say Snapchat changed our lives or progressed society's knowledge. People will look back wondering why it made a handful people beyond wealthy.

Yeah, but to be honest, that's true of the vast majority of companies, tech or non.

You're not wrong, but the 'frightful 5' were all transformative for society. The point is that the big companies quash non-transformative small companies.

True, but the vast majority of small companies (~24 for Snapchat) don't make people multi-millionaires by providing so little to society.

no one forces people to use snapchat. people use it because it adds value. maybe it's not better than AIM or whatever, but it is still valuable.

Considering AIM just got shut down, that's a rather poor long term outlook.

Which I think is the point. To be a new billion dollar company (vs pump and dump) you need to either make 100's of millions in profit for a few short, but profitable years. Or, have steady profits and steady growth over a very long time scale.

My interactions with teenagers makes me wonder though if Snapchat actually has a reach into that market. Right now their reach is providing a tool that teenagers enjoy, mostly because things disappear and their parents don't see it. As soon as they start to attempt to leverage that reach in anyway that seems obvious, or if that reach infringes on the core experience, I'll bet they're on to the next thing and we're left with something else that was once valuable "because of the users!"

Teenagers grow up, and the next crop of teenagers would use not Snapchat but QuickBlah or FastYap or something else. There is no inherent advantage to Snapchat, it's just luck that they happened to be the one there. It's like finding a suitcase with money on the street - valuable, but not sustainable.

Where can I get in on FastYap? Does it also have a coin?

let me show you the ICO whitepaper, done in LaTeX

Sonar and YikYak also had lots of users. Until one day they didn't. I think op is spot on - snapchat is destined to end in the same list.

YikYak was a bit different in that it was anonymous (initially). When you don't know anything about your users, it must be tough to monetize them.

They had a really rapid decline, eh?

WhatsApp and Instagram were innovative but were acquired.

The only reason Instagram isn’t a $100B company in its own right is because Facebook had a better vision for it than investors. If Instagram were able to raise at a $5B valuation rather then be acquired, then Facebook would now have a serious competitor.

Similarly, Facebook messenger wasn’t as popular as WhatsApp.

Facebook could have been acquired by Yahoo or Microsoft but wasn’t.

What was innovative about Whatsapp?

Sending SMS over the web. May not be particularly interesting in the US, but in countries where texting is expensive, being able to do it for "free" was a godsend.

Yes, messaging over the Internet is useful, but we had that for a long time. Whatsapp was far from the first.

For a lot of users it was their first SMS to Web interface.

Right, but that's not an innovation.

Okay, maybe that's not YOUR definition of innovation.

I personally like this one:

http://www.businessdictionary.com/definition/innovation.html

Is there any product that wouldn't fit that definition?

Products that are clones of other successful products. Which is tens of millions of products. There aren't many industries with single vendors. I think the definition perfectly captures how most people think about innovation.

It might not be much of an invention, but it is an innovation.

So if I make a clone of some existing product and give it to users that never used that kind of product before, I'm being innovative?

Absolutely. Pushing a product to a new group of people is innovation. It's innovation in the business aspect, not innovative on the tech side.

Is that quantitatively different than AIM, YahooIM, ICQ, etc.?

These simply didn't have market penetration and network effects in the Indias and Indonesias of the world. Probably did not have a dominant network even in the US. Maybe they we a bit ahead of their time of easy internet availability anytime.

The other innovation was WhatsApp used phone numbers already stored on phone address book as identifiers, allowing rapid user onboarding and spread without much effort by the user. Again maybe these others happened before the smartphone revolution making this possible

Wait, they invented internet messaging??? That existed since forever. Calling it "SMS" doesn't change much. Yes, they exploit the greed of cell providers as leverage, but that's a very tactical innovation (not to dismiss it, tactical innovations can be very lucrative) but nothing strategically new.

As I understand it they also had a stronger focus on usability for first-time Internet users in many countries. For example, porting the app to many devices (not just smart phones) and using phone numbers as user identifiers instead of usernames.

I don't know if you call that tactics or strategy, but it made a difference for user growth. Users don't care who invented it, they care if they can get it to work easily.

> Wait, they invented internet messaging? That existed since forever...Nothing strategically new.

WhatsApp enabled low-cost internet messaging on a global scale by taking the existing messaging technology, perfecting the user interface and positioning the product correctly (i.e. text messaging instead of instant messaging).

Sure, people could have used AIM, but then they would need to collect the emails or screen names of their close friends and encourage people to use AIM with that system. WhatsApp succeeded by framing it in the context of text messaging (something you do on your phone with friends) instead of in the context of internet messaging (something you do at a computer, and less personally). Tying the messaging to something that was already familiar and ubiquitous (phone numbers) while keeping the interface essentially the same was a real innovation.

There is a tremendous amount of innovation opportunity when two situations collide: 1) a new platform of user software emerges or becomes realistically cheap, and 2) useful systems or software exists that is extremely useful, but decentralized or frustrating to use. Mobile app stores and taxis are a good example, which resulted in Uber and Lyft.

Your criticism is substantially the same as people dismissing Dropbox’s legitimate innovation because rsync already existed. If you dig deeply enough, most real innovation can be described as a kernel of something old enhanced by something that’s new. It’s more consistent to use this heuristic for identifying innovation than it is to go by whatever personally impresses you.

> perfecting the user interface

Frankly haven't noticed any difference in UI.

> and positioning the product correctly (i.e. text messaging instead of instant messaging).

Basically framing & marketing. Yes, that's important. But not exactly a technological innovation, rather finding a right set of words to convince the users to use existing technology.

> dismissing Dropbox’s legitimate innovation because rsync already existed.

There are substantial differences between what rsync did and what Dropbox did, especially in the area of storage and automation. rsync is just a tool to get bytes from point A to point B, Dropbox solves the end-user problem. Whatsapp doesn't add much to solutions that already existed - besides using phone number as ID instead of email, there's nothing different in UI or capabilities or solutions of this service that hadn't existed for decades before.

Uber and Lyft give me things I couldn't do before - i.e., get transportation cheap on 5-minutes notice. Whatsapp just rehashes what already existed for decades with a new label on the box. It was a successful label, good for them, but that is not what we talk about when we talk about innovations, usually.

Tying the messaging to something that was already familiar and ubiquitous (phone numbers) while keeping the interface essentially the same was a real innovation.

As the original poster of this thread, thanks, I think that's a good answer to my question. It seems a small step considering SMS, but then again I can't remember any other app doing that, and hindsight makes many things appear simple.

Mobile first messaging system that worked even in feature phones

Windows Live Messenger, just as a random example, had apps for J2ME, Windows Mobile, BlackBerry and later iOS, besides the desktop.

Is "mobile first" an euphemism for "doesn't have a native desktop client"?

Are you asking why Whatsapp is better than Windows Live Messenger?

No, I'm asking why it's more innovative than Windows Live Messenger.

This debasement of the concept of innovation is exactly what I'm railing against.

I think Whatsapp is a good app, and their business is obviously successful. I just don't see the innovations. And I think it's important to preserve the word for those who merit it, even if they don't have the interest or skill to build a successful business.

No. In this case "mobile first" meant that their user identity was a phone number, not a username or email address.

Thanks. I think that's in fact an innovation. Were they the first?

I believe so. The first I remember anyway.

Messaging people across countries, not worrying about what phone they had, or about having to pay extra money.

Yes, but we already had free messengers. As I pointed out in another post, Windows Live Messenger already worked on a bunch of phones (including J2ME).

And yet Windows Live Messenger is dead and whatsapp is going strong. It was a piece of shit.

> The only reason Instagram isn’t a $100B company in its own right is because Facebook had a better vision for it than investors.

What has FB done with it that was so great, though? IMO Instagram's user experience has declined since FB bought it. I personally don't like Stories, though I understand why many people do. The timeline used to be strictly reverse-chronological, and now it's a useless mess like the FB timeline. It's also peppered with ads, which I hate. Nowadays I use Instagram a lot less than I used to.

> Similarly, Facebook messenger wasn’t as popular as WhatsApp.

That depends wildly on country. That's only the narrative from a non-US perspective.

In the US, WhatsApp is basically unheard of, and most people I know use Messenger for everything because we're all on Facebook anyway so we might as well use the same service for everything.

or FB bought Whatsapp as insurance against competition. If an independent Whatsapp can make $1 for ever $10 they make Facebook lose, FB would value Whatsapp 10x what investors would, but not because of "vision"

Exactly. And WhatsApp was way ahead in striking preferred access deals with telecoms in the developing world. Facebook was able to piggyback on those, and develop it into the internet.org initiative to try to create a beachhead in these markets that it had less traction in.

Exactly, innovation is dead. Now its a bunch of remix artist that are trying to make a quick buck. Whatsapp is purposely going stale (what is the deal with only being able to sync with gdrive or icloud, what if I want to switch my OS, how to get my data out?) in the hopes that people will move to messenger like how Google just killed gtalk in the hope that customers will move to one their many messenger.

This is the case in hardware also. Every phone looks like an iphone & tablets are a larger phone, I miss the days when Nokia & Samsung used to release phones of various form factors.

> What's so hot about SnapChat?

The same can be said about a lot of companies in the 1st web bubble. pets.co for example

Actually, a lot of 'experiments' in every technological wave have failed

You remember Windows 98 but doesn't remember OS/2 or BeOS. Google but not Altavista.

The PC survived but not the Amiga or other computer manufacturers besides Apple (and even then).

I was even puzzled by win98...what was special about it? It was basically win95 2.0 iirc.

I'm probably misremembering the specifics, but i think you could have up to 24 open sockets. That was pretty special.

I am missing something, I think? Walmart and Toyota both have competition. Just yesterday, there was a good read about Dollar General. There are young automaking companies in China and India, though not really in the US market.

I assume I'm missing something.

> All of them are roughly the same: ever so slightly more novel way to deliver roughly the same set of data to users in exchange for app or token of money. How is that "ground breaking"?

What you describe is the justification for state-run media versus newspapers, magazines, TV shows, movies, and games. All of these could be considered the same set of data from the state's point of view.

Why is the state involved? He just means that it’s hard to run a buisiness without a moat and you should expect Goliath to win in that case.

I was trying to illustrate the cultural limitations of the big five.

Just because an app has only a slight difference (for now) doesn't mean they should be ignored or excluded. The technology of social communication today is akin to the printing press of the 15th century. We have thousands of years forward to be social, buy things, and enchant users... so why limit it to the early, myopic giants?

As long as everyone plays by the rules of a free market, or close enough, then consumer choice is what ignores the players for the superior offerings. They win if they can make a better product, and the Giants often have an easier job of making a better product because of the advantages of being a tech giant.

Independent news sources provide investigations critical to the state, which state run media do not. It's like GNU/Linux or Android to Windows or iOS. They provide excellent value as well as competitive advantages.

SnapChat vs Whatsapp? well.....

> all of these "web startups" are not very innovative.

So are you basically just lumping "SnapChat and Whatsapp" into "all of these web startups". That seems terribly myopic don't you think?