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Comment by derefr | Hacker News Reader

> They could have likely sold it or spun it out, but did not do so.

Doing either would have required de-acquiring the team that develops and runs it. Whereas I assume the whole point of acquiring Zenly was to acquihire those folks to work on Snap (and likely then lay off the now-redundant engineers previously working on Snap’s geo features.)

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Updated with how shutting down Zenly means firing the whole team. The Zenly engineers always worked on Zenly, and not on Snap. If the goal was to acquihire, they are letting their whole acquisition go.

It smells like a complete change in direction. I am just unsure why not sell an asset that seems pretty valuable, or spin out, keeping ownership stake.

Presumably they’re going to write off the cost of the acquisition for tax purposes. I suppose that doesn’t preclude selling the assets like the brand and the software, but since it looks like they’re in a hurry to reach profitability, the certainty of booking tens of millions of future tax offsets must have seemed appealing.

If you've never made any money - how much are you really thinking about taxes?

That’s the point: They’re clearly attempting a shift from growth to profitability. Those future profits look that much better to investors if they have (say) $50M in tax offsets already banked.

You know what looks better than $50M in tax offsets? $500M in cash

I don’t understand the point you’re making. Zenly could be readily sold for $500M?

There’s cost, time, and unknown returns in spinning it off.

And it would apparently give a geographically dominant 40 MAU to a competitor.

It’s an insult to users and team members for Snap to just shut it down, and it could become bad PR, but there’s a reasonable case to be made on near-term business strategy.

You don't actually know if it's valuable. Users = costs, they are only valuable if you can monetize somehow. Inability to develop a workable monetization strategy would lead to this sort of outcome.

$300M is too much for an acquire unless they are super AI scientists who have know-how that's worth a few billion.

$30M - maybe. If they have 30 person team and they are really good.

I remember that deal and it stunk. It feels like one of those pilfering Private Equity deals where someone is getting payback for something or the other.

Divide that price by the # of users and the $300M can make sense...

They had 4M users, it's not enough unless it was growing hyperbolically, which it wasn't.

Or it was to kill off the competition intentionally. They may have seen Zenly as a major threat at some point.

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