Of the many things that keep founders up in the middle of the night, one of the biggest may be the looming specter of the “Big Four” as a competitive threat. Founders are taught to have a good answer for the question that inevitably rises in pitch sessions or fundraising excursions: what would you do if Facebook, Google, Apple or Amazon entered your market? How would you react?
Perhaps, if recent history is any indication, the reaction should be: bring it on. At least if you’re a social app and Facebook has you in their crosshairs.
While most point to Mark Zuckerberg’s apparent $3 billion offer for Snapchat as the first publicly expressed moment of validation for Snapchat’s business model, Zuckerberg actually had his eye on the nascent LA-based startup for some time. The Facebook Poke app, released in December 2012, was the first app built with the intent of dethroning Snapchat’s reign as the pre-eminent ephemeral app. Spiegel himself acknowledged as such, sending a note of congratulations to Facebook:
“Snapchat co-founder Evan Spiegel responded to Facebook’s new Poke app today with the brief statement, “Welcome, Facebook. Seriously.” He declined to comment further.”
Columnist MG Siegler encapsulated the sentiment of this veiled threat:
I also can’t help but wonder if maybe this is a message from Facebook: don’t want to come work with us? Fine, we’ll clone your service in a couple weeks and ship it to a billion users.
What actually happened is that a healthy percentage of those billion users not only ignored the Poke app but continued using Snapchat. In fact, Snapchat’s monthly share actually grew from December to January ’13, leading one to suspect that perhaps Facebook’s focus on the space also helped turn more attention towards Snapchat that may not have been there to start. A rising tide lifting all boats, indeed.
Facebook’s inability to gain any traction for Poke led to the infamous talks of late 2013 where supposedly an offer of $3 billion was made to Spiegel by Zuckerberg that was rebuffed.
The Empire Strikes Back
So after failing to lure Snapchat into the fold, Zuck went back to the well again and had his Facebook Creative Labs team give it another go, this time with an app called Slingshot, an asynchronous photo sharing app that again focused on the dynamics that made Snapchat such a success: ephemerality, spontaneity & customization.
Now we’re only a month into it’s release, so it’s probably too early to write Slingshot off entirely. But the numbers don’t look good. After briefly cracking the top 50 upon launch, the app has tumbled out of the top 1000 and its growth is slowing monumentally.
Which leads us back to our earlier question: is Facebook still an entity to be feared in the consumer-focused, mobile-social landscape?
Leaving aside the question (for a moment, anyway) of whether or not it would have behooved Snapchat to accept Facebook’s offer, it seems painfully obvious that once a startup has established itself as the market leader, it makes it very difficult for anyone to catch them, even if that competitor has billions of dollars at their disposal.
So what does this mean for Facebook? If they can’t entice a valuable startup (think: north of a billion dollar valuation) to sell at the price they want, they will inevitably have to overpay for the peace of mind of not having a competitor chip away at their market share in social.
Creative Labs Holds the Key
But perhaps we’re asking the wrong question. Maybe what we ought to be asking is something much deeper than that. And that is this: Can Facebook’s Creative Labs team come up with software that seriously challenges ascendant competitors on their own turf? Or perhaps more importantly, can they produce experiences independent of both the core Facebook functionality AND that of their competitors? Because that’s what ultimately will get them out of this reactive cycle of producing copycat apps and having to go back to the well (sometimes in vain) to acquire their competitors.
Facebook should be setting up Creative Labs to function more like Google X’s project teams: independent of Facebook and designed to build stand-alone experiences that leverage the creative muscle of the larger company but are ultimately their own projects capable of standing on their own accord.
Easier said than done, of course. And perhaps Facebook has already started along that path. But after missing out on ephemeral media and having to pony up $19 billion for WhatsApp, it’s high time for Facebook to start developing their own moonshots and putting a scare back into smaller upstarts in mobile/social instead of buying everyone else’s. Otherwise, startups will have their answer to the “800 pound gorilla” question, at least relative to Facebook: and that is that the emperor has no clothes.