Startup Hits of the Last Decade Don’t Understand Mobile

As most people know by now, Facebook purchased Instagram for $1B and the deal supposedly went down in just 48 hours. But what did Instagram have to offer Facebook above and beyond what Facebook already owned?

It wasn’t users. I would say at least 75% of Instagram’s 30MM users were already on Facebook. It wasn’t architecture. Facebook seems to have done a good job solving the scaling and data storage problems. And as a talent acquisition, well, $1B is a bit high for 13 people.

The answer, then, is simple: Instagram had mobile engagement far beyond what Facebook was able to deliver with its own app. It’s even clearly stated in their own S-1 filing:

“Any number of factors could potentially negatively affect user retention, growth, and engagement, including if…we are unable to continue to develop products for mobile devices that users find engaging, that work with a variety of mobile operating systems and networks, and that achieve a high level of market acceptance;”

And so, Instagram was purchased for $1B.

Where does that leave the rest of us?

Actually, in a pretty good position, if your product and/or service is focused on mobile and could arguably be complimentary to any number of businesses from the last decade.

Just like Facebook and Google revolutionized the web and those savvy enough to notice bemoaned those who just didn’t “get it” we are in a similar environment today. The hot startups of the 2000′s don’t seem to really “get” mobile, it’s designed with the same engagement as a full web site and people don’t spend commensurate time on their mobile devices. They cannot seem to drive engagement in the post-PC era. This is great for new startups in the mobile space as there is your liquidation event, ready to go.

As a group, the RTP software startup ecosystem is in a particularly well position as we are, in a way, starting fresh. Not tied down by the baggage of the 2000s startups here can concentrate on delivering solutions to the mobile engagement problem. Where the liquidation channels of the 1990s and 2000s may have been BigCorps like IBM, HP, Dell, etc. today they are Facebook, Google, and other hot companies of 2000s.

So the new, old guys have come of age, now let the new, new class emerge.

About the Author

Hersh Tapadia Hersh is the lone representative of the fairer schools at Triangle Tech Talk. An engineer by trade but he spends the majority of his free time dreaming up new business ideas and fantasizing about being a professional race car driver. Born and raised in Raleigh, NC, Hersh has been involved with medical device and pharma startups, medCount and CertiRx, and worked with Foundation Capital. Currently he spends a decent bit of time mentoring new companies on strategy and financing while hoping that people get his humor. Hersh has a BS in Electrical Engineering from NCSU and an MS in Biomedical Engineering from Duke.