BUSINESS
These Apps Are Worth More Than A Billion Dollars.
Today I will go through the billion-dollar application club and see what I can learn from their success. Here are 13 billion dollar apps in no particular order.
That is what I am focusing today on, valuation, recent financials strategy for growth & how they got to the point they are today. It is gonna be a fun one, especially if you are interested in the tech-space.
Number 1: Instagram (IG) – Current Valuation: $100 Billion
Facebook (FB) acquiring Instagram (IG) was probably one of the best-calculated moves they made, and one of the most profitable ones as well.
Recall when people were waiting for the world to end, some were finding out who the identity of gossip girl was & I was just happy that the twilight saga was done. Things were way different back then.
One morning a news notification pops up, announcing that Facebook (FB) just paid $1 billion in order to acquire the foto centered application Instagram (IG). The world was in shock! 1 Billion dollars for a filter adding application, which was barely launched two years earlier.
The truth is Instagram (IG) was gaining traction rapidly, and the folks at Facebook (FB) were smart enough to see that.
Today, although Facebook (FB) still has more registered users, the balance is shifting, with people spending more time on Instagram (IG) than they do on Facebook (FB). – and to be honest, it is for a good reason, Facebook (FB) is newsfeed is pretty much junk and newborn babies these days.
Number 2: WeChat – Current Valuation: Under $100 Billion
I have a strong fascination for WeChat. Before I get into the basics, guess who owns WeChat? Yep! Tencent, the company I kept on mentioning throughout this article. They are the first Chinese firm to be valued at over $500 billion. That is half an Apple right there, and they are not coming from Silicon Valley.
WeChat is the leading app in China and its surroundings. They started out as a chat application, got people in & then evolved into a multi-layer platform with attention on financial transactions, from banking to sending money & paying.
Most people in that part of the world use WeChat for everyday purchases because it is more convenient & widely accepted.
The company has over 900m daily active users, and it is probably the natural evolution I will see from the likes of Whatsapp.
Number 3: Uber – Current Valuation: $62 Billion
Uber has a special place in my heart as well, primarily for providing us with a way better alternative than the traditional taxi drivers. I love their story, not only because they have and still are disrupting a whole industry, but they chose not to sell early on and instead focused on growth and took the firm public.
Just to give you guys a glimpse into the kind of numbers Uber is currently doing:
In the first three months of 2018, Uber posted a $2.46b net profit
To be fair, the huge amount is due to some strategic partnerships in Russia and from selling their Asian subsidiary to (GRAB) their main competitor in that area.
It is one of those companies where if you only looked at the balance sheet, they do not make any sense, since the company has been hemorrhaging money for the past five years, yet they are still on track to become one of the most prolific tech companies of our time.
Just sliding this in, they have a partnership with Ford to produce self-driving cars who are already on the road in Pittsburg and recently a deal with Hyundai to build the flying car taxi service.
Number 4: Whatsapp – Acquired by Facebook (FB) for $19 Billion
The application is currently the most popular worldwide, with 1.5b active users every 30days.
This happened quickly, while the world was still trying to understand why Facebook (FB) would pay 1 billion for Instagram (IG). This deal was going on in the background. Jaws dropped when the press release came out, saying they are paying 19b for a messaging up that is barely doing 20 million dollars in revenue per year.
So why did Facebook (FB) pay this much? The simplest answer is Traction & Data.
Facebook (FB) is incredibly good at big data, slurping as much info about the user as they can and then using it to show you relevant ads. At least that is how they’ve been making money so far.
Number 5: Square – Current Valuation:$19 Billion
You know the guy who built twitter, yeah, his name is Jack Dorsey. He is also the founder of another service called Square, a mobile payment service which at the beginning of this year was more valued than Twitter.
They are one of the leading wireless payment processors in the globe, and although the growth is slowing down, the firm is quickly increasing in value.
At this point, they have evolved into a hybrid between software and hardware, with Jack returning to twitter as CEO as well.
Number 6: Snapchat – Current Valuation: $16 Billion and dropping
Snapchat has one of the most interesting advancements. They positioned themselves as the new kid on the block, the new social media application for the youths, and they started growing fast.
Up to a point where Facebook (FB) offered to acquire snapchat for $4b.
It was time for a decision whether or not they would take the money or ride the wave & compete with the big guys.
After turning down the offer, Snapchat maintained its growth trajectory but not for long. They try to push hardware products in the form of the Spectacles, The company was losing a lot of money, but they saw themselves as the new Facebook (FB), so they started cranking up the ad sales.
Before taking the company public, there were talks in the tech space that Google offered to acquire Snapchat for a whopping $30b, which they turned down as well.
Now, two years later, Facebook (FB) cloned the little competitive advantage snapchat had and integrated it with all its applications. Snapchat is no longer receiving acquisition offers, and the investors are worried.
Number 7: Clash of Clans – Current Valuation: $10.2 billion
Clash of Clans is still killing it. They’ve dominated the application store for months, and I was shocked to find that they’ve generated over $2b in revenue in 2017 alone.
Taking everything into account, they’ve made over $800m in profit. That is amazing, considering the company has only released four games in its seven years of existence.
In 2016, Supercell, the company behind Clash of Clans & Boom Beach got acquired by the Hong-Kong based company Tencent at a $10.2b valuation.
Mobile gaming is on the rise, and the only reason I have not included the likes of Fortnite or Pub-G is because they were not mobile-first. But with the rise of smartphones, I get a feeling that the gaming arena is about to change.
Number 8: KakaoTalk – Current Valuation: $9.8 Billion
This is Korea’s largest messaging app. They started as a chat app and have now evolved into a central application for services. From banking to ride-sharing, to games, to music streaming & fresh food delivery, they are bringing everything into a single application, and it seems to be working out great for them.
Tencent, the gaming company I mentioned earlier that they bought Supercell: is also one of the biggest investors and has vowed to take the company internationally.
The reason why I included Kakao, apart from the fact that is a billion-dollar plus application – is that they are currently used by a little over 40m people, but that was enough of an audience for them to reach out into adjacent industries and make the likes of Uber uncompetitive in that market.
People already have the application, they know how to use it, it gets the same service done, why would anyone bother to install a different app?
The crazy thing about their parent company is that they are not stopping here. Last year they acquired 12% of Snapchat & 5% of Tesla. As of putting together this piece, I realized it might be a great idea to make a video on them where I deconstruct how they got here.
Number 9: Candy Crush by King – Acquired by Activision for $5.9 Billion
Remember when everybody was playing candy crush? Are you ready to have your mind blown?
The company, King, was generating $3.5m dollars every day, from Candy Crush alone. Seeing all this potential, Activision Blizzard decided they need themselves one of these and picked it up for $5.9b.
Number 10: Tango – Current Valuation: $1.7 Billion
Speaking of chat-apps, it seems to me that different companies are focusing on different geographies as a means of getting themselves market share since there is little differentiation between them.
In their last funding round, Tango got a cash infusion of 215 million from multi-billionaire Jack Ma, valuing the company at over 1 billion dollars.
But since the competition is so fierce in the recent quarters, we’ve seen massive layoffs in order to optimize their expenses.
Number 11: Waze – Acquired by Google for $1.3 Billion
I love Waze! The Israeli company sparked a bidding war between Facebook (FB), Google, and apple, finally accepting Google’s offer of 1.3 Billion.
There is also a bit of controversy around their exit because the founders did not want to sell the firm this early seeing its great potential, but early on when raising money, they sold a bit too much of the company to shareholders who had the final say on whether or not to accept Google’s offer.
It only took them five years since the company formation to the large exit.
Special mention here is also the Lyft application, which is basically doing the same thing currently valued at around 15 billion dollars.
Number 12: Angry Birds – Current Valuation: $1 Billion
I love the story of Angry Birds because they were so close to just calling it quits and closing down the shop. The company behind the game, Rovio, was really short of cash after many attempts at breaking through this space, so they decided to pull all their resources and invest in 1 more project.
After many rejected concepts, one of the designers came up with the idea of launching fat birds with different facial expressions at pigs. The game was addictive, and people downloaded it like crazy.
Soon after the firm tried to milk the brand as much as possible, with toys, a movie, & additional licenses, the brand value soared to over $2b, and then they went public. As of 2018, the company has already lost half of its share price, and this is due to poor revenue reports.
Number 13: Shazam – Current Valuation: around $1 Billion
Who does not love Shazam?! They have such an interesting story. What you guys might not know is that the company was actually created in 1999 in the pre-smartphone era. Back then, you could call a number, and they would try to let you know what song was playing through the phone.
Then, the age of the smartphone came by, and everything changed for them. The firm flourished in popularity but never really found its footing. At the top of their charts, the company was valued at around $1.2b, mostly because of its massive user base.
In Dec 2017, Apple stepped in and acquired the company in a strategic partnership but at a significant discount: they paid only $400m. They revamped their ad-system & integrated the service with apple music, which kind of makes sense.
