Given the sheer volume of photos generated by users of mobile devices, it was only a matter of time before the scores of app builders set their sights on moving images through the phone’s video camera. Despite the unfortunate rush to label this new breed of social video services as “the Instagram for video,” a few apps broke out from the noise and started to grow — depending on how you define “growth.” The leaders during this period were Viddy (which raised a large round at a high valuation) and Socialcam, a Y Combinator company backed by some of tech’s most notable angels. And while these apps grew because of their good timing, the attention generated by celebrity tie-ins, and — of course — because of the sheer power and lift generated by social networks.
Socialcam and Facebook’s Open Graph, however, had a special relationship. Perhaps unlike any other application, the Socialcam team designed, architected, and built one of the most savvy Facebook integrations to date, learning the ins and outs of Open Graph while simultaneously (and repeatedly) convincing consumers to click where they wanted them to click in order to unlock videos to watch and share. The result was one of the fastest growing social applications, which itself generated tremendous interest from investors and other entrepreneurs curious about the space. And while Viddy decided to raise at a large valuation (almost $370m!), the Socialcam founders kept plugging away, riding the wave of growth. Their investors, some of them connected to Hollywood celebrities (or the actual celebrities themselves) helped the app distribute from creators to fans, further fueling growth, as well as acting as a curation layer for people to discover great content housed on YouTube.
As we all know now, Socialcam was acquired for around $60m by Autodesk, a large, public company that is known for its wide variety of software offerings, including video technology that was used in flicks such as Avatar. How did it come to be that two fast-growing mobile video-sharing startups went down such different paths? What compelled Viddy to raise over $30m on such a high valuation, while Socialcam decided to stay lean with their angel funding, bypass venture capital, and have a life-changing outcome for the founders by selling to a big company? Is there something inherently limiting about user-generated video on mobile devices today and in the near future, or is there a large opportunity on the horizon that Viddy is holding out for? And, what happens to services that experience exponential growth through powerful loops like Open Graph, followed by exponential decay?
At the end of the day, I tip my hat to the Socialcam team. If Bloomberg media adorned its covers with Zuckerberg on the eve of Facebook’s IPO with the moniker “The $98B Hack,” I’d do the same thing for Socialcam, calling it “The $60M Hack.” To be clear, I use the word “hack” here with respect, not condescension. Socialcam’s creation, rise, and sale were all executed brilliantly, especially the timing around hacking Open Graph. The company needed seed capital, it has a vision, it built a product, and saw a path to exit to provide value to a larger company that already boasts an impressive suite of complex modeling and automation software, but like many large companies, not only doesn’t have a mobile presence, but probably doesn’t have a clue of how to go about it — let alone build it.
While some in the chattering classes lament yet another company that possessed a smaller vision, or didn’t have the desire to go for a big idea (and venture capital), it’s worth remembering that applications like Socialcam are oftentimes built by very small teams who don’t need much more than seed capital, and who may personally have different motivations for building and selling — motivations that we should not underestimate and/or disrespect. At the end of the day, Socialcam was an extremely capital-efficient business and filled a hole in a huge market, especially in a business climate where large companies like Autodesk are exposed.
This is the era we live in. Mobile is an absolute dark and scary blindspot for big companies. That delta creates an opportunity for the next Socialcams to build the right bridges and build themselves into life-changing events. For Socialcam specifically, which is now a part of Autodesk, the team can remain small, not worry about finances and resources, and go about their business. Perhaps their vision for the product alters a bit. Or, perhaps they get tired there and leave to start the next thing. Either way, both sides win, and that is a very good thing. A tip of the hat to the Socialcam team.