What does it take for Facebook to swoop in and buy your startup after it’s been running for just nine weeks? Five million downloads and 2.5 million active daily users will do it – that’s why Facebook acquired tbh.
This app, which lets people anonymously respond to polls from friends, may not sound like something that’s set to become the next Instagram. But Facebook figures it’s worth a shot – the app has been a hit among kids who’ve posted more than 1 billion polls since August. The financials have been kept under wraps, but TechCrunch reports the deal was “less than $100 million”.
The four co-founders of tbh will keep working on the product somewhat independently, but with the full backing of Menlo Park. “When we met with Facebook, we realized that we shared many of the same core values about connecting people through positive interactions,” tbh said as the deal was announced. The idea behind tbh was to give teens a tool that’s honest, but avoids the snark of other popular anonymous apps like Yik Yak and Secret.
So why did Facebook buy tbh, instead of developing its own polling tool?
Facebook has a history of both acquiring and building: it acquired Instagram and WhatsApp after they went viral; it developed Instagram Stories to compete with Snapchat and has recently been testing a new group video chat tool that’s very similar to Houseparty, the livestreaming app from Meerkat.
But buying tbh isn’t the same as when Facebook acquired Instagram for $1 billion in 2012, when the photo sharing app already had 30 million monthly users. tbh has yet to prove its staying power – this is far from a sure thing, and represents a genuine punt on behalf of Facebook.
The rise of Snapchat seems to have created a painful awareness at Facebook that to be a world class player, you need to get in on new things early or risk being a second-rate copy.
Facebook tried to buy Snapchat for $3 billion four years ago only to be turned down, and has been on a quest to replicate what the popular messaging app does ever since. Deals like tbh make it clear that Facebook has learned that it’s better to get in early when an idea is cheap, rather than wait until it’s proven and miss out – even if you end up with a few duds. $100 million may not be a lot to Facebook, but for the founders of tbh it was a pretty decent lump of cash for nine weeks’ work.