Consumer social is increasingly impossible for any startup to build a really successful company. It can sometimes be surprising because, for a lot of people, social media was their first introduction to technology. Plenty of people learned about HTML for the first time having to customize their Myspace pages. From there it was YouTube, Pinterest, Instagram, Reddit, Snapchat, Yik Yak, Tumblr, and (obviously) Facebook. So what happened from the golden age of social media to now?
Driving the perpetuation of the “consumer social is hard” narrative is the announcement this week that photo-sharing app, BeReal, was being acquired by French game and app developer, Voodoo, for ~$600 million. This is about at the same price as BeReal’s Series B in April 2022. Some are rightfully pointing out that a half a billion dollar acquisition in consumer social should feel like a win. It’s certainly rare! Sheel Mohnot even noted; “I want to know who BeReal's bankers are... seems like they did a great job of maximizing value.”
And he’s not wrong. BeReal’s downloads have plummeted since its peak in 2022.
In fact, this spike in downloads is reminiscent of another recent attempt to break through the ceiling of consumer social hardship: Clubhouse.
For a brief moment in 2021, social audio was the future. The company’s valuation shot from $100 million in May 2020 to $1 billion in January 2021 to $4 billion in April 2021. And then? It disappeared as quickly as it came on the scene. Why are apps like Clubhouse and BeReal, that could have likely dominated in the early 2010s, so difficult to succeed now?
One key reason is that, for most people, their social graphs are already established. Twitter, Instagram, Facebook; all of these platforms grew up around the same time that people were first starting to establish their preferred networks and means of communication online. Now that those are built in, its incredibly difficult to replace. Even newer social apps, like Airchat, try and leverage existing networks to help you find people you know.
But a primary driver is that, in social media, advertising is king. And advertising requires sustained engagement. App experiences that are fads rarely create the types of audiences advertisers want. Amy Wu made the point that this may be one driver of BeReal being able to sell for such a stable price (relative to its last valuation). While downloads have plummeted, daily active users (DAU) is declining much more slowly, with ~20 million people still using the app daily.
Alexandre Yazdi, the CEO of Voodoo, who is buying BeReal, made a similar point about advertising when announcing the acquisition: “We think advertising is necessary for the business model of a social media platform.” If BeReal really does have an engaged user base of 20 million, that could be an attractive advertising opportunity.
But by and large, the days of being able to build a multi-billion dollar social media company are pretty much over. Notable counter-arguments are things like TikTok, which was only launched in 2017. Maybe newer modals of interaction, like short-form video, are enough to break through the malaise? Only time will tell.
