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In this episode, episode 7, we discuss Facebook buying the GIF sharing service Giphy, we look at Clubhouse’s new $100 million valuation and see how Huawei in the UK is getting political again.
Facebook buys GIPHY
On Friday last week Facebook announced that it is welcoming the GIF sharing service GIPHY in to its Instagram team. So basically, they’re buying GIPHY and integrating it in to its Instagram business.
It’s reported that Facebook paid $400 million for GIPHY which is a significant amount of money. However, it’s last valuation back in 2016 when it raised $72m in VC funding it was actually valued at $528m. So it’s seen its value drop by around 25% but there is of course is a difference between a valuation for investment and a valuation for a cash purchase. I think Facebook have probably got quite a good deal on this.
It’s a deal that makes a lot of sense. Facebook’s users already know GIPHY and use it quite a lot. In fact around half of GIPHY’s traffic comes from Facebook, or at least the Facebook family of apps which of course includes Instagram and WhatsApp.
Now a lot of people have talked about this acquisition being all about data. By acquiring the company Facebook now has more data on what people do online and importantly what people do on other platforms as of course GIPHY is used on many of other social networks. But actually I think this is probably a very small part of Facebook’s thinking on this one.
I think this acquisition is much more about the technology and almost the science than anything else. What GIPHY has is a real understood of user sentiment. GIFs have this unique ability to portray people’s feeling and emotions and really allow people to express them and their creativity.
This is particularly prevalent in younger generations who can communicate almost entirely without words. They communicate by pictures, GIFs, videos, memes, all sorts of stuff that isn’t text. So they have a deep understanding of peoples emotions from images.
So what Facebook is really acquiring is this knowledge of people’s sentiment and an understanding of how people are communicating.
Clubhouse gets funded
You may recall in a few episodes back, I think it was episode 3, that we talked about this new app called Clubhouse. It’s a kind of social media app that allows people to spontaneously join voice only groups. It’s worth taking a look at if that’s in your area of interest.
Well that app has just raised its first ever round of venture capital funding. It secured a $10m investment from the well known firm Andreessen-Horowitz at a $90m valuation.
These are relatively modest figures particularly when you compare to them to the Facebook GIPHY acquisition we just discussed but for a company that’s only been around for a few months and whose app isn’t even released to the general public yet it’s quite a sizeable valuation.
This app, Clubhouse, has a lot of people getting very excited, although they do seem to be confined to the tech industry at the moment. It’s reported that there was some steep competition for this funding round with some bids supposedly getting up to $100m.
The concept of the app is really interesting. Spontaneous group voice chats are something that people have started craving since the global lockdown started and people are spending huge amounts of time at home with little interaction with others. Clubhouse starts to go some way to replacing those ad-hoc conversations we have in the office and with our friends in the pub.
This app and it’s no doubt many emerging competitors are definitely worth keeping an eye on.
Huawei out of the UK
It’s reported that the members of the Conservative party in the UK are pushing the Prime Minister, Boris Johnson, to again review Huawei’s involvement in 5G networks in the country.
Earlier this year the government announced new rules that would see Huawei’s market share being capped at 35%. The pressure now is to completely remove them by 2023. It’s a little unclear where these new pressures have come from but it’s likely that members are looking at Australia and of course the USA where Huawei have been completely banned. In a letter to the Prime Minister some weeks ago MPs point towards our apparent over reliance on China.
It seems again that this is an entirely political move without any real thought or understanding of the reality and the true risks supposedly posed by the company.
The telecoms industry in the UK has been desperately trying to get some clarity and direction on this issue which they thought had come earlier this year. For them rolling out networks is extremely expensive with 5G being the biggest investment they’ve ever made. To have this turbulence and uncertainty in their supply market is not good at all.
All of the mobile network operators in the UK have at least some Huawei equipment in their network with, I believe, Three having the most but very closely followed by EE. For them this poses a very difficult challenge.
Huawei produce some excellent equipment at very competitive prices. Most people in the industry recognise that the company is probably about a year ahead of the competition which is Ericsson and Nokia mainly.
I really hope the UK government takes a well balanced evidence based approach to this and doesn't make our telecoms network political. We all rely on them so much.
episode 7: Facebook buys GIPHY, Clubhouse's $100m valuation & Huawei is a goner