I wanted to comment briefly on the news that Yahoo! has acquired Flurry. This a turning point, or a milestone. A marker of some sort. The End of the Beginning of Mobile, something along those lines. I originally wrote this the day of the announcement, but delayed posting, in part because I wanted to take some time to read Fred Wilson’s post on Flurry’s history.
First the facts
Flurry was one of the first mobile analytics companies to gain scale. They offered a free suite of tools that developers could embed in their iPhone apps to give the developers a better sense of what users were doing with those apps. For commentators on mobile apps, Flurry was a huge help in the early days (circa 2010). They had data on hundreds of thousands of apps at a time when no one else really had any hard facts (at least no one after AdMob got acquired). Later Flurry added a whole host of other tools, largely around ads and user tracking.
Yahoo! confirmed the deal late in the day, but no terms were disclosed. The big blogs cited valuations from $200 million to $1 billion. RWW literally has the range at $300 million to $1 billion. This is the same as saying no one knows how much Yahoo! paid because that range spans the gamut from a great exit to a weak one. According to Crunchbase, Flurry had raised $73 million, although I suspect that data may be understating the total. Reading between the lines (aka guessing) if Flurry had really sold for $1 billion or anywhere north of $500 million, someone would be saying so, loudly. Bottom line, seems like a modest exit for a well known company.
Truth be told, I have been hearing warnings about Flurry’s results for a couple years. The first red flag was their pivot in 2012(?) hard into the ad space. I regard the Flurry team very highly, so I think this exit has something to say about the broader app market.
Now the Analysis
Flurry’s early success led many (myself included) to wonder if the mobile app market was going to develop very differently from the shrink wrapped PC software market that came before it. With mobile app stores providing a largely open distribution channel, the way was now open for hundreds of thousands of new developers to enter the market. We are still feeling our way through that change.
The first takeaway I have from the news is that selling tools to developers is still a hard business to be in. This was one of those old truisms from the PC software market. Surely having all these new customers offered a new market for tools. Turns out that some things never change. The Developer tools, or Developer to Developer (no relation to this D2D) market is not big enough to support large companies.
The second conclusion I have is that there is a bubble in app development, and that bubble is stretched pretty thin. I am not calling the whole appconomy a Bubble (capital B), nor I am claiming that the whole mobile space has gotten overly-frothy (San Francisco real estate not withstanding). Nonetheless, Flurry’s sale seems to me an example of what happens when there are too many venture dollars chasing a too small market. Flurry had a lot going for it,but was never able to find a breakthrough business model.
Again, I am referring to that pivot into the ad market. Flurry has more data on mobile app usage than probably any company out there other than Google and Apple. But the value of that data, apparently is not worth so much. There are too many other companies out there charging little or nothing for smaller subsets of that data. Those companies will probably not exist much longer either, but they were around long enough to make the future of Flurry cloudy enough to merit a sale. This is bad money pushing out the good. I am not saying every mobile ad company is bad, just that there are a lot of bad business models getting funded out there, and that makes it hard for the good business models.
So what does this sale mark? I suspect this just proves what we have long suspected – Google, Apple, Facebook and a handful of others are the big winners in the app market. Google is able to take app usage data and throw it into its core search business, Facebook can do something similar with app usage against its social graph data. And Apple likes having a robust, highly competitive app market because it highlights their integrated hardware’s advantages. I think the mobile ad market is solidifying around the majors. This is not necessarily bad for app developers, but probably should be of concern for the hundreds of ad networks out there.
Finally the Lament
I want to close on a personal note. I was a big fan of Flurry. Not as a customer, but as someone deeply involved in the mobile app space. I will be sad to see them swallowed inside the “mobile first” Yahoo!. Covering the mobile app space has not been easy. Finding hard data has been challenging. For a long time, there was only AdMob and their excellent monthly reports. Much of that team ended up at Flurry after the Google acquisition of AdMob. They continued to put out some of the most interesting blog pieces about mobile usage. You know that meme that compares consumer media usage (TV, Newspaper, Mobile and radio) to ad spending? The one that showed mobile ad spending is poised to grow hugely… That came from Flurry. China is now a huge app market. You know who called it first? Flurry. I could go on, but you get the idea.
As you go into the dark Purple ether, know that you will be missed.
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