INSANITY: Facebook App Sells to TripAdvisor for $3 Million
Update: A Tripadvisor spokesman says this is “untrue”.
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Let’s hope this is the peak of the Facebook hype: TripAdvisor has reportedly acquired the Facebook application Where I’ve Been for a ridiculous $3 million, resulting in a huge payout for developer Craig Ulliott.
If true, TripAdvisor is paying $1.30 for each of the 2.3 million “users”, says InsideFacebook. We say users in a relative way, however, since these surely aren’t as valuable as the users on an independent site: they’re “borrowed” members of Facebook who could ultimately decide that they’d like to switch to a different travel app. Monetizing them, meanwhile, is also a challenge. No doubt TripAdvisor was wise to tap the youth demo through acquisition, but justifying that price seems impossible.
A quick check of Facebook shows the app debuted on around June 8: ignoring the high server costs and other expenses, Craig has made about $43,000 for every day his app has been live. Incidentally, that’s about as much as the average American earns in a year.
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19 Comments
Would this make Top Friends worth nearly $16 million?
Peak? Maybe in insanity but certainly not in apps. I see hundreds of developers starting their own Facebook apps about “whatever” this same night!
I might be one of them… so tempting lol
Congrats to Craig, that is fabulous for him. For TripAdvisor, I would think not so much.
Not only does it seem high, but I’d think they’ll start losing a lot of users as TripAdvisor tries to recoup that investment.
Still– awesome in a lot of ways.
Hmm, time to start working on a few facebook apps…
I hope it is not yet peaked. I have yet to launch mine. Congrats to Craig though … that must be 3 of the easiest million one can make in a lifetime.
Boy do I love America. Everytime I read a story like this, I feel more determined to launch my own site. I tip my hat to Craig.
You can see that the app has been posting solid growth since its inception: http://appaholic.com/display/2603626322
As co-founder of SocialMedia I am clearly bullish on the value of Facebook applications as real media properties. That being said, I lived through the late 90’s bubble with a front row seat as a Venture Capitalist at Flatiron Partners and try to be careful to keep my feet on the ground.
One thing that is super clear to me, however, is that Langley Steinert (Co-Founder of TripAdvisor) and the rest of the IAC M&A team are *not* dummies. In fact, they are careful, analytical and value-oriented. If they indeed paid this much for Where I’ve Been, then they clearly see something that could be worth far in excess of what they paid.
Online Travel was the first E-Commerce category to make total sense online as a self-sustaining business. It makes perfect sense, and is extremely promising, that this was the first acquisition of note on the new F8 platform.
As I discuss on my blog (link: http://tinyurl.com/3yhkdx) - compared to other formers of customer acquisition or lead gen online $1.30 per user isn’t so insane for a commercially related app like Where I’ve Been is travel as Seth above notes.
Commerce-related content has a lot of value and I think we’ll see more of there types of acquisitions as web 2.0 forms user acquisition. In essense Trip Advisor outsourced their viral marketing to Craig.
In ways the app or widget becomes an ad, but since there’s an opt-in involved hopefully a lot more acceptable to users then other forms of marketing.
Nice Work!
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$1.30 per user isnt bad at all. Google paid $40 per user for YouTube, and it could easily be said that users could easily switch to a rival video service.
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I’m not going to try justify the $3M … but I do question your analysis here, Pete;
1) Switching costs are 99% of what they would be for an independant site. Users would still have to migrate their travel data. The login is the least of the switching cost.
2) Marketing costs are 1% of what they’d be for an independant site - (yes, I’m most probably exaggerating - but Facebook is the state of the art of word of mouth marketing and the “youth” of this App is proof of that.
3)Development costs are also a fraction of what it would cost to copy this App off of facebook.
4) Monetization is not a challenge for TA/Expedia - marketing is - hence this play. This App doesn’t need to earn a cent on facebook to pay for itself. Which explains why we’re going to see (a lot?) more of these deals.
d
i too was taken aback at first by the size of the deal, but i’ve seen way more money dumped into much less popular sites outside of facebook in the form of venture money.
this is a great play for tripadvisor, they have great ties to the travel booking market, and this provides them with data on 2million+ users who are potentially future long term customers of expedia, etc. they now know where all these people want to go, and where their friends want to go…
great work!
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