The Real Reason Facebook Bought This 3-Month Old Startup... For Almost $100M

As you may have heard, or as the title may have prompted you to believe - Facebook just acquired a very young startup that launched their product 70 days ago.

After hearing this, you're probably doing 1 of 2 things:

  1. Hitting up your software developer friends to develop that startup app you never got around to
  2. Trying to figure out, why in the world did Facebook purchase 'TBH'?

I can't help you with point #1, but let me tell you why FB dished out almost $100 million.

To begin - you need to understand who Ibn Khaldun was.

Considered the father of sociology, and one of the greatest Arab historians, he noticed the rise and fall of African dynasties in the 14th century - and this work is the key to understanding the FB purchase.

You see, in the 1300s, nomadic tribes were always scrapping for resources. They were always way more creative and vicious in their initiatives than kings sitting on royal thrones.

Once in a while, these tribes would "sweep in" and replace corrupt and complacent rulers that dominated the existing civilization. And in a matter of years, the tribesmen would become accustomed to the organized lifestyle - ready to get replaced by another set of innovative and rambunctious nomads.

This translates beautifully to the tech dynasties of today - Facebook rules the lands of social media, Microsoft battles for hardware dominance, while Google is the clear overlord of search.

So, getting back to point #2 we brought up - Why again did FB buy this startup?

Well, imagine Facebook as a powerful dynasty. But not corrupt (as far as I know), and as far away from complacency as possible.

See, Facebook saw a potential group of tribesmen headed in their direction, and instead of pulling up their drawbridges, and unleashing hungry crocodiles in their moats - they decided to invite the nomads inside for dinner.

They decided to make the vicious and innovative nomads part of their own army.

And this isn't new for Facebook - they acquired 9 companies for over $21 Billion... in just 2014.

Here are the synergies offered by 'TBH' that Facebook now enjoys with their buy:

  • Engaging a teen audience
  • Avoiding a Snapchat-esque competitor
  • Access to data (...teenage data)
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A higher percentage of teenagers between the ages 13-17 use Instagram (inviting the nomads inside) and Snapchat (failing to extend a proper invitation to the nomads), than Facebook. Teenagers aren't as interested in Facebook than they used to be in 5 years ago, and Facebook is on a mission to acquire data and users to keep their dynasty as long-lasting as possible.

 

They get to avoid a scenario where they miss out on the 'next big thing' by moving early and decisively like they did with Snapchat.

Facebook (as creepy as this may sound) gets access to an enormous amount of teenage data - what times they get on social media, who they interact with on social media, and what sort of content they enjoy. And of course, these data points (just like they did when they introduced 'reactions' ) will be tied back in to improve Facebook and convince teenagers to switch to the primary platform.

So, let's summarize our findings.

Why did FB buy a startup application that has 5 million users, and was released less than 3 months ago on the app store?

It's really simple - the dynasty is avoiding a coup d'etat and decided to invite the nomadic tribes inside their own homes.