This is why we can’t have nice things: When being ‘acquihired’ is a startup’s only option

This is why we can’t have nice things: When being 'acquihired' is a startup's only option

Last week, the cult-favorite email app Sparrow announced it had been acquired by Google. Sparrow’s site explained the typical reasons why: We’re going to work with Google to make something bigger and better.

It’s the same sentiment we hear every time there’s a so-called ‘acquihire’ — one company scooping up another to take on its talent, rather than its product, which typically becomes a fatality of the transition. Faithful early adopters are supposed to feel comforted by the fact that the product is going to live on in larger form, maybe revolutionizing the buying company on a certain level. At least, that’s the idea; the skeptics among us know that there are generally different implications of what an acquihire means. From taking out competitors to putting a stamp on a particular market, more often than not, “innovation” is one of only several factors motivating these business decisions.

Which is why Sparrow devotees were disappointed to hear about the Google deal. The company’s email app was an incredible product that people had high hopes for and were excited about. We wanted to see where it would go, and a roadmap was in place. But Sparrow’s features are now frozen in place, and Google’s reasons for scooping up the startup aren’t totally steeped in innovation.

This is just going to keep happening, because companies like Sparrow can’t afford not to do it. App Cubby CEO and founder David Barnard summed it up quite nicely in a blog post, saying: “Sparrow did everything right. They built an incredible email app with broad appeal and released it into the hottest software market the world has ever seen. And yet it was a financial flop.” 

“…That’s the Sparrow problem, break-even was not sustainable,” he explains. “They had to find a way to turn a profit — lot’s [sic] of profit — to provide their investors a decent return.” 

Building an app like Sparrow — an app that’s trying to change something like email — can be complex and expensive. While the app economy is a real thing creating real jobs, they can’t all be the next Instagram or Angry Birds. And when they’re not, an acquisition looks like the next best option, even when it may kill off the product.

Sparrow wasn’t even free; it was $2.99 in the App Store. That’s relatively expensive. So its inability to make enough money to stand on its own two legs as a business is definitely concerning. You just have to look at the numbers regarding how many people own smartphones, how often we’re accessing Facebook via its mobile app, sending email from our smartphones, logging minutes on them, playing games. For each of these things, there’s a survey that says mobile growth is unstoppable and that the app market is exploding. So it should stand to reason that users want this, that this is something we’re willing to pay for. But it’s not working this way: As consumers, we’re unaccustomed to paying much, if anything at all, for apps.

sparrow google

As someone who can count on one hand how many apps she’s paid for and usually uninstalls anything that has more than two in-app purchase prompts, I know I’m part of the problem. I spend a lot of time using my iPhone, and I want top-notch app experiences… yet the moment someone asks me to pay for them I can hear my brain saying “whoa, whoa, whoa — let’s just slow down here.” Smartphones are expensive and so are data plans. Adding charges on top of this seems unfair.

I’m willing to admit, though, that my attitude isn’t long for this world. As digital life becomes increasingly tied to real life, we’ll have to be willing to consider apps a worthwhile investment. It’s something that Imeem and PicPlz founder Dalton Caldwell recently wrote about after Twitter announced its new API restrictions. Caldwell argues that instead of subjecting ourselves to “free” content that actually plagues us with advertisements and uses our data in order to build even more targeted advertising, we should pay for digital products.

His new project, App.net, wants to change this line of thinking and get out of the business of harvesting and selling user data. Instead, App.net (if it reaches funding) would be a paid service for mobile app developers, allowing the focus to be on the product.

Caldwell’s frustration doesn’t just derive from the ad insanity we live in, but from his own experiences trying to turn tech startups into profitable businesses. “I was founder/CEO of one of the huge Web 2.0 disappointments,” he says. “I ran a company called Imeem which users loved, but which I was unable to keep going because I couldn’t turn a profit.”

He also created incredibly popular photo sharing service PicPlz, which was focused on monetization, but he says he decided to spin it off because “it became clear to me that the space was following the same old Web 2.0 cycle.”

App.net is an ambitious endeavor, and while it feels a bit ahead of its time, Caldwell is making some really important points. The app marketplace — both mobile and Web — is very new and user behavior and expectation are in the process of being formed as we go. Right now, even critically beloved apps like Sparrow are having a hard time making it on their own. And unless something changes and we evolve how we think about these products, it’s going to keep happening.

Deals

REI clearance sale extends discounts on Garmin, Fitbit, and GoPro devices

Beyond the things you typically expect to find at REI — like tents, skis, and jackets — there are tons of great deals on quality tech foryour outdoor adventures. From smartwatches to action cameras, here are the best tech deals.
Computing

Here’s how to install Windows on a Chromebook

If you want to push the functionality of your new Chromebook to another level, and Linux isn't really your deal, you can try installing Windows on a Chromebook. Here's how to do so, just in case you're looking to nab some Windows-only…
Mobile

New Galaxy S10 leaks showcase display sizes, confirm headphone jack return

While we still may be months away from an announcement, there's no doubt about it: Samsung is working hard on its successor to the Galaxy S9. Here's everything we know about the upcoming Samsung Galaxy S10.
Movies & TV

'Stranger Things' season 3 teaser reveals the new episodes' titles

With a sophomore season as strong as its first, Stranger Things is now moving on to season 3. Here's everything we've learned so far about the Netflix series' upcoming third season.
Movies & TV

Ice meets fire in HBO's latest 'Game of Thrones' season 8 teaser

With the eighth and final season looming, Game of Thrones fever has officially become a pandemic. Our list of all the relevant news and rumors will help make the wait more bearable, if you don't mind spoilers.
Mobile

Put down the controller and pick up the best phones for gaming on the go

Which phones are the best if all you want to do is play some mobile games? We've done the hard work and put together a list of the best gaming phones on Android and iOS, so you can keep playing and winning.
Social Media

Instagram could be making a special type of account for influencers

Instagram influencers fall somewhere between a business profile and a typical Instagram, so the company is working on developing a type of account just for creators. The new account type would give creators more access to analytical data.
Social Media

#ThrowbackThursday is only the start: Instagram hashtags for every day of the week

Not getting your hashtag fill with #ThrowbackThursday or #ManCrushMonday? Here's a list of some of the more popular Instagram hashtags, so you can outfit your next post with the proper tag, regardless of what day it is.
Mobile

Protect your new iPhone with one of our favorite iPhone XR cases

Apple's new iPhone range is the toast of 2018, with beautiful style and more power than you can shake a stick at. But beauty can often be fragile -- keep the damage to a minimum with the best iPhone XR cases.
Computing

A dead pixel doesn't mean a dead display. Here's how to repair it

Dead pixel got you down? We don't blame you. Check out our guide on how to fix a dead pixel and save yourself that costly screen replacement or an unwanted trip to your local repair shop.
Mobile

Apple's iOS 12.1.1 makes it easier to switch cameras in FaceTime

After months of betas, the final version of iOS 12 is here to download. The latest OS comes along with tons of new capabilities, from grouped notifications to Siri Shortcuts. Here are all the features you'll find in iOS 12.
Mobile

5G Coverage

Curious about 5G and what it means for you? Well here is our awesome one stop shop for all things 5g.
Mobile

The Galaxy A8s is Samsung's first with a hole-punch camera cutout

Samsung is building exciting, technologically innovative midrange phones, and the latest to be revealed is the new Samsung Galaxy A8s, which may give us an idea of what the new Samsung Galaxy S10 will look like.
Mobile

Looking for flexible and inexpensive phone service? Check out our favorite MVNOs

Looking to switch from a major carrier to something a little more affordable? Luckily, there are a ton of great MVNO options to choose from. Check out our guide to the best MVNOs, from Boost Mobile to Google Fi.