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.

Emerging Tech

Awesome Tech You Can’t Buy Yet: Grow veggies indoors and shower more efficiently

Check out our roundup of the best new crowdfunding projects and product announcements that hit the web this week. You may not be able to buy this stuff yet, but it sure is fun to gawk!
Home Theater

The best Dolby Atmos movies for your home theater sound as good as they look

If you've got your hands on some sweet Dolby Atmos gear, the next step is to find films that take advantage of it. These are our picks in several genres for the best Dolby Atmos movies currently available on Blu-ray and streaming services.
Photography

What’s the difference between Lightroom CC and Lightroom Classic?

Lightroom CC has evolved into a capable photo editor, but is it enough to supplant Lightroom Classic? We took each program for a test drive to compare the two versions and see which is faster, more powerful, and better organized.
Deals

The best Presidents’ Day vacuum deals: Roomba, Dyson, and Bissell

Amazon and Walmart are offering pretty substantial savings to help kick-start your spring cleaning. Top brands like Roomba, Dyson, and Bissell are dropping prices left and right for Presidents' Day.
Health & Fitness

Nike’s Android app is bricking its $350 Adapt BB self-lacing shoes

A firmware update for Nike's new self-lacing Adapt BB shoe appears to be bricking the $350 footwear for some owners. Android users have said the Nike app no longer pairs with the shoe, rendering the tightening mechanism useless.
Mobile

You can now pre-order the Samsung Galaxy S10, S10 Plus, or S10e

The Samsung Galaxy S10 is one of the most-anticipated phones of the year, offering a new chipset, beautiful display, and more. Now that the phone has been announced you might be wondering where you can get it for yourself.
Mobile

Where to buy the Samsung Galaxy S10, S10 Plus, and S10e in the U.K.

The Samsung Galaxy S10, S10 Plus, and S10e have all been officially announced and can be pre-ordered right now, with deliveries expected on March 8. If you're in the U.K., this is where you need to go to buy one.
Mobile

Sony partnership with Light aims to take smartphone photography to new heights

Smartphone photography is in its ascendancy, and a new partnership between Light and Sony hopes to lift it to new heights through the development of multi-image sensor solutions for smartphones. We spoke to Light to find out more.
Mobile

Samsung Galaxy S10 vs. Google Pixel 3: Can Samsung beat the stock Android king?

The Samsung Galaxy S10 is here, offering modern specs, a beautifully high-resolution display, and an edge-to-edge design with a small cutout in the display for the front-facing camera. But can the phone take out the Google Pixel 3?
Deals

Protect your iPhone or iPad with the IPVanish VPN, on sale through February

One of our favorite virtual private networks for iPhones and iPads, IPVanish, is now offering a huge discount on its two-year subscription as part of its 7th-birthday promotion. Read on to find out more about how this VPN works and how you…
Mobile

Verizon is launching real standards-based 5G in 30 cities in 2019

Verizon is in the midst of a massive 5G rollout. In addition to fixed 5G service, it will also begin deploying mobile 5G in the coming months. Here's everything you need to know about Verizon's 5G network and when it will be in your town.
Deals

Stay fit and save cash with our top 10 affordable Fitbit alternatives

As much as we love Fitbits, they're rather expensive. If all you want is a simple activity tracker, however, then check out these great cheap Fitbit alternatives. With offerings from brands like Garmin, you don't need to pay full price.
Mobile

Samsung Galaxy S10e vs. OnePlus 6T: Can the Flagship Killer survive?

The Samsung Galaxy S10e is the new affordable flagship on the block, but at $750, it's $200 more than the OnePlus 6T. Does the Flagship Killer stand a chance against the new generation of flagship devices? Let's take a closer look.
Mobile

Samsung says it has set new standard for mobile tech with the 2019 Galaxy range

Samsung launched a host of new products on February 20, with prices ranging from just $35, all the way up to nearly $2,000. This was not by chance, and the company believes it has something for everyone in 2019.