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: Halfbikes, VR for all your senses, and more

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's fun to gawk!
Computing

Meet the mastermind behind Microsoft's massive new Surface Hub

Microsoft Chief Product Officer Panos Panay gives us an exclusive peek at the 85-inch Surface Hub 2, and explains how innovation and collaboration will transform your workplace.
Gaming

Bethesda's sharp new Elder Scrolls mobile game is blunted by microtransactions

Elder Scroll: Blades brings elements of the most popular open-world RPG to mobile phones. It has many of the features fans will expect but, in its current Early Access state, lacks the real charm and depth of its predecessors.
Home Theater

Logitech’s Harmony Express remote: a steep price for simplicity

Thanks to its built-in Alexa support, Logitech's latest remote, the Harmony Express, eliminates huge button layouts with voice commands to control all of your smart home gadgets. But at $250, is it worth it?
Mobile

Spruce up your Lenovo smartphone with the best Moto Mods for the Moto Z-series

Moto Mods, the snap-on accessories compatible with Lenovo's Moto Z-series smartphones add a lot of value without adding a lot of bulk. Looking to try one out? Here are a few of our favorite Moto Mods.
Mobile

The Pixel 3 range will soon be coming to T-Mobile's network

Google's latest flagships, the Pixel 3 and Pixel 3 XL, are now official and we have all the details from the October 9 event in New York City and Paris. Here's everything we know about the Google Pixel 3 and Pixel 3 XL.
Mobile

The Pixel 3a and 3a XL will be coming to the U.S. with T-Mobile

The Google Pixel 3 and Pixel 3 XL are considered to be two of the best Android smartphones, but it looks like Google could be prepping a midrange line. Say hello to the Pixel 3a and Pixel 3a XL.
Mobile

Keep your new iPad (2018) sparkling with the best screen protectors

Your iPad sports a stunning 9.7-inch screen and you'll want it to stay that way. The best iPad (2018) screen protectors guard against cracks, scratches, and even smudging from your fingers. Check out our top picks here.
Mobile

Intel gives up on 5G modems for smartphones, will focus on other devices

After a delay that saw Intel's manufacture of 5G modems pushed back to 2020, Intel has given up on the 5G modem business, and will focus its efforts elsewhere. But is something else to blame?
Mobile

The black satin Razer Phone 2 is now available for $500

The Razer Phone 2 is finally here, and it's got upgraded specs, that super-smooth 120Hz display, and an updated design. Here's absolutely everything you need to know about the Razer Phone 2.
Mobile

The best LG G7 ThinQ cases will keep your phone looking new

The LG G7 ThinQ comes with a powerful processor, versatile cameras, and amazing sound. But a powerful phone still needs protection and you might want to change the style. Here are the best LG G7 ThinQ cases.
Mobile

Multiple phone leaks show May 21 is going to be a big day for Honor

Honor will launch at least one new smartphone on May 21, at an event taking place in London. Leaks have indicated the Honor 20 will take center stage, with a Lite version, and perhaps even another model also showing up on the day.
Mobile

Breaking news: Samsung responds to reported Galaxy Fold display issues

The Samsung Galaxy Fold has arrived, and it goes on sale soon. Folding out from a 4.6-inch display to a tablet-sized 7.3-inch display, this unique device has six cameras, two batteries, and special software to help you use multiple apps.
Mobile

The Avalon V is Alcatel’s first Verizon-exclusive smartphone

Alcatel is has announced a new phone, the Avalon V -- but this budget device isn't what makes the announcement special. It's Alcatel's first phone on the Verizon network, and it's available now.