I used to hear people talk about consumer software and social media interchangeably. I always used to think of these people as luddites or not in the loop somehow. I believed that this mistake was largely because social media is viral, is where people communicate, and is noisy. After all, consumer software is surely far more than new media. But lately I’ve been trying to understand what it is, with the intention of better understanding our thesis about collaboration, innovation, and web-powered value creation. As part of this exercise, I took some time to look at big U.S.-based acquisitions over the last dozen years. Here are some statistics I found which are interesting*:
I decided to categorize the start-ups by “News”, “Communication Tools”, “Photo/Video”, “Music”, and “Other”. Based on this categorization, the lion’s share of acquisitions have been communication tools (8) and photo/video sites (8). There have been 4 news sites, 1 music site, and the rest have been ‘Other’. In the last fifteen years, 2/3 of the consumer software acquisitions have been “Social media”, by one definition or another, totaling over $20B**. Even today, Reddit, Tumblr, Quora, and Twitter demand a lot of our attention. It’s worth considering the fact that those people who use consumer software and social media interchangeably aren’t crazy or wrong.
At least, not yet.
This article describes which start-up companies today are most popular to developers on AngelList, which is fast becoming a powerful resource for the early-stage funding, research, and recruiting. The companies are: Quora, Pocket, Path, Pulse, ClassDojo, Instameet, Ark, Rally, Locu, Clever, 42Floors, Kaggle, Ouya, Skillshare, WikiHow. Of these fifteen, 6 are “social media”, 3 are education, 2 are productivity, 1 is hardware, 1 is recruiting, 1 is non-profit fundraising.***
It makes me wonder if the next 15 years will resemble the previous, or if we’ve finally reached the point where the best businesses are not simply social media, but innovating on the rest of the web. I was frankly surprised by how many social media acquisitions there were in consumer, as compared to other categories. Now this list does not include eBay, Amazon, Google, Facebook, LinkedIn, Groupon, or Zynga, all of whom are now public companies, representing a greater diversity of industries. Perhaps software is finally eating the world, after all.
*(rumored prices are italicized)
**In 2007 alone, just three enterprise software companies were bought for a combined $10B. Needless to say, enterprise rules.
***We invested in Rally and Skillshare.