BeReal's $500M Acquisition
What it takes to build leading mobile social apps like Bereal, CapCut, Clubhouse and alike
Overview of Mobile Social Products
In the past eight years, the world has seen few new global mobile products or social networks emerge. TikTok, launched in 2016, was the last major success. However, this narrative isn't entirely accurate.
First, consider Meta's launch of Threads. Though its success is very much due to traffic driven from Meta's other platforms, still it is ranked N1 in the social media category in the US as of July 2024. It has around 10 million installs on iOS. To put this in perspective, hitting 10 million installs in a month is enough to be at the top of the US app store alongside giants like Instagram or Telegram.
Interestingly, CapCut has reached similar figures. CapCut, a video editing app, is another unexpected entry in the top charts. Like Threads, its success isn't entirely organic. It benefits from traffic directed from TikTok. Nevertheless, CapCut surpasses Instagram and Snapchat in downloads and ranks N1 in Photo & Video category on the App Store.
There have been a number of other viral attempts over the years. Clubhouse is one of the most noticeable of them. The live audio chats app skyrocketed to number 1 on the app store and was valued at $4 billion at its peak. And the crazy part that valuation was not just “venture” valuation. Twitter offered to acquire Clubhouse for $4B. But the company declined the offer. Clubhouse is backed by A16Z, raised around $100M and probably expected to become next Twitter themself. But it did not happen. Twitter cloned their voice chat functionality and added it as a feature to its product. Clubhouse founders could have sold for $4B. This could have been extremely successful exit for the founders, team, and investors. But history has no ifs.
Now Clubhouse is barely visible on the App Store with under 100k monthly downloads according to Sensortower.
Another more recent example. Airchat—a Twitter-like platform with audio as the primary input mode — also made some waves. Co-founded by Naval Ravikant (founder of AngelList) and Tinder's CPO, Airchat briefly made it to the top 10. But they are already nowhere to be found in the App Store charts. And they have under 5k installs in June according to Sensortower.
The Rise and Sale of BeReal
Another app that aimed to reinvent social networking and went viral is BeReal. BeReal quickly gained popularity and went viral not only in the US but across the world. The Paris-based company, backed by global investors like Accel, Andreessen Horowitz, and DST Global, raised around $100 million in total. This included a $30 million Series A round in 2021 and a $60 million Series B at a €600 million valuation in 2022.
BeReal prompts users to post a photo only when they receive a notification, using their camera to capture a real-time moment. This approach encourages authenticity and seemed to resonate well with people tired of polished instagram content. as users can't upload curated content.
Launched in 2020, BeReal remained popular for some time but has seen a decline recently. BeReal has around 700k monthly installs on iOS as of June 2024. Not bad but 15+ times less compared to category leaders like Instagram.
Voodoo's Acquisition of BeReal
Voodoo, a French mobile apps and games publisher, acquired BeReal for €500 million. This deal includes €166 million in cash, with the remaining amount likely tied to performance targets and equity. So the real figure, the real cash, is probably less than €500 million when considering these factors. And keep in ming that BeReal had a liquidation preference of over €100 million.
Following the acquisition, Voodoo started implementing layoffs, reducing BeReal's 100-person team by 30%. They are now adding ads to the platform in an effort to reach profitability.
Building a succesfull social app is hard. This type of products are volatile by nature of the mobile social app market. Apps like BeReal face challenges in sustaining growth and achieving financial success. So one of the learnings here is probably sell when you reach significant level of success if you are not 100% sure you can continue growing fast. While BeRreal’s sale is not considered to be a massive success by the market, comparing it to the result of Clubhouse you can see how much better is the outcome.