The past year has seen an incredible number of tech startups appear, something that is seen by many people as an incredibly positive occurrence. However, to the long-standing traditional operators that have to compete with new services like Uber, Airbnb and Deliveroo, things don’t appear to be quite so positive.
Many of these traditional titans are lashing out at these new tech companies, for example London Black Cabs versus Uber. However, are the titans actually lashing out at the wrong company? It seems they might be for it appears that it is actually Facebook feeding the enormous fire of startups through the stoking of its app economy.
The app platform, provided by Facebook enables developers to build, grow and monetise their companies through the use of the platform’s creative and analytic tools. Facebook is proud to be one of the driving forces behind the shake-up of what we would recognise as a classic business model and the company claims direct responsibility for 3.5 billion of apps that were installed on desktop and mobile devices throughout the year 2014.
Julien Codorniou is responsible for the management of Facebook’s global platform partnerships and therefore takes responsibility for managing the Facebook Platform, which launched in 2007.
The original purpose of the Platform was to enable developers to design and create external content, for instance games, which could then be launched and played on Facebook. Within the first year of operation, the Platform saw approximately 30,000 apps developed. It quickly saw a further opportunity and unlocked the platform to enable developers to create apps which could function externally to Facebook.
Essentially this means that on a daily basis, you could be interacting with a Facebook app and not even realise it. For instance the Facebook platform sits behind apps such as Uber, Spotify and Airbnb, a fact which might surprise many. Of course, the benefits to startups such as Uber and Airbnb are huge, for they immediately become part of the Facebook platform and for a small fee can target their apps to any of the 1.49 billion monthly Facebook users.
Even though many of these apps exist on alternative platforms like Android and iOS, Codorniou believes Facebook holds the ace card: “The unique asset we have is distribution – we provide the opportunity to reach more than a billion users on any device and nobody could say that before us,” he said. “And we are definitely the only platform company in the world that has a vested interest in making its ecosystem cross-platform.”
So, what exactly might Facebook be able to do for your startup? Can it help you join the unicorn club?
Well, you don’t have to look far to see what the positives of getting noticed by Codorniou might be, with a recent report by Deloitte showing that the Facebook platform had contributed $29bn to the global economy, $10.5 billion of which Europe benefitted from, alongside the creation of 198,000 jobs!
Many European startups have already benefitted greatly from the Facebook Platform. For instance you will no doubt have heard of King, the creator of Candy Crush Saga? This startup was floated on the London Stock Exchange in 2014 and given a market cap of $4.9 billion. Spotify has also done extremely well, with a valuation of $8.5 billion, as has Clash of Clans, which is assumed to have a value of approximately $11 billion.
London-based Codorniou explains how Facebook aims to identify startups, such as those described above, early on. He states: “We’re always on the lookout for the next big thing. Who’s going to be the King.com of e-commerce in China? Who’s going to be the King.com of dating in Sweden?” With such successful examples such as King, there is no doubt that being on the Facebook Platform can do wonders for growing the horn of your unicorn!
Of course, there are many sceptics who question the accuracy of such high market valuations of these startups, especially when companies like Uber have actually been reported to be making losses. However, Codorniou combats this questioning by explaining how the valuations are well-founded because they occur and are driven as a result of the “crazy reach” and “crazy engagement” that comes with being paired up with Facebook.
He emphasises the difference between the cost of development and reach from five years ago, to now: “The barrier has never been as low as it is today – it’s extremely easy for anyone in the world to build a great app and to become potentially a billion-dollar company.” Europe in particular has greatly benefited from these latest developments, for it has made reaching a huge audience and making a profit with limited resources a lot easier.
Cordorniou is certainly making sure that Facebook is on high alert to notice new startups which have the potential to be the new unicorns in the club. No sector is off limits for Facebook, so now is the prime time for startups to be vying against one another to attract the attention of the social giant.