Billion dollar apps: Success Stories & Valuations
Long are the days when everybody was building an app and now that the ecosystem has matured a bit and now we can see who’s been winning the game, here are 15 billion dollar apps!
We will go through the billion dollar app club in no particular order and see what we can learn from their success.
Even if you’re not planning on building an app centered business, there are important lessons to be learned from the way these companies were structured and what made them be worth this much.
That’s what we’re focusing today on, valuation, strategy for growth, recent financials and how they got to the point they are today. It’s gonna be a fun one, especially if your interested in the tech-space.
As always there’s a video version of this article which you can enjoy here:
With that said, here are 15 Apps That Are Worth More than 1 Billion dollars!
Number 1: Instagram – Current Valuation: $100 Billion
Facebook acquiring Instagram was probably one of the best strategic moves they made and one of the most profitable ones as well.
We remember it like it was yesterday! People were waiting for the world to end, some were finding out who the identity of gossip girl was and we were just happy that the twilight saga was done. Things were way different back then.
One morning a news notification pops up announcing that facebook just paid 1 billion dollars in order to acquire the foto centered app instagram. The world was in shock! 1 Billion dollars for a filter adding app which was barely launched 2 years earlier.
The truth is instagram was gaining traction rapidly and the folks at facebook were smart enough to see that.
Today, although facebook still has more registered users, the balance is shifting, with people spending more time on instagram than they do on facebook. – and to be honest, it’s for good reason, facebook’s newsfeed is pretty much junk and newborn babies these days.
Number 2: Waze – Acquired by Google for $1.3 Billion
We love Waze! It’s a service which we use and saves us time – as well as speeding ticket fines which we would’ve gotten otherwise.
The israeli company sparked a bidding war between facebook, google and apple, finally accepting Google’s offer of 1.3 Billion.
There’s also a bit of controversy around their exit, because the founders didn’t want to sell the company this early seeing its great potential, but early on when raising money they sold a bit too much of the company to shareholders who had the final say on whether or not to accept google’s offer.
It only took them 5 years since the company formation to the large exit.
Number 3: Uber – Current Valuation: $62 Billion
Uber has a special place in our hearts as well, mainly for providing us with a way better alternative than the traditional taxi drivers. We love their story, not only because they have and still are disrupting an entire industry, but they chose not to sell early on and instead focused on growth and took the company public.
Just to give you guys a glimpse into the kind of numbers Uber is currently doing:
In the first three months of 2018, Uber posted a $2.46 billion net profit
To be fair, the crazy amount is due to some strategic partnerships in Russia and from selling their Asian subsidiary to GRAB – their main competitor in that area.
It’s one of those companies where if you only looked at the balance sheet, they don’t make any sense, since the company has been hemorrhaging money for the past 5 years, yet they’re still on track to become one of the most prolific tech companies of our time.
Just sliding this in, they have a partnership with ford to produce self-driving uber cars who are already on the road in Pittsburg.
Special mention here is also the Lyft app, who’s basically doing the same thing currently valued at around 15 billion dollars.
Number 4: Whatsapp – Acquired by Facebook for $19 Billion
The first messaging app on the list and currently the most popular world wide with 1.5 billion active users every month.
This happened quickly. While the world was still trying to figure out why would facebook pay 1 billion for instagram, this deal was going on in the background. Jaws dropped when the press release came out saying they are paying 19 billion for a messaging up that’s barely doing 20 million dollars in revenue per year.
So why did facebook pay this much? The simplest answer is: Traction & Data.
Facebook is incredibly good at big data, slurping as much information about the user as they can and then using it to show you relevant ads. At least that’s how they’ve been making money so far.
Number 5: Candy Crush by King – Acquired by Activision for $5.9 Billion
Remember when everybody was playing candycrush? Are you ready to have your mind blown?
The company, King, was generating 3.5 million dollars every single day, from CandyCrush alone. Seeing all this potential Activision Blizzard decided they need themselves one of these and picked it up for 5.9 billion dollars.
This entire article was inspired by a book we read last year, but never got around to making this piece until now. The book is called: How to build a billion dollar app and it’s written by the founder of candy crush, breaking down what it takes to build one of these companies. How to scale, how to add revenue streams and some insider secrets as well.
If you haven’t already, go to alux.com/freebook and if you sign up you can get the audibook version for free, which normally costs around $36.
Number 6: Snapchat – Current Valuation: $16 Billion and dropping
Snapchat has one of the most interesting evolutions. They positioned themselves as the new kid on the block, the new social media app for the youths and they started growing like crazy.
Up to a point where facebook offered to acquire snapchat for 4 billion dollars.
It was time for a decision whether or not they would take the money or ride the wave and compete with the big guys.
After turning down the offer Snapchat maintained their growth trajectory but not for long. They tries to push hardware products in the form of the Spectacles, which we aren’t a big hit. The company was losing a lot of money but they saw themselves as the new facebook, so they started cranking up the ad sales.
Before taking the company public, there were talks in the techspace that Google actually offered to acquire Snapchat for a whooping 30 billion dollars which they turned down as well.
Now, two years later, facebook cloned the little competitive advantage snapchat had and integrated it with all its apps. Snapchat is no longer receiving acquisition offers and the investors are worry.
Number 7: Angry Birds – Current Valuation: $1 Billion
We love the story of Angry Birds because they we so close to just calling it quits and closing down the shop. The company behind the game, Rovio, was really short of cash after many attempts at breaking through this space, so they decided to pull all their resources and invest in 1 more project.
After many rejected ideas, one of the designers came up with the concept of launching fat birds with different facial expressions at pigs. The game was addictive and people downloaded it like crazy.
Soon after the company tried to milk the brand as much as possible, with toys, a movie and additional licenses. The brand value soared to over 2 billion dollars.
Then they went public. As of 2018, the company has already lost half of its share price, this is due to poor revenue reports.
Number 8: Viber – Acquired in 2014 for $900 million and increased market share since.
In 2014, this was the second largest acquisition of a messaging app.
There’s a very active and competitive space in the mobile messaging arena. With many of the billion dollar apps mentioned on this list trying to get as much market share as possible.
Why is the viber app worth over 1 billion? Apart from having over 1 billion registered users, the company has surpassed whatsapp in daily active users in the East – especially russia, making it a very attractive acquisition for Rakuten.
They purchased it in 2014 and they kept on growing ever since.
Number 9: Tango – Current Valuation: $1.7 Billion
Speaking of chat-apps, it seems to us that different companies are focusing on different geographies as a means to getting themselves market share since there’s little differentiation between them.
In their last funding round, Tango got a cash infusion of 215 million from multi-billionaire Jack Ma, valuing the company at over 1 billion dollars.
But since the competition is so fierce in the recent quarters we’ve seen massive layoffs in order to optimize their expenses.
Number 10: Clash of Clans – Current Valuation: $10.2 billion
Clash of Clans is still killing it. They’ve dominated the app store for months and we were shocked to find that they’ve generated over 2 billion dollars in revenue in 2017 alone.
Taking everything into account, they’ve made over 800 million dollars in profit. That’s amazing considering the company has only released 4 games in its 7 years of existence.
In 2016, Supercell, the company behind Clash of Clans and Boom Beach got acquired by the Hong-Kong based company Tencent at a 10.2 billion dollar valuation.
Mobile gaming is on the rise and the only reason we haven’t included the likes of Fortnite or Pub-G is because they weren’t mobile first. But with the rise of smartphones we get a feeling that the gaming arena is about to change.
If you’re curious to learn which are the most valuable gaming companies in the world, watch the video below!
Number 11: Flipboard – 2014 Valuation placed them around $800 million
Flipboard is the perfect example of the right kind of timing. They created the app with the main focus to dominate the ipad market. It launched perfectly and it quickly became one of the top 10 must-have apps for your ipad.
Their goal was to save the publishing industry by aggregating everything you might be interested in in a single easy to use place. And it worked phenomenally.
The company is still going with their latest iteration shifting focus from tablets to mobile devices and it makes sense since smartphones have been getting bigger and bigger in the last couple of years, up to the point where they are not similar to a small tablet.
We’re curious to see if the company will survive the next 5 years, because in our own experience, people already rely on reddit, youtubers or curated communities by their friends for their news. So it’s going to be an interesting case-study.
Number 12: KakaoTalk – Current Valuation: $9.8 Billion
This is Korea’s largest messaging app. They started our as a chat app and have now evolved into a central app for services, from banking, to ride sharing, to games, to music streaming & fresh food delivery, they’re bringing everything into a single app and it seems to be working out great for them.
Tencent the gaming company we mentioned earlier – they bought supercell – is also one of the biggest investors and has vowed to take the company international.
The reason why we included Kakao – apart from the fact that’s a billion dollar plus app – is that they’re currently used by a little over 40 million people, but that was enough of an audience for them to reach out into adiecent industries and make the likes of Uber uncompetitive in that market.
People already have the app, they know how to use it, it gets basically the same service done, why would anyone bother to instal a different app?
Number 13: WeChat – Current Valuation: Under $100 Billion
We have a strong fascination for WeChat. Before we get into the nitty-gritty guess who owns WeChat? Yep! Tencent, the company we kept on mentioning throughout this article. They are the first Chinese company to be valued at over 500 billion dollars. That’s half an Apple right there and they’re not coming from Silicon Valley.
WeChat is dominating China and the surroundings. They started out as a chat app, got people in and then evolved into a multi-layer platform with a focus on financial transactions, from banking, to sending money and paying.
Most people in that part of asia use WeChat for everyday purchases because it’s more convenient and widely accepted.
The company has over 900 million daily active users and it’s probably the natural evolution we will see from the likes of Whatsapp.
The crazy thing about their parent company is that they’re not stopping here. Last year they acquired 12% of Snapchat and 5% of Tesla. As of putting together this piece we realized it might be a great idea to make a video on them where we deconstruct how they got here.
Number 14: Shazam – Current Valuation: around $1 Billion
Who doesn’t love Shazam?! They have such an interesting story. What you guys might not know, is that the company was actually created in 1999 – in the pre smartphone era. Back then, you could call a specific number and they would try to let you know what song was playing through the phone.
Then, the age of the smartphone came by and everything changed. The company flourished in popularity but never really found its footing. At the top of their charts the company was valued at around 1.2 billion dollars, mostly because of its large user base.
In December 2017, Apple stepped in and acquired the company in a strategic partnership but at a major discount: they paid only 400 million dollars. They revamped their ad-system and integrated the service with apple music which kinda makes sense.
Number 15: Square – Current Valuation:$19 Billion
You know the guy who built twitter, yeah his name is Jack Dorsey. He’s also the founder of another service called Square, a mobile payment service which at the beginning of this year was more valuable than twitter.
They are one of the leading wireless payment processors in the world and although the growth is slowing down, the company is quickly increasing in value.
At this point they have evolved into a hybrid between hardware and software, with Jack returning to twitter as CEO as well.
What do you think Aluxers, did you learn anything for these case-studies?
What is your billion dollar app idea? Let us know in the comments.
