Facebook’s Mobile M&A Roll


It wasn’t just Instagram—Facebook is on a buying spree, trying to load up on verticals and practically conduct a pivot of its business as it simultaneously executes a $12 billion IPO.

Today, word broke that Facebook snapped up another photo-sharing component, this one in the form of Lightbox. Facebook and Mark Zuckerberg understand that, as its primary user base shifts rapidly to mobile handset consumption, its business model needs to shift significantly as well.

The Lightbox buy comes after the social network acquired loyalty rewards startup TagTile and geography-based social app Glancee. These deals came after—not before—the Instagram acquisition. Translation? Facebook can figure out who you are, where you are, who you’re friends with, what restaurants and stores you’re near, and can provide you with loyalty points for those transactions. It is as if you hardly even need to make a decision as a consumer, at least, for as long as you’ve got your eye on your smartphone.

While, in a recent IPO filing update, the company’s management used the broad mantra “mobile usage of Facebook is critical to maintaining… growth and engagement,” this actually entails the social network pivoting in a number of directions, not just one.

To truly go “mobile,” Facebook must be on users’ phones not just in the form of the social network’s app, but even in how images are uploaded (hence: Lightbox, Instagram). It must have their e-wallets somehow integrated into smartphones and purchasing decisions—not that any e-wallet has successfully gained traction—and still be able to advertise and transact (Glancee). No doubt about it, Facebook’s got the advertising component of its business down pat (save its relationship with GM, apparently), but approaching verticals like travel and clothing over cars is a more surefire strategy for the company.

Perhaps one of the risk factors Facebook should highlight in its roadshow is the premiums being generated for M&A in its space. Whaleshark Media CEO Cotter Cunningham reportedly said the company has six targets in the pipeline; Groupon is veering further from daily deals and more into transaction processing with its Kima Labs buy and traditional players like Amazon and Google have offerings that will compete with whatever Zuckerberg launches. Judging by the trajectory of deals that led to launches of other Facebook verticals like Places and Timeline, there will be no shortage of work for Facebook’s deal bankers in the future as the company scrambles to satisfy its new shareholder base, and the image of success—or failure—that this generates for the company.

Sure, Mark Zuckerberg owns more than half of a company worth more than $100 billion—but how cool is what was once $100 billion when the value starts to decline? Retail investors should ask themselves this very question.

Image Credit: Mark Zuckerberg by Yuriko Nakao of Reuters