Investors are pouring big bucks into startups, and when it comes to their mobile investments, photos and videos are where it’s at. And for an obvious reason: following Facebook’s still-pending purchase of Instagram for $1bn, investors are hoping they can fund the next big acquisition target.
But predicting who will be acquired, and by whom, can be a tricky exercise. Case in point: today, Autodesk announced that it is acquiring mobile video startup Socialcam for $60m.
According to AllThingsDigital’s Liz Gannes, the software company, which is best-known for its 3D and engineering software and not consumer internet plays, was apparently one of several companies interested in the startup, which launched a little over a year ago as a spin-off of live video upstart Justin.tv.
Today, Socialcam is the top application on Facebook, boasting some 3.7m active daily users and 56m monthly active users. Perhaps most incredibly, as Gannes points out, the company has built that user base with only four employees.
So what does Autodesk plan to do with Socialcam?
That isn’t quite clear. As TechCrunch’s Ryan Lawler explains, the Socialcam acquisition was executed by Autodesk’s Consumer Products Group, which has made a number of “seemingly random purchases” in recent times, including that of a photo sharing service and an online do-it-yourself community. According to Lawler, “Autodesk…sees an opportunity to pitch the Socialcam application to some of its entertainment clients as a way to better engage with their viewers and customers.” Autodesk’s press release confirms: “Video is an ideal medium for professionals and consumers alike to communicate and share their design ideas.”
That, frankly, seems like a fairly weak reason to spend $60m on a one-year old startup with four employees that is highly reliant on Facebook and has drawn criticism for its questionable use of YouTube content. And it’s even harder to understand given the fact that Autodesk is a company that, as previously noted, generates more than $2bn a year in revenue primarily through the sale of software to businesses. If Autodesk wants to facilitate the sharing of design ideas, it certainly didn’t need to spend $60m on a consumer internet play with negligible revenue.
For these reasons, Autodesk’s acquisition of Socialcam may be one of the stronger signs of irrational exuberance yet in the current internet boom.