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Snapchat, the self-destructing-photo sharing and messaging app, is buying up the search startup Vurb, for a cool $110 million, according to the Information. The deal will be 75 percent stock and 25 percent cash, with Snapchat paying almost as much in retention payouts to Vurb's current employees, bringing the total price to nearly $200. Devoting 50 percent of the deal's cost to retention, Business Insider notes, is "an unusually high proportion."
So, what's behind the buy?
If you're scratching your head over Snapchat's move, you're not alone. We hadn't heard of Vurb either. It's apparently an app that lets you search for things to do, then saves those and offers you suggestions in the future. The app is basically a mix of Yelp and Pinterest, with a lot of potential for marketing tie-ins. Interested in this dog park? How about taking an Uber there, then stopping by this pet store?
Snapchat's move comes just two weeks after Instagram released its new "Instagram Stories" feature, which threatens to steal some of Snapchat's disappearing-photos thunder. Instagram Stories allow users to post images of videos for just 24 hours, after which they're lost to the ether. It's almost identical to Snapchat's own story feature, which has been around for a few years now.
So Vurb's technology could be a way to differentiate Snapchat from its larger competitor. (Snapchat has about 100 million active users, to Instagram's 500 million.) But, more likely, Vurb's technology will be used to monetize those highly-engaged, very young Snapchatters.
Vurb's linking technology could make it easier for Snapchat users to find new ways to connect to each other and, importantly, to connect to advertisers.
Snapchat's acquisition isn't just notable for the high price tag, but for how much money it's devoting to keeping Vurb's employees around. In addition to the $110 million price tag snapchat will also be paying Vurb's CEO and founder, Bobby Lo, nearly $75 million to stick with the company over the next few years, a testament to his importance to the app and what Snapchat has envisioned for it. Instead of a golden parachute, consider it a golden ball and chain.
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