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Google buys Waze for $1.3 Billion!!!

Rewind

Facebook buys Instagram for a $1 billion!!!

Reset

These companies aren’t worth anywhere near a billion dollars. I love them and they simply aren’t worth the multiples that are being paid . Why then, did they get acquired for those prices?

Fear

Facebook and Google are betting on the future of those companies and yet, if the past teaches us anything, it teaches us that the future is murky at best. Especially when it comes to consumer behavior. Our bodies are about 75% percent water when we’re born and we spend the rest of our lives acting like it. We move fluidly through experiences and tools that facilitate those experiences. 2 years ago – which is nothing – I was Googling like a mad man to find information. Now, I’m at about half of that. My Tumblr usage is up, Vimeo up, Twitter up and my professional blogging is down. (I know. I know.) The point is that people change and they change faster than they ever have because they can.

Google is losing mobile search market share to local genre specific apps. “I can search for a restaurant using Google or I can pull up Yelp and find what I’m looking for.” e.g. (This is the reason Google tried to buy yelp but was denied.)

Google is going to be losing market share as people use Facebook’s search. Not sure how much but we’ll see.

Facebook is competing with mobile applications for engagement and they’re simply not a mobile company. That’s why they bought Instagram. And if they think they’re going to put ads on Instagram – no matter how targeted, no matter how beautiful, no matter how contextual – they’re kidding themselves.

And then there is Yahoo!. Marissa has made some excellent acquisitions (Stamped, Tumblr, SummlyHulu?) and she’ll keep on acquiring her way into relevance. (Keep your eye on this horse.) This could be the first “mobile” giant.

For now the titans will throw around massive amounts of money to try keep pace with consumer’s evolving behaviors/preferences. A predictive purchase. Just short of an MMA bout, there is nothing more fun than seeing huge/scared companies battle it out. And who can blame them.

I’d do the same thing.

The smell of fear