Yahoo Finance Why Path vanished from the U.S. social-networking world
When the social networking app Path launched in November 2010, headlines trumpeted it as the next Facebook. But there’s a reason you stopped hearing about it: One year ago, Path quietly sold to Kakao Corp the maker of a South Korean messaging app, for an undisclosed price.
The story is a useful cautionary tale for new social media startups in Silicon Valley.
Path was slick, well designed, optimized for mobile and promised to create a closer community for you by limiting the number of friends you could have to 150 (this was later expanded to 500). It caught on among family members for sharing intimate moments multiple times in a day. Path even had a series of ‘reaction’ faces (funny, sad, wow) you could tap on someone’s post long before Facebook implemented something similar this year.
The app hit one million users within a year, then two million users after redesigning in November 2011. It raised a total of $66 million in venture funding. Google even made an early play to buy Path for over $100 million.
But by 2014, the company was struggling to raise new venture capital and had lost most of its Western users. Path was burning through cash, and reportedly had a 1-2 designer-to-developer ratio, compared to the more typical 1-20 ratio. Layoffs arrived. It sold.
lol @JohnPaczkowski : “Maybe” Here Being a Euphemism for “Obviously”
Path founder Dave Morin on Path: “Did the experiment fail? Maybe.”— Noah Kravitz (@noahkravitz) September 10, 2014
The sale was another reminder of the exceeding difficulty of challenging Facebook and other established social media giants. “We in the US already have time invested in our Facebook, Instagram, and now Snapchat communities,” says social media strategist Sue Reynolds of Carmine Media. In other words: It’s tough to convince people they need to add yet another one.
Path may very well have been better-designed than Facebook; it could have been prettier and nicer to use. But that wouldn’t be enough to get people to leave Facebook, Reynolds says.
New entrants, to gain any real traction, must strongly differentiate from Facebook, Instagram, Snapchat and Twitter, experts say. They cannot simply offer a better version of these networks, and even when they do offer something new, still it’s a challenge to pull users from giants like Facebook (which is the dominant social platform nearly everywhere except China). Path tried to differentiate with its 150 friend-limit feature, but Reynolds says that just wasn’t enough; Path didn’t offer much of a “unique experience.”
To be sure, Path is surprisingly popular in Southeast Asia. It is especially popular in Indonesia, where most of the app’s 10 million monthly active users live. But you can bet that Dave Morin, an American entrepreneur who worked at Facebook for more than three years before creating Path, wanted a better ending for his app.
Nonetheless, Path is a good fit in Indonesia. Cindya Esti, social media strategist at CNN Indonesia, links its popularity to regional behavior. “Indonesian people love to share everything, starting from the important to unimportant things,” she says, “such as tagging location, what music we are listening to…” Path, she says, is well-suited to sharing these granular details.
It helped that in 2010, when Path launched (and at some point caught the eye of Daum Kakao), Facebook didn’t have as strong a presence in Indonesia as it does now, with a mere 19 million users at the time, out of a population of roughly 250 million. This gave Path some room to grow, while it was hamstrung in other markets by Facebook’s deep foothold. While the vast majority of its users are now in Indonesia, it says it has some in the Middle East as well.
While some in Silicon Valley may see Path as a failure, the company has fully embraced its niche. Kakao Corp even replaced the entire Path team with people based in Asia; there are no Path employees remaining in the U.S. The company says it has no plans to break back into the Western market, and a spokesperson declined to comment specifically on why it failed to gain lasting traction in the U.S.
What had Path aimed to do? In the company’s words, the service wanted to, “provide users with a private environment where sharing could be kept intimate and personal.” In many ways, Facebook has become less and less personal, as brands and media outlets seek to reach users constantly, ads become more intrusive, and live, public video gets ubiquitous.
One could argue Path was too early; perhaps a Path-like player could do better now. Then again, new social networks that have launched recently, like Ello or Peach, haven’t had real staying power after the initial pop and buzz they achieve at first. Facebook, with its 1.5 billion monthly global users, isn’t going anywhere. That’s a scary Goliath for any new social-media David to want to take on.
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Rayhanul Ibrahim is a writer for Yahoo Finance.
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