Face.com’s was mainly a B2B company, with individual developers and technology companies building products that rely on their face-recognition API.
Alas, comes the exciting Facebook acquisition day, the new owners in the house decide to shut down API support (or, basically, kill face.com’s main product). The decision’s implications are simple: basically, Facebook and face.com are telling developers who relied on its technology to, let’s put it gently, get lost.
And that’s really the sad issue here (and in numerous other startup cases): As a startup, a company courts developers, partners and potential customers, creates a relationship of trust and gets them to rely on its products. These customers help the startup grow, gain power, revenues, and appeal for potential buyers.
But when the buyer comes in, it kicks out of the party all these people that made the party the success it was. The startup founders, doing what’s right for their bank accounts, give in to the decision of the new house ruler and start doing what their new bosses tell them to do.
In 2007, I was about to acquire a very expensive ($300,000) storage solution for my startup from XIV, a great Israeli storage startup. Sound rumors though it was about to get acquired by IBM made me decide to buy a NetApp machine instead (dire mistake, long story), because I realized that promises given to me by a startup become obsolete the moment it gets acquired.
So what’s the moral from the face.com story? If you need to rely on 3rd party APIs for your product, have a backup plan. Acquisitions, bankruptcies, new product directions, changes in terms-of-service (Twitter is infamous for that) – your lifeline cord may be cut abruptly, leaving you very little time to change course.