Skynet is coming

Ok, now that the Google / Skynet joke is out of the way, how about Googles most recent acquisition of Skybox Imaging?

Skybox Imaging is a satellite company that is able to cram the latest digital imaging technology into a (relatively) small cube sized package (satellite) that pales in size and weight comparison to your standard earth orbiting satellite. 

This is exciting, as the cost-per-pound of getting anything into a near-earth orbit is still at a staggering USD$10,000; more than most companies can even contemplate. Skybox's micro-satelitte technology will in effect, open up the skies and be an important step forwards in space technology.

With this acquisition, Google has acquired a significant component to add to its very popular and powerful Google Maps service. They are now able to maintain and update the accuracy and relevance of their current public mapping service, and also provide their stealth, under the radar enterprise mapping services with significantly more applications. Everyone from the farming industry, to logistics, all the way to hedge fund managers are sure to find utility in real-time satellite imaging. 

Farmers can track weather and crop growth, logistics can track their fleets at any given moment and hedge fund managers, well, they can acquire real-time data that will give them the edge to move their billions of dollars around on the stock markets.

The current vision of Skybox is to build a constellation of 24 satellites which in effect, will be able to cover the entire expanse of the Earth. 

Instagram $1 billion, Whatsapp $19 billion 

This has got me thinking though. With all the patents, expertise, knowledge, tangible assets and practical applications that Skybox possesses, they were still only acquired for a small $500 million.

This doesn't make sense to me, as Instagram ($1bn) and Whatsapp ($19bn) were acquired for staggeringly more. Instagram has yet to show that it can make even a single dollar in revenue with it's advertising plans, and Whatsapp, has only in recent years started charging $1 a year for it's messaging services. 

I'm not saying that there is no value in both these services, as I use them both very often - on a daily basis actually. But from a practical business point of view, purchases like Skybox are a much more logical acquisition than Instagram or Whatsapp. 

It just goes to show how the Silicon Valley bias values large active user bases over all else. Sure, they're not profitable now, but they're popular. I guess the potential for profit in these cases is worth just as much (if not more) than actual profitability of a tangible business. 

Mental note to self: build active users first, business second. 



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