GetReal

Spotify should acquire BeReal

BeReal launched in 2020 as a first-of-its-kind photo sharing app without the options to edit, filter or fine-tune posts. It was dubbed the "anti-Instagram" with the aim of promoting authentic social media usage i.e. users 'being real'. In its earliest conception, each user received a daily prompt to post a photo showing their friends what they were doing in real time. The app became increasingly popular over the next two years, skyrocketing from ~10,000 daily active users (DAUs) in 2021 to eventually clocking 2 million DAUs in 2022. 

Fast-forward to 2024: BeReal has 25 million DAUs, has raised a total of $90m at a $600m valuation, and is amongst the App Store's "Essential Social Apps". Yet, the number of DAUs has stalled over the last year and the company supposedly has 'just enough' cash for 9 months of runway. 

BeReal undoubtedly launched at a crucial time. There was a much-needed authenticity following the social media fatigue accrued during the pandemic, and BeReal was that breath of fresh air. Notwithstanding, I suspect BeReal are in their current position due to a poor product strategy with a short-term emphasis on virality and engagement without a sustainable growth plan. 

In my opinion, BeReal provides little value to its users beyond how 'fun' it is. Although gamification is a proven method to boost DAU, I found BeReal's streak score lacking in depth and rather pointless overall. Instead, I believe such features are more efficient when employed as consequential rewards for utilising the product's main features (e.g. Wordle, Snapchat, Duolingo).  

Additionally, BeReal remains free for all users despite adding more features to its product. While including more features over time is expected as the product itself evolves with its concurrent market, the features and partnerships created glaringly obvious cues for monetisation. Partnerships with celebrities and brands ("RealPeople" and "RealBrands") or its partnerships with Apple Music and Spotify certainly provide value which could have been unlocked via a freemium model. 

Prioritising user growth ahead of revenue is not unheard of, but adding 3-5 more features and raising two funding rounds without any revenue is in fact unheard of and quite bizarre. Yet, the company is keen on a Series C round to rapidly ship even more features.  

Currently, BeReal have 2 options:a) Raise a Series C — likely at a lower valuation given the current climate — and repeat the same formula to ship new features in a bid to potentially increase usage metrics. This may include some paid features to (finally) bring in revenue.b) Get acquired by another company. 

As I see it, the second option should be pursued. Given BeReal's lack of revenue and negotiating leverage, a lower valuation seems inevitable. An acquisition is a win-win-win scenario for the buyer, BeReal and its investors: potential hires for the acquirer, an exit for the founders and investors receive a marginal % return. Win-win-win. 

If so, I recommend that Spotify acquire BeReal. I believe the product's most promising feature is BeReal Audio, which allows users add songs to their daily selfies and actually provides some value. BeReal Audio is already partnered with Spotify, and I believe Spotify could — and should — integrate this into their current product to add a much-needed social element missing from the listening experience which could be monetisable. 

I don't think a startup could build something like this and succeed, but I do feel a company like Spotify would be in a good position to adopt this product or something similar given their scale and established brand identity. 

BeReal supposedly have 9 months to go and are facing a long-overdue reality check (pun intended). There are tons of ways the next 9 months could possibly play out; I'll be watching closely.

Edit: BeReal were acquired by Voodoo, a French mobile apps and games company, for €500 million on June 10, 2024.