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Square Inc. in talks to take over slumping Yik Yak

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Dive Brief:

  • Square Inc. is in talks to acquire the failing college-focused social media app Yik Yak, according to a report in The Verge. If a deal occurs, it’s likely to be a so-called “acquihire” that would bring Yik Yak employees and technology to Square, while the payments company would end the social media part of the operation. Yik Yak is headquartered in Atlanta and believed to have 20 employees.
  • Yik Yak joins a long list of once-promising technology investments that have quickly flared out from a lack of revenue potential or other shortcomings. Fortune declared none of the deals on the table for Yik Yak net a return for the social media outfit’s investors. Yik Yak raised $73.5 million in three funding rounds, and Sequoia Capital poured around $62 million into the startup, the publication said. At one point, Yik Yak was valued at $400 million. 
  • Yik Yak co-founders Stephen Buffington and Tyler Droll aren’t expected to join Square should a deal for Yik Yak materialize. A purchase of Yik Yak would follow previous Square acquisitions of Main Line Delivery, OrderAhead, Kili Technology and Caviar, a food delivery service Square was purportedly shopping around before apparently recommitting to it this year. 

Dive Insight:

In these days of high-flying technology news, it’s sometimes easy to forget that most startups, often by their nature, don’t make it. Once the hot social media kid on the block, Yik Yak has fallen far from its former glory. In September of 2014, TheStreet noted Yik Yak was the third most downloaded iOS app. Students on campuses across the U.S. — some 2,000 campuses at its peak — coveted Yik Yak as a source of anonymous gossip and a platform to bare their souls.

Anonymity was indeed the major attraction for Yik Yak but ultimately also an Achilles’ heel, sometimes turning the app into a forum for hate speech, cyberbullying and other questionable content that brands view as poison.

Yik Yak tried to shift course but to no avail. It attempted to implement handles to be less anonymous and worked on a group messenger dubbed Hive. But trying to save Yik Yak was a thankless task.

In a Business Insider article, Nathan McAlone summarized Yik Yak’s issue in a single sentence: “It’s not cool anymore.” And, in the time since Yik Yak was “cool,” college students have flocked to more robust social platforms Instagram and Snapchat to quench their thirst for conversation and sharing.

The reason for Square’s interest in Yik Yak is unclear. The Verge pronounced Square has no desire to start a social media network, remarking that chief executive officer Jack Dorsey already has his hands full with one. Dorsey is also a co-founder and the current CEO of Twitter.

Certainly, Yik Yak’s user base, such that it is, is filled with college-aged social enthusiasts that Square could garner learnings from and market its services to. No doubt Square’s potential pickup of Yik Yak amounts to a rounding error on its balance sheet. Colleges may be expensive, but a social media flop targeting them probably isn’t. 

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