Squash Competition From Startups — by Betsy Morris and Deepa Seetharaman: “Tech startups live by the rule that speed is paramount. Houseparty, creator of a hot video app, has an extra reason for urgency. Facebook, a dominant force in Silicon Valley, is stalking the company, part of the social network’s aggressive mimicking of smaller rivals. Facebook is being aided by an internal “early bird” warning system that identifies potential threats, according to people familiar with the technology.
Houseparty, formally known as Life on Air Inc., was one of the first startups to go all-in on video chat, with an app that lets small groups of friends drop into a video conversation as if hanging out in a dorm room. Two of Houseparty’s founders—Sima Sistani, 38, and Ben Rubin, 29—have been on the verge of success before. They previously led one of the first live-video-streaming apps, Meerkat. Facebook delivered the death blow to Meerkat by deciding to go full force into live video.”
Facebook uses an internal database to track rivals, including young startups performing unusually well, people familiar with the system say. The database stems from Facebook’s 2013 acquisition of a Tel Aviv-based startup, Onavo, which had built an app that secures users’ privacy by routing their traffic through private servers. The app gives Facebook an unusually detailed look at what users collectively do on their phones, these people say. The tool shaped Facebook’s decision to buy WhatsApp and informed its live-video strategy, they say.”