# Path (2010 – 2018)

- URL: https://girisimcikafasi.com/en/startup-graveyard/path/
- Sector: Social media
- Country: United States
- Total funding: $66 million
- Cause of closure: Acquired and shut down

## What did it do?

Path was a mobile social network on which users shared photos and moments only with close friends and family. At first each user could have a circle of no more than 50 people; the limit was later raised to 150 and then removed altogether. The app was positioned less as a rival hub to Facebook than as an intimate complement to it.

## Why did it shut down?

Path turned down a $100 million acquisition offer from Google in 2011 and chose to grow independently. In February 2012 the revelation that it had been storing users' phone address books without their knowledge caused a major backlash. In February 2013 the FTC fined the company $800,000 for storing data on underage users. Its largest user base turned out to be in Indonesia, and in May 2015 the company was sold to Kakao for an undisclosed sum. Kakao announced in September 2018 that it would shut the service down.

## The story

In February 2011 Google wanted to buy Path, then just three months old, for more than $100 million. Dave Morin turned the offer down. The former Facebook executive believed that the app he had co-founded with Napster founder Shawn Fanning would become something much bigger.

Path launched on 14 November 2010 as a refuge for people tired of crowded social networks. Users shared photos and moments with a close circle of no more than 50 people; the app was designed less as a meeting place than as an intimate complement to Facebook. The friend limit was raised over time to 150 and then removed altogether. Its first $2.5 million round included Ron Conway, Index Ventures and First Round Capital; in February 2011 came an $8.5 million round joined by Kleiner Perkins and Index Ventures. After a revamped version in November 2011 it raised $30 million from Redpoint Ventures, followed by another $25 million round in January 2014.

The road was not smooth. In February 2012 it emerged that the app had been storing users' phone address books without their knowledge; Morin apologised and said the data had been deleted. Two members of the US Congress asked Path and 33 other app developers to disclose what data they collected. In February 2013 the FTC fined the company $800,000 for storing data on underage users. That same year there were complaints that unsolicited SMS invitations were being sent to people in users' address books; according to TechCrunch, Facebook also cut off Path's access to its friend-finding feature.

Path's stronghold turned out not to be the market it had originally targeted: in 2014 its largest user base, with more than 4 million users, was in Indonesia. In May 2015 Kakao, the owner of a popular messaging app, bought Path for an undisclosed sum. On 17 September 2018 it was announced that the service would end, and from 18 October 2018 users could no longer access the app.

Path's story shows how data scandals that shake user trust can leave a small social network defenceless against big rivals. Turning down Google's offer was a bold decision, but the growth that would have vindicated it never came.

## Lessons

- When you turn down a big acquisition offer, commit in a written plan to the metric by which, and the timeframe within which, you will exceed that value.
- Obtain explicit consent for every feature that accesses user data; in Turkey, breaches of KVKK, the data protection law, hit reputation and budget at the same time.
- If your product takes hold in an unexpected country, consider early on rebuilding your revenue model and team around that market.

## Sources

- [Path (social network)](https://en.wikipedia.org/wiki/Path_(social_network))
- [Google Tried To Buy Path For $100+ Million. Path Said No.](https://techcrunch.com/2011/02/02/google-tried-to-buy-path-for-100-million-path-said-no/)
- [Path acquired by the makers of a popular messaging app](http://www.businessinsider.com/kakao-talk-buys-path-2015-5)