Minsk Express: why Facebook bought a very young service MSQRD


Mobile app MSQRD developed by Belarusian company Masquerade Technologies Inc., allows users to overlay their photos and video of the virtual mask with the features of faces of famous people and post stills and videos in Instagram, Twitter and other social networks and instant messengers. Simple and intuitive interface, high-quality 3D modeling and face recognition has helped the service to quickly grow in popularity: in the App Store, he made his debut in the second half of December 2015, and for the first month it was downloaded more than a million users. According to the Masquerade, at the beginning of March the number of application downloads exceeded 16 million worldwide. MSQRD got to the first lines of the charts App Store in 12 countries — without the cost of paid promotion, told one of the founders, technical Director MSQRD Sergei Gonchar in the column on the portal VC.ru.

MSQRD became truly world-wide glory in February on the back of the ceremony film awards “Oscar”, one of the victors which was actor Leonardo DiCaprio, reported research firm App Annie. American TV host Jimmy Kimmel showed on his show the application by wearing the mask DiCaprio. Now this mask is flanked by two statues of the “Oscar” among the most popular in MSQRD. After a week and a half after the ceremony MSQRD acquired U.S. Facebook Inc., the owner of the world’s largest social network.

Not from the first attempt

“It’s certainly a cool story that we did for two days. But actually we have huge experience in application development, and each in his sphere,” said Potter in an interview Lenta.ru. Gonchar, CEO of Masquerade Technologies Newgen Eugene and Eugene Zatepyakin compare themselves with Rovio: the Finnish developer has launched more than 40 games, while not shot with the Angry Birds.

Millions from Belarus

Belarus is a stable supplier of promising startups in the global market. Among the companies from former Soviet republics who have managed to find partners for the development on a global scale, except MSQRD were the developers of the map service, messenger, online casinos and weather app.

Viber

At the time of purchase of the messenger of Viber by Japanese Internet retailer Rakuten in February 2014 the service with the Cyprus registration and development centers in Belarus and Israel, and Belarusian co-founder Igor Magazinnik was already one of the leaders in its segment. It is not surprising that the amount of the transaction amounted to $900 million In August 2015 Viber with audience of 250 million users in the top five of the world’s most popular instant messengers, behind only the Chinese QQ and WeChat, and U.S. WhatsApp and Facebook Messenger.

Maps.me

The map service, created by Belarusian developers, in November 2014 was acquired by Russian Internet giant Mail.Ru Group. Deal experts have estimated in $30 million After the acquisition of the Russian partner team Maps.me moved to Moscow. Soon the service became free.

Viaden Media

In 2011 Belarusian software developer for online casinos and applications for monitoring the health of Viaden Media has bought Israeli billionaire Teddy Sagi, founder of the world’s largest producer of software for online gambling games developed by Playtech. The amount of the transaction were not disclosed. According to the portal scoop.it, Viaden Media was valued at €95 million following the acquisition, the company retained a development center in Minsk. The most famous products Viaden is app All-in Fitness and Texas Holdem Poker Free.

Apalon

In November 2014 the Belarusian developer Apalon apps mobile bought American Internet Corporation IAC (IAC, which owns, for example, the Vimeo video hosting, online resource The Daily Beast and an informational website Ask.com). Among known projects Apalon — Weather Live implemented into the app, showing the weather, the alarm clock My Alarm Clock, Notepad, Notepad+. The amount of the transaction were not disclosed, however, according to experts interviewed portal About business, buy Apalon could cost Americans $80-100 million.

23-year-old Newgen, despite her young age, is known in Belarus, a serial entrepreneur: he focuses on startups from 2010 until MSQRD has created a number of projects. Fall 2015 the Belarusian edition Probusiness.by included it in the list of 40 most successful young businessmen in the country. Among his projects Neugene service of electronic signatures and documents PandaDoc and charity meetings auction Goodwillion.

Last spring, nevgen won in the competition of startups from Venture Day of service Metrics for Split A/B testing of apps in the App Store and Google Play and won a trip to Silicon valley, said co-organizer, founder of the Minsk center for innovative business “Imaguru” Tatiana Marinich. The organizer of hackathons (forums developer) Garage48 Ragnar Sass says that the CEO MSQRD participated in at least five events Garage48 — always with different projects every year more and more high level.

To start MSQRD of Neugene encouraged the news of the purchase of the Ukrainian service of the company Looksery filters Snapchat for $150 million, according to the portal Ain.ua. With Gonchar he planned to release a similar product and believed that its development has advantages in comparison with Looksery. They invited a team of experienced programmers Zatepyakin who brought their own technology fastracking (face recognition) — according to the founders MSQRD, it was “the best on the market”. The nevgen taken the design and the variety of masks, Gonchar graphics applications.

In November 2015 at the next hackathon “Imaguru” partners unveiled a prototype MSQRD. At that time they had formed a team and there was an agreement with the investor, says Sass from Garage48. This investor became a Belarusian businessman Yury Gursky (in February 2016, he was appointed Vice-President Mail.ru Group on new products) .

In conversation with the Rostov region confirmed that invested in the project more than $1 million “I’ve been working with Eugene [Newgene] on other projects and as an investor, as a mentor,” he says.

Stalin, Obama and DiCaprio

The creators of the service are particularly careful in our selection of masks in the calculation of the viral effect: among the three dozen options — the Oscar-winning Leonardo DiCaprio, rapper Snoop Dogg, Joseph Stalin, the Iron Man (in this mask MSQRD with connection to Facebook have already congratulated mark Zuckerberg), the Joker, guy Fawkes, Barack Obama, Conchita Wurst and other heroes of show-business, the Internet and politics. The popularity of the masks varies from region to region. For example, monkey relished the Asian audience (especially on New year’s eve: 2016 — the year of the Monkey according to the Chinese calendar), Stalin — Russian, and DiCaprio is an American.

The virality of startups spurred the star users: photo and video with masks MSQRD social media posted the Snoop Dog, Chris brown, Busta, Yegor kreed and other Russian and world stars with tens and hundreds of thousands of subscribers. On February 24, the test drive service in the show staged a popular American comedian Jimmy Kimmel (his mask, the founders prudently MSQRD also released for the American audience), and after a couple of days, on the eve of the Oscars, MSQRD entered the top-5 most popular U.S. apps for iPhone. Video from the show Kimbella has since collected more than 100 thousand views on YouTube.

Of the more than 16 million users 14 million are MSQRD monthly and 3 million daily. Most of the audience already in the U.S., refined the creators of the service.

Competing for teenagers

On Wednesday, 9 March, Facebook announced the purchase MSQRD, without revealing the amount and transaction parameters. Gursky does not specify how successful was his “exit” from a startup is the deal with Facebook “very strict”. Managing a large venture Fund said that “Mail.ru Group allegedly offered to the creators MSQRD “sold” for $50 million,” but they refused (Mail.ru this information has not commented). The Belarusian team application now will move from Minsk to London and will continue to work independently on a product within the ecosystems of social networks.

The Western media have interpreted the new acquisition of Facebook as the next round in the fight for audience with Snapchat. This service is “self-destructing” photos and messages that mark Zuckerberg in 2013 was not able to buy for $3 billion, is now worth $16 billion, and most of his tomillions audience is users under the age of 18.

Snapchat uses technology Looksery in the built-in chat filters Lenses. The photo and video app is now possible to apply graphics effects to change the color and size of the person “grow” hair, etc. After the launch in September of 2015 feature Lenses two months was paid: since the user took in $0,99. Later, Snapchat decided to focus on monetizing through the advertising model and made filters are available for all audiences. In 2016 the company plans to increase revenue to $350 million, said its CEO Evan Spiegel. At Facebook there is a whole set of services where you can embed the functionality MSQRD, — Facebook Messenger, Instagram and WhatsApp.

“There is a sense that the project is bought not so much for the battle with Snapchat, but for the complete ecosystem in the field of augmented and virtual reality”, — says the managing partner of the VC Fund Impulse Kirill Belov. Mark Zuckerberg dreams for several years about the development of “the effect of 3D presence with the use of technology,” said Facebook founder Vanity Fair. The first and most important step in this direction was the purchase in 2014 for $2 billion manufacturer of points of virtual reality Oculus. MSQRD also works with augmented reality and fits well in the concept Zuckerberg for creating an alternate universe for each user, said Belov.

One way or another, but the product created by Belarusian developers received access to the audience 1.6 billion users. “This amazing success, is not sparing in his praise Ragnar Sass. — I work with startups for ten years and never seen a startup successfully sold within three months after the appearance of the prototype. And investments in the $1 million they attracted in January — unheard of!” “Absolutely brilliant team, stars! At 23-24 years, and I’m ready to put the brandy crates, this is not the last news about the guys,” Gursky wrote in Facebook after the transaction.