The strategic importance of Parse to Facebook (and to your mobile app)

A year and a half ago Facebook bought Parse, a YC-backed company building an AWS-like backend for mobile apps, for a reported $85 million. It was a brilliant acquisition.

I strongly believe that in the long-term Parse will be one of the most additive acquisitions Facebook has made.

The logic of the value creation is simple:

• Parse provides a feature rich (and almost free platform) that abstracts 90% of the pain for new app developers. To date 500k apps have been built on Parse
• It provides seamless (and again almost free) features like Parse Push even for those not hosting on Parse to provide value and bring into the “platform” stack.
• It gradually ensures that the Parse (and eventually FB) SDK is prevalent across as many apps as possible. This drives integration but also insight into what users have what apps (and combined with FB profiles who those users are, what they like, what they play and in the not-to-distant future, what they pay with)
• Shake all of the above, add a layer of type of targeting only Facebook can do for acquisition, re-engagement ads, notifications and payments and milk for $$

This whiteboard scribble by Julien (who leads Parse outreach internationally) sums it best

As Business Insider correctly states

“As long as the Cost Per Install (the marketing investment it took to persuade you to download an app) is less than the Long Term Value of new downloads, users, and in-app payments, then the company should keep spending on more ads on Facebook.”

With Parse Facebook is both building a fantastic stand alone business but also a meta-platform to ensure that a slice of Facebook-owned code sits across as many mobile apps as possible. The Facebook federated identity (Facebook Connect/FB Login) has a broad reach, but the Parse layer has the potential to extend much more broadly across the mobile app ecosystem.

I equate Parse to Google’s Toolbar which became a leverage tool to ensure PC Makers and Tier 2 search companies deeply integrated Google for some marginal upside, while delivering massive strategic upside to Google by locking out competitors (very, very, very few users ever change the default search provider….which is why the Y!/Firefox deal is so material). Another analogy might be Android (the most additive acquisition Google ever made) where the proliferation of the platform (with and without Google services) and the standardization of the mobile web onto Wekbit has meant more mobile searches, more mobile ads and more mobile revenue.

For startups building mobile apps, given the ease of deployment (and the near zero cost) Parse Core and Parse Push are absolutely options you should consider. The ability to scale out an app on top of Facebook’s infrastructure (and knowledge on scale) combined with the breadth of features and parallel integration with the Facebook Open Graph stack holds a lot of (unrivaled) power.

Watch Ali Parr of Facebook/Parse explain why:

Parse has a massively high potential to become “the platform of platforms” and provide value to more and more developers all while ensuring that even if Facebook does not own a mobile platform itself, the App Economy is built and linked on top of an owned and operated code base.