The big round and the valuation counters the current popular wisdom that tech startups are going to have a difficult time raising in the current environment unless they’re already running solid businesses. Apparently, Giphy is popular enough and has enough revenue potential that it was able to find investors.
Giphy started as a searchable trove of GIFs that are free to use, but its key move was to open its giant repository for GIFs to integration with popular apps.
The popular inter-office instant messaging client Slack, for instance, allows its users to type “/giphy” and any word they can think of. That word is then sent to Giphy, who finds a GIF with that tag and posts it. The process is seamless, and after a few uses becomes second nature, meaning when people think of GIFs, they often think of Giphy.
Businesses have also found a use for Giphy through “Live-GIFing”, turning a few seconds of their recently published videos into highly sharable GIFs. The service is so popular an entire section of the staff is dedicated to “Live-GIFing.”
Future revenue streams could come from selling ads alongside relevant GIFs, or by letting GIF creators integrate their mini moving pictures with popular franchises, including Star Wars, Zoolander, and the X-Files.
So, the company people use to get jobs (LinkedIn) is struggling, while the company people use to distract themselves from doing their jobs is killing it.
How ironic.
In all seriousness though, Giphy deserves a ton of credit for recognizing the potential that GIFs have to offer.
They’ve been circulating around the internet for years, and a funny GIF of a celebrity caught doing something embarrassing always makes for a good laugh. But Giphy has taken GIFs to a whole new level, turning them into a language of their own – one that is perfectly suited for text messaging.
Plus, they obviously have the foresight to recognize how GIFs could be monetized in the future.
That’s what this $300 million valuation is based on, right? They didn’t approach investors with a cute tool for making jokes with coworkers at work. They approached investors with a future money-making machine.
Let’s take a look at a few ways Giphy could start making some serious cash.
Monetizing advertising within messaging
When using GIFs in Slack, users type /giphy (followed by any word they want) and a GIF related to the word they chose instantly pops up.
For example, I just typed in “/giphy lunch?” to see what my coworkers might be interested in for lunch.
Here’s what Giphy surprised me with:
That was funny. But imagine if a GIF of someone eating a burrito from Taco Bell appeared instead?
That’s next-level advertising. Not too intrusive, yet suggestive enough to be effective.
Giphy Cam
Giphy Cam is Giphy’s app that allows users to create their own GIFs. These can then be sent or shared on social media.
The app allows users to add filters to their creations, and similarly to Snapchat, companies are able to create their own custom ones.
Right now, brands like Star Wars and Zoolander have gotten involved, but Giphy is waiting until they’ve built several strong partnerships before monetizing this product.
At work, millions are on Slack. At home, even more are on Facebook Messenger. Giphy is available to them at all times.
And as a result, the company is in prime position to play a role in any future conversation.
/giphy make it rain