December 03, 2020
Facebook Buys Kustomer for $1B
The acquisition continues the social media juggernaut’s push to help companies use its platforms for business.
In another major acquisition for the social media juggernaut, Facebook has purchased Kustomer, a startup specializing in customer relationships. Terms of the deal weren’t disclosed, but people familiar with the matter said it would value New York-based Kustomer at a little over $1 billion, The Wall Street Journal reported.
Kustomer’s technology gathers conversations from different channels, such as customer-service platforms and chatbots, and displays them on a single screen. It’s a helpful tool to examine the history between a company and its customer and will fit quite nicely in Facebook’s ever-growing offering of platforms for companies to do business online, especially during the pandemic. In May, the company launched Facebook Shops, which lets businesses create online stores through Facebook and Instagram.
Prior to the acquisition, the companies already had a relationship. Kustomer allows businesses to aggregate and respond to customer inquiries that come in through Facebook Messenger. In October, Kustomer said it also began integrating with Facebook’s Instagram messaging. Messaging companies on social media rather than picking up the phone is becoming the preferred method of interaction for customers. For example, Facebook said more than 175 million people reach out every day to businesses using its WhatsApp messaging service.
With more people spending time on social networks, particularly on mobile devices, integrated e-commerce solutions have become more prevalent. It’s a trend many in the promotional products industry have kept an eye on. “Social is the most logical and natural place to be able to shop and transact,” JP Hunt, partner and co-founder at InkSoft, a platform for online branded merch, told Counselor earlier this year. “The reality is a brand or personality spends a lot of effort in developing their social media reach. If they want to stay in front of these customers and keep their attention, the best way to do that is through branded products. There’s a total synergy there.”
Kustomer was founded in 2015 by Brad Birnbaum and Jeremy Suriel, two entrepreneurs who sold a previous company to Salesforce.com Inc. Kustomer was valued at $710 million in a private funding round roughly a year ago, according to PitchBook.