App discovery startup AppHero has been acquired by fellow Toronto-based company Fuse Powered, the company announced today, in a deal that will see the entire AppHero team including 19-year old founder Jordan Satok join Fuse Powered and develop its products for app publishing, marketing and distribution. AppHero, founded in 2011, was a pure play discovery network that developed sophisticated algorithms for suggesting mobile software to users, but now it’s crossing the line into territory it stayed specifically out of when it was operating under that guise: paid placement.
The recommendation platform built by Satok and AppHero was designed to survey what kinds of apps a user already has and then make intelligent predictions about what else they might be inclined to download – taking into account that if you already have an excellent grocery list app, for instance, you’re not likely to want to get another one. But Satok says that some months ago they started to realize that more and more users are downloading new apps based on what they find through advertisements, rather than through suggestion networks like the one he and his team had built.
“[Fuse Powered] has a monetization product that they offer to their monetization partners, so what we’re looking at doing, and this is something we’ve been working on the last few months, is we recognized that people are discovering a lot of apps via ads,” Satok explained in an interview. “So Facebook ads, etc. The difficulty is that most mobile app ads today are really impersonal and not at all relevant to what people are really interested in. So we started using the same processes we’d developed to find apps that people would really like, and then show them ads for those apps.”
Satok says it’s a much more straightforward business model than any they’d created for AppHero, and also really well-aligned with their goals and technological development. He says that they were always worried about doing the same thing in AppHero itself, for fear of compromising the user experience, but notes that now there’s nothing stopping them from using that tech in that way, as it’ll be clear to any and all that this is an advertising product.
The terms of the deal aren’t being disclosed, but AppHero has raised some $1.8 million in funding from OMERS Ventures and others, and Satok says that all investors and stakeholders are more than happy with the deal.
App discovery is a dangerous market to operate in, as Apple has proven time and time again with its ability to shut out companies who do similar things from the App Store entirely. An exit here for AppHero actually manages to help Satok and the company he built mitigate that risk entirely, while giving both them and new parent Fuse Powered a way to quickly chart a relatively uncomplicated path to monetization. I asked Satok, who started AppHero when he was just 17, if he’s feeling entrepreneurial again, but he said he sees this as the chance to build something more long-term with his new partners at Fuse Powered.