In early 2021, Discord, the nine-year-old social communications startup, faced a pivotal moment during the height of the pandemic. They were presented with a staggering $12 billion acquisition offer from tech giant Microsoft. This astronomical sum underscored the significance of Discord, whose application experienced an unprecedented surge in user activity as people around the world sought ways to connect during the COVID-19 lockdowns. It wasn’t just Microsoft knocking on Discord’s door; the company also engaged in acquisition discussions with several other firms, including Twitter, as revealed by an insider with direct knowledge of these negotiations.
At first glance, turning down Microsoft’s generous offer might have seemed like a missed opportunity, but delving deeper into the situation reveals a more complex picture. Discord, under the leadership of CEO Jason Citron, had cultivated a devoted user base, primarily comprising gamers who utilized the platform for real-time communication while playing their favorite games. However, as the world slowly emerged from the constraints of lockdowns, Discord’s growth trajectory began to shift.
During the first quarter of the year, Discord reported a 21% increase in its average monthly active users, reaching an impressive 183 million, up from 151 million during the same period the previous year. While this growth was still substantial, it marked a notable deceleration compared to the remarkable 68% surge recorded in the first quarter of 2021 when compared to the same period in the prior year. This data, shared by a current Discord employee with direct insights, suggests that the rapid expansion Discord experienced at the peak of the pandemic might be tapering off.
So, was rejecting Microsoft’s massive offer a strategic blunder on Discord’s part? Perhaps not. By turning down this offer and opting to chart their own course, Discord retains its independence and the ability to shape its future in a rapidly evolving landscape. While the explosive growth rates seen during the pandemic might not be sustainable, the platform’s continued popularity among its core gaming audience and its potential for diversification into other areas of social communication leave the company with numerous avenues for future growth and innovation.
In the ever-changing world of tech startups, the decision to decline a multi-billion-dollar acquisition offer is a bold move. Still, for Discord and its CEO, it represents a vote of confidence in the platform’s enduring appeal and its potential to adapt and thrive in the post-pandemic era. Time will tell whether this decision proves to be a masterstroke or a missed opportunity, but one thing is clear: Discord’s journey is far from over, and its evolution promises to be a fascinating one to watch.