Even the smallest change to Apple’s iOS platform can have a huge impact. Tiny tweaks, such as the decision to improve privacy settings on iOS8, can wipe out whole categories of app makers.
Take Nomi, a New York-based startup. The promising startup launched using Wi-Fi signals from phones to help retail stores track and analyze their customers. (This category is part of the “omni-channel” retail movement.) But when Apple (AAPL) changed its privacy settings, that business vanished, and the company laid off staff. Now Nomi has sold itself to Brickstream, a retail analytics company based in Norcross, Georgia.
The companies did not disclose the all-stock deal’s valuation. Nomi’s 39 employees will join Brickstream, which has 100 employees. Nomi has raised $13 million in funding from First Round Capital, Greycroft Partners, SV Angel, Forerunner Ventures, Ralph Mack, David Tisch, Andy Dunn and Sam Decker. Brickstream has raised $30.2 million in venture funding from Mohr Davidow Ventures, Relay Ventures, RBC Venture Partners, Columbia Capital, and Eastward Capital Partners.
It’s a powerful lesson in building on another company’s platform. After Twitter (TWTR) revoked access to its API from a number of app developers, Fred Wilson, a prominent venture capitalist and Twitter investor, famously advised startups, “Don’t be a Google bitch, don’t be a Facebook bitch, and don’t be a Twitter bitch. Be your own bitch.”
Nomi CEO Marc Ferrentino says that despite the layoffs, the Apple news was not “earth-shattering,” because the company had already been expanding its offerings beyond data from mobile Wi-Fi connections. Nomi now collects data on customers with beacons and video cameras. “We realized that doubling down on beacons and video is where the future is going with sensors,” he says. “We just shifted where our data comes from.”
The acquisition emerged over the last four months when Brickstream, which provides a variety of analytics services to 1000 retailers, began selling its video services to Nomi. The two companies offer complimentary products, Ferrentino says. Prior to the merger, the partnership resulted in 27 net new customers.
Correction, October 19, 2014: An earlier version of this story misstated that Nomi and Brickstream’s partnership resulted in seven new net customers. The correct number is 27.
