Startup Obituary : Path

When Privacy Couldn’t Compete: Dave, Shawn, and Dustin’s $500M Bet Crumbles

Author

Ram Gangisetty
May 13, 2025

We wanted to build a place for real friends, not followers.

Dave Morin, co-founder of Path

🔦 The Spark

In November 2010, three friends in San Francisco set out to redefine social networking. Dave Morin, a former Facebook exec; Shawn Fanning, the creator of Napster; and Dustin Mierau envisioned something quieter, more private, and more human.

"Facebook is about the past. Path is about your future," Morin often said. Where Facebook encouraged broadcasting, Path aimed for intimacy. Only 50 friends, max. Later 150. Just enough for Dunbar’s number—the theorized cognitive limit to meaningful relationships.

It wasn’t a network. It was a digital journal.

📱 The Build

Path was mobile-only before that was cool. The app was sleek, minimalist, and emotionally resonant. Each photo, song, or check-in lived on a "Moments" timeline. It had no ads, no algorithmic feeds, and no public likes.

Users could share their location, what they were listening to, who they were with, and how they felt. It wasn’t about performance. It was about memory.

Version 2.0 added filters and stickers. Version 3.0 added video and messaging. Nike+ and Foursquare integrations made it feel like the center of your digital life.

Path Talk spun off messaging into a standalone app. Morin even acquired TalkTo to power real-time conversations with businesses.

🚀 The Climb

Path's approach resonated deeply, especially in Southeast Asia. By 2014, it had:

  • 15 million users

  • 5 million daily actives

  • 4+ million in Indonesia alone

Time Magazine named it one of the 50 Best iPhone Apps. TechCrunch dubbed it the "anti-Facebook."

Even Google took notice. They reportedly offered $100 million. Morin turned them down.

"We believed we could be the next Instagram. But for your whole life," said Morin in a 2018 reflection.

Investors believed too: Path raised $66.1 million from Kleiner Perkins, Redpoint, Ron Conway, Ashton Kutcher, and Index Ventures. Its valuation peaked at $500 million.

❌ The Cracks

But idealism doesn’t pay hosting bills.

  • Path refused ads.

  • It sold stickers and filters.

  • A $14.99/year subscription tier launched—then faded.

Morin believed the product would be so beloved, users would pay to keep it alive.

But even beloved things can fall behind.

Instagram exploded. WhatsApp grew. Snapchat rewrote the rules. Meanwhile, Path capped friends and monetized modestly.

Then came the missteps:

  • “Address Bookgate” (2012): Path uploaded users’ contacts without permission.

  • A $800K FTC fine followed.

  • Spammy SMS invites damaged trust.

In a world shifting toward privacy, Path was ironically seen as invasive.

🛋️ The End

By 2015, growth stalled. Monetization didn’t work. The friend limit, once Path’s edge, became a wall.

That year, Korean tech company Kakao acquired Path for an estimated $40–50 million. They ran it independently for three years.

On October 18, 2018, Path shut down.

We couldn’t outrun the giants. But we tried.

Dave Morin

Path Scorecard

Dimension 

Score 

Reasoning

Product-Market Fit

3/5

Deep emotional resonance with early users, especially in Asia—but struggled to cross into mass-market relevance or create lasting retention.

USP

4/5

Beautiful design, mobile-first, privacy-first, and limited connections created a truly differentiated social experience.

Timing

3/5

Mobile-only was ahead of the curve in 2010, but its privacy and intimacy positioning were misunderstood just as social broadcasting took off.

Founder Fit

5/5

Dave Morin brought elite consumer product vision from Facebook. The team had the pedigree and execution ability to build a beloved product.

Team (Execution)

3/5

Strong on product, weak on monetization and damage control (e.g., contact scraping scandal). Monetization attempts came late and flopped.

📖 Lessons for Founders

  • Privacy is table stakes. Trust is everything. Once broken, it's hard to repair.

  • Revenue isn’t betrayal. Even beautiful apps need business models.

  • Don’t just differentiate—educate. Users didn’t always get what made Path special.

  • Sometimes the best product doesn’t win. As Marc Andreessen famously said, "In a startup, you need to do everything right – and still get lucky."

I hope the story and learnings of Path gives us an edgeand help you navigate your own startup wisely.

If you found it helpful, please sahre it 🙏.

Cheers,

Ram

👉 My simple ask: It took hours to put together this post for you. I hope you forward this email to at least one founder friend or share on your social channels 🙏.

Startup Obituary is for educational purpose only not a business advice.

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