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Snapchat has raised $485M more from 23 investors

74 pointsby drumover 10 years ago

20 comments

olalondeover 10 years ago
I have never used Snapchat so I might be off here but if I understand correctly, its main distinguishing feature is the ephemeral nature of content shared with it.<p>I find the concept of imposing artificial constraints on apps&#x2F;interactions fascinating. Twitter was arguably the one to popularise the idea with its 140 character limit (perhaps by accident, the limit was initially there to support SMS) and now Snapchat (ephemeral posts). Are there any other apps that play on this theme?<p>Makes me wonder if there are other apps out there waiting to be &quot;constrained&quot;. Here&#x27;s some dumb ideas off the top of my head. What about a social network where you can only have 10 friends? What about an email inbox where you are limited to receiving X emails&#x2F;hour (perhaps senders could bid on delivery priority?). What about a HN where you are only allowed to comment once a week? What about a continuous delivery system where you are blocked from releasing after you reach a quota of defects (I heard Google uses such a quota system internally)? What about a package repository which rejects packages with over 150 lines of code or some other quality metrics?
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elberto34over 10 years ago
This talk of bubbles reminds me of 2007 when everyone, including all the experts, was certain Facebook was a bubble at a valuation of $15 billion after Microsoft invested; now it&#x27;s worth $200+ billion. Then in 2012 after Facebook&#x27;s hugely publicized botched IPO and Nasdaq error, all the experts again said the web 2.0 bubble had burst; the stock price and earnings have since doubled. Unlike the big blowups of Friendster, Myspace, Digg, etc..these post-2008 web 2.0 valuations have proven to be extremely sticky. Pinterest, Twitter, Dropbox, Air B&amp;B, Tinder, Snapchat, Whatsapp, Uber, Instagram...all keep going up with no end in sight, year after year until either IPO (which finally creates volatility) or buyout. There&#x27;s hardly any big failures or blowups, except perhaps Zynga and Groupon (although it&#x27;s still worth $5 billion). My prediction is these web 2.0 valuations will keep rising for many years to come because that is the path of least resistance, and the investor demand and user growth for these companies is seemingly unquenchable. The unending web 2.0 boom and unending wrong predictions about its demise show how these &#x27;obvious&#x27; parallels to the old tech bubble of 1995-2000 are just so wrong. There&#x27;s more at play here, such as the investor flight to quality (more money chasing fewer companies), huge user growth, huge monetization potential from smartphone engagement, the very large millennial population that use these services, and ability of these web 2.0 companies to carve out niche dominance and then keep it. Within the next year or two, we&#x27;re probably going to see Uber being worth $100 billion before IPO, Snaphat $50 billion, Tinder $10 billion, Air B&amp;B $50 billion, etc. Take every valuation and quadruple it. Back in the 90&#x27;s, $100 million was a big deal; now that&#x27;s just a rounding error or the equity of just a single early employee. Insane, but very prosperous times we&#x27;re living in. And it&#x27;s got a long way to go.
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mehwootover 10 years ago
<i>Snapchat originally set out to raise $40 million, but demand for the round skyrocketed, and it decided to shoot for an ambitious $900 million instead. When that didn’t work out, it dialled it back to $500 million.</i><p>Mind boggling.
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tonyjstarkover 10 years ago
I always thought if you raise money the investors want the money back in the end. Maybe they want even more than they invested. So if a company raises more money than some of the old players of the game who actually having big revenues one has to think how much revenue the inverstors expect from this company in the next years. It seems like everybody only bets on Snapchat being bought by a bigger player which is a strange model of buisness case because there is no value but only assumptions generated. I believe (and that is very subjective) that that kind of investing is sickening the whole industry, it feels more like some sort of speculation which caused already problems in the banking sector. But it will be fine as long as the majority plays along. I found myself feeling rather conservative when I think about a valuation of one of those startups comparing them to other companies and for me that doesn&#x27;t work out. Maybe it&#x27;s because the whole market changed the last few years but maybe it&#x27;s the b-word. I look forward to find out.
moabover 10 years ago
I&#x27;m incredibly curious about how they&#x27;re planning on monetizing, considering that that recent stab at pushing micropayments was a major flop. Ads that aren&#x27;t full-fledged &#x27;snaps&#x27; (and don&#x27;t feel spontaneous) seem like a sure way of pissing off their userbase. Stories seem like an effort to push for fb&#x27;s ads strategies, but whether this will pick up and become a real competitor is questionable.<p>Props to them for not getting acquired though, and pushing on.
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joeblauover 10 years ago
It seems like Yahoo! makes more money investing in other companies than it does as a company. They seem to invest lots of startups, including this one, that end up being huge.
barnacsover 10 years ago
Let&#x27;s waste an enormous amount of resources to create Yet Another Messaging App. That&#x27;s exactly what the industry and humanity in general needs to advance!
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nnainover 10 years ago
It&#x27;s still difficult for people sitting outside North America to make sense of these high valuations. To me, dropbox and youtube were even interesting case studies. It all seems quite simple now, but in the initial stages, people wondered how they are going to make enough revenues to recover the infrastructure costs. But I have begun to see a clear trend in how the Social Apps, Sharing (Rental) Economy apps, and Ecommerce are behaving at different places across the globe.<p>100 Million users of a social app in US (followed by other western countries) are several times more revenue generating than the developing countries. The one metric that matters here is the Average Revenue per User (ARPU). Mobile advertising is growing in second and third world countries, but still lags behind. Not to say that users elsewhere are any less useful; Facebook has a huge focus on the Indian Market.<p>Apps for rental(sharing) economy, Uber et al, work more evenly everywhere, since they bring a straight cut out on the amount paid.<p>The segment that seems to works most at par globally has to be Ecommmerce. Amazon committed a $2Bn investment in India in 2014, as Flipkart got over 1.5Bn in funding.
mattbarrieover 10 years ago
Big raises like this are primarily secondary. Probably someone like lightspeed selling out (was mentioned in leaked email <a href="http://www.businessinsider.com.au/snapchat-ceo-evan-spiegels-email-memo-2014-12" rel="nofollow">http:&#x2F;&#x2F;www.businessinsider.com.au&#x2F;snapchat-ceo-evan-spiegels...</a>).
forrestthewoodsover 10 years ago
My rule of thumb for awhile has been that if you can get one hundred million users (100,000,000) you can sell your company for one billion dollars ($1,000,000,000). It doesn&#x27;t matter if you have any revenue or not, 100m users = 1b dollars.<p>Snapchat is at 200m users, but has doubled since August. If you think it&#x27;s headed for 500m users then 10b is only a 2x premium for an unusually large pool of users in one place.<p>WhatsApp sold for 18b with 500m users. It was headed for 1b users so 18b is a similar 2x premium.<p>At first I thought the math didn&#x27;t work but I guess it does. Users are king. Engaged users are directly convertible to money.
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DigitalSeaover 10 years ago
Honestly, I am surprised Snapchat is still around. I never receive or send Snapchats to my friends any more. About one year ago me and my friends used the app on a daily basis, it was fun and you could send funny things, now it is mostly dead whenever I do check it.<p>It was only ever a trend. They should have sold it when they had the chance to sell to Facebook, because if the numbers are to be believed, they&#x27;re not doing that well. Eventually we will see Snapchat either pivot or die.
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auganovover 10 years ago
As long as Snapchat has a good case for maintaining the monopoly on ephemeral messaging the valuation is pretty reasonable. It&#x27;s the best thing since IM and nobody else seems to get it. FB messenger could shake things up, but they seem reluctant. It&#x27;s hard for any social&#x2F;messaging incumbent to do it without cannibalizing their existing user activity. And they have 2 patents which may or may not be valid. My prediction is 1B users by 2016.
lognover 10 years ago
I wonder about the wisdom that hardware is cheap and programmers are expensive. &quot;One source said that Snapchat has an over $30 million-per-year burn rate, and pays half of that to Google Apps Engine to host all its photos, though this number seems low to us.&quot;
chad_strategicover 10 years ago
With interest rates near zero for the last 6 years, what is really the value of money?
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apunicover 10 years ago
Probably I am alone here but I think that Snapchat is the biggest innovation in the social space since Facebook and not just because of it&#x27;s ephemeral nature. Let me elaborate and give my view why I think Snapchat is great and one of my most used apps.<p>- To start, Snapchat changed my communication behavior heavily. Before Snapchat people used any kind of messengers when they had a clear intent to start an interaction with another person. With Snapchat you just send something. You do not want to start a conversation, often you just share what you do right now, how you feel and very often it&#x27;s so close to what you are and not some polished something you would like to be. You share emotions in forms of pics also on Instagram and Facebook but this is different since the emotions you present there are highly curated, see below for more.<p>- There are no &#x27;likes&#x27; and this is wonderful. The existence of likes sets us under pressure. If we post something on Facebook and do not get a single like it&#x27;s embarrassing and leads to postings which are only of outstanding nature painting a distorted picture of our life. Facebook is anything but not reflecting reality.<p>- Sending and selecting a few contacts is so fast and I do not know one single app which has a slicker process. This again leads to so much more honest and personal messaging. Since I target on other platform many more people I have to take care about my postings. On Snapchat I can quickly select a bunch of people and leave those out who might be bored by a single snap.<p>- The process of taking a picture is different than with the stock camera of a phone. You take a pic which is NOT saved—usually it&#x27;s immediately saved and if you do not like it you have to go the the gallery, delete it and confirm again that you want to delete it. This is very annoying if you take selfies. Snapchat turned this around and once you find the right shot you can send and&#x2F;or save it. Small thing but so convenient.<p>- Features like slide-in filters, painting on the pic, amazing video calling are just nice amenities but again show that Snapchat&#x27;s interface is just great and miles beyond other cluttered UIs.<p>- One feature which I want to mention is putting text on pictures, no rocket science but again sometimes so funny and shows similarities to those meme generators.<p>- Finally, the ephemeral thing is not the key feature but it&#x27;s the brand and the DNA of Snapchat, everybody knows that there&#x27;s no privacy, people can screenshot the snaps and share it, period. But it&#x27;s about being oneself and understanding that the pictures are just &#x27;throw-away products&#x27;, no shiny thing kept forever. This again leads to a very honest snaps. Snapchat is not about looking good.<p>I encourage everyone who doesn&#x27;t &#x27;understand&#x27; Snapchat&#x27;s success to try it, it strengthens the relationship to close contacts and friends much more than other &#x27;social app&#x27;.
iloveluceover 10 years ago
Magic Leap raised $542M and I don&#x27;t know of anyone that uses their product so there is also that <a href="http://www.campaignlive.com/article/google-puts-542m-augmented-reality-startup/1318362" rel="nofollow">http:&#x2F;&#x2F;www.campaignlive.com&#x2F;article&#x2F;google-puts-542m-augment...</a>
logicalleeover 10 years ago
will be interesting to see what happens when the rest of the VC&#x27;s get back to their offices on Monday.
sunasraover 10 years ago
Is it worth of it?. I dont think so.
_almosnowover 10 years ago
I like Snapchat, I still can&#x27;t grasp their plan to become the next great thing but at least they have a lot of users and their users &#x27;don&#x27;t want to leave&#x27;.<p>I always thought that Facebook were too big to fail, like in no one would close their account because of what they&#x27;ve invested there (friends, pics, etc...); yet, people are leaving it at an unprecedented rate. I remember Facebook desertion not being much more than a statistic even a year ago, now it&#x27;s pretty common to encounter people that don&#x27;t have an account there anymore. I think that the bandwagon effect that is behind the growth of online communities is a double-edged sword; once the trend shifts to users leaving, the more they leave the more users are likely to leave later and everyone snowballs out until there is no one left. Fortunately for Facebook, many of those peers left because of WhatsApp&#x2F;Instagram, so business&#x27; still in the family... for now, albeit much less profitable. Sooner than later, FB will be gone and its place will have to be filled up by something else. Snapchat has a seat reserved in the post-FB era and apparently that is worth at least $20B.<p>Anyway, derailing the discussion a little, I&#x27;d like to hear what you&#x27;d think if &#x27;Core Facebook&#x27; went out of business right now (but not WhatsApp&#x2F;Instagram). Would you consider it a success or a flop? Was it a profitable endeavour or not?
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curiouslyover 10 years ago
The bubble has reached it&#x27;s peak folks.