Snapchat raised $1.8B in a Series F round
techcrunch.com
techcrunch.com
Personally, I think one good way to see why people use the product is to 1) be in a relationship, and 2) regularly send pictures of what you're doing / funny things you've encountered / your face, back and forth with your partner.
Where I feel like there is legitimate criticism of Snapchat is their ability to monetize. Unlike Google, there is no purchasing intent. Unlike Twitter or Facebook, there is little ability to target users beyond age/gender/location (and no amount of computer vision in the short term will change that). Their Discover / Live products (which allow you to see snippets from brands / news channels / publishers) are promising but unlike the core product, I think there is legitimate reason to be doubtful about the appeal of these products because they have nothing to do with chatting with friends.
The much better example is Twitter, which people did indeed say wasn't monetizable, still isn't profitable, and has absolutely tanked since its IPO.
http://www.forbes.com/sites/greatspeculations/2012/07/27/fac...
All the data showed that Twitter wasn't monetizable, yet people still threw huge valuations at it.
There is nothing wrong with building apps and platforms that don't have clear paths to monetization, I just don't see why any sane VC would ever invest in one.
I just don't like the acknowledgement that most of their investments will fail.
Snapchat turning him down was an echo of that enthusiasm and market knowledge. Quiet determinsim & with only that to go on, the market assumed it was a zuckerberg story: knowing much more than everyone else and being able to see the companies future.
That was bold, and that took guts to do what snapchat did, and turn down money. However, facebook grew up in a totally different time. After 7 years facebook raised slightly less than this capital raise and it was just fundamentally a better/different company. But chiefly, Facebook's value materialized after this as Mark expected it to. By value, I mean on many levels. Snapchat's has not. The product hasn't evolved (again I don't use it, but apparently) very much. Facebook, adn the team stormed pictures, mobile, developer centric apis (becoming a core authentication cornerestone and identity tool), streamlining feed data, and matching algorithims. Snapchat, to a non-user, appears to fall flat in positive significant improvements. There seems to be one feature I have read about that is relatively new, that is universally hated. It is the only thing I have read about that seems like a departure from text messages I can never see again.
First off, advertising revenue was super important and a semi-reasonable monetization strategy back then. Facebook had officially won the network effect social game. It was the beneficiary of the largest social network to exist, ever. Also, their content was aggregated and stored and has been for a decade. They have massive amounts of user data and a distribution network. You really can't replicate 5 years of content in a single place and a network that is ~1/10th the size of earth. Facebook is google for people, it is a search engine.
Snapchat does not have a clear monetization strategy and the content they have is ephemeral. If a snapchat clone came out tomorrow, snapchat wouldn't be as sticky. Snapchat looks like twitter, the poster child for massive high engagement with disposable content and horrible biz fundamentals. In fact, twitter or facebook could clone snapchat probably super easy and enjoy crazy leverage and synergy. The only reason a 3rd unknown party can't is network penetration.
The thing about twitter, is that it is a realtime sentiment protocol that allows data-mining by forcing humans to condense thoughts into a single data object called a tweet. Creating your own data transmission protocol and having end-to-end control of it has huge potential. They can distribute their api & data objects to news, politicians, entertainers, hedgefunds and also allow advertising and purchase execution.
Uniting this data object with something like a hashtag allows them to track global trends. Where as Snapchat allows you to send dickpicks to horny girls you want to sleep with. So I am all for people trying to procreate and I have even had sex once or twice myself, but snapchat has a worse monetization strategy than twitter, and they really would need a facebook size IPO to pay back investors.
FB raised 16B in a horribly botched IPO. That would 10x the last money in, which has probably horrifying ratchets and clawback clauses. So, an admittedly super popular app that has existed for 5 years doesn't justify a 16B ipo at 100+B in 2 years like facebook did unless they think they can charge like $1 like whatsapp did, but that proved to be shitty for them. Was that acq. worth it? IDK, but certainly no PE firm would do it, only a huge company based 100% on realtie social connectedness.
I don't want to hate too hard, snapchat is cool (i don't use it myself) and many people find it a staple of their day. Especially trnedy demographics like postlennials. However, if my generation (millenials) is any indication, these kids are going to have way less money, be much less willing to pay, and came out of the womb with adblock, ublock and a propensity to jump around numerous social networks.
edit: fossuser pointed out, which I had forgotten/totally missed, that post facebook/snapchat deal facebook did clone snapchat with poke in a 2 week sprint and spent the next 1.5 years hacking on it. It did fail, and they shunted the project. Here is the IBM advert fossuser was speaking about and the Evan Spiegal quote[0]
[0]http://techcrunch.com/2012/12/21/snapchat-co-founder-evan-sp...
there have been plenty. facebook even launched one
what was the Facebook snapchat clone? I haven't heard of a large scale effort to clone snapchat yet. If I were to build a comparable universe of companies for snapchat, I would say it is a lot like tinder, twitter and foursquare.
Then Evan responded by copying Apple and saying 'Welcome Facebook, Seriously'. On an unrelated meta note I found this annoying because it originally came from people building personal computers and not dumb ephemeral messaging apps.
Maybe Snapchat can do what Facebook and Google have done and become a real technology company, but so far feels more like twitter (lots of users, but unclear vision).
Its launch: http://techcrunch.com/2012/12/21/facebook-poke-app/
A comparison with snapchat: http://techcrunch.com/2012/12/21/facebook-poke-vs-snapchat-w...
Its death: http://www.theverge.com/2014/5/9/5700732/facebook-poke-is-de...
That's how absurdly sticky Snapchat is.
It's been emulated many times over (incl. as mentioned above, by Facebook) – yet you haven't even heard of a single one.
Say you have a Snapchat account and follow 25 of your friends. Each of them are active and contribute 30 second snap stories maybe 4 times a day.
That means it's 50 minutes of footage. A day.
Say it's not just friends anymore but you're also following brands or brands pay your friends to act out something as well.
Snapchat is the new MTV.
With instant ability to chat with whoever, whenever, in augmented reality.
After 20 years on the internet this shit is so future.
Does it really matter to you that someone got billions of dollars so that 100 million people every single day gets an hour at least of entertainment intermixed with native advertising that snapchat charges $100k a day for?
Does the world really need you, personally, to worry and save them from this?
Does the world really need you, personally, to wander around a museum and remarking on how much a Picasso or Hirst is really worth?
Your ego makes you blind. Your cynicism makes you jaded. Go build something and don't stop until your work is being considered as such.
> go build something.
i mean, i am. but again, i was just legit curious what i was missing. no need to be a dick about it.
edited out some info
> Brilliant and great insights building on what’s happening now and been happening in the tech industry. Interacting with someone/something that doesn’t judge me opens up a new dimension of conversations. It might normalize honesty in society.
Quote I found interesting.
Think like a younger Millennial (18-25 right now). Their whole social lives have been in public on FB/etc. They're going through a horribly awkward time in their lives, but it's all public. When they act like an immature kid, or aren't sexy, or whatever, that is recorded for all time.
So they feel incredible pressure to be sexy/fit/cool/smart/doing interesting things. People take hundreds of selfies to find the one that meets (what they think) their peers expect.
The pressure to be cool and attractive is intense. With FB, there is no escape.
Now Snapchat offers the opposite. People can "let their hair down", not have to look sexy or be cool, because the message is just temporary.
Most of the time I want candids, not portraits. FB made everything a portrait (intended for consumption by future selves/others).
SnapChat brought it back to the present by making it temporary.
Can't they just change how the stuff they posted on FB is shared?
What makes you say that? Do you know how hard it is to get your social network to move to a new thing? The clone would have to have an amazing benefit, which Snapchat would be in a decent position to clone themselves.
This is fundamentally wrong. I'm an advertiser and I have seen so many Snapchat campaigns work tremendously well for brand advertisers. All for large established brands who are spending solid amounts with the platform.
Much of the hard work is ahead for the platform in terms of measurement and clear steps to defining and achieving ROI metrics such as awareness, brand uplift all the way through to DR elements such as traffic, leads, mobile installs and conversions.
The company makes huge strides very often updating media packs, incorporating measurement (Nielsen) etc. I expect very smart acquisitions in terms of continuing to drive user growth on the consumer side and build out of measurement / ads API to cater to the agency world in the next 12-18 months.
An IPO for snapchat is some time away but it is building a very real commercial organisation amongst brands, advertisers, agencies, the TV community (look at the viacom deal recently).
Also to your point here:
"FB raised 16B in a horribly botched IPO."
You can't say a company raised $16bn and had a horrible IPO. This really doesn't make any sense irrespective of all the ratchets and clawback clauses (none of which will keep any FB exec up at night let alone the CEO). Look at FB today, you should be kicking yourself if you had the chance or even thought about buying the stock at $17 when it was being shorted like crazy by Wall Street.
however, like pg said about whatsapp acq, it was like taking the atomic mass of company. who are you going yo believe, mark zuckerberg, the guy who is betting hos company amd his own money and furure on it after extensive talks, internal fb ops kniwl, and access to WA books, or TC pundits. (clearly my summary, not direct wuote. was video interview, tough to find source)
i do believe still, to disagree somewhat, that fb ipo was botched. point i was making is that facebook was a very strong company (at least rel to SC) and the IPO was indervalued because of scandal and technical errors. even undervalued, a comparative IPO for snapchat would still require a huge increase in real revenue and numbers.
it is a steep climb, if we say FB was $100B and dont adjust for the interference of several problems (glitch, scandal, info leak) snapchat would have to justify real profitability and massive rev growth. maybe they have that, but (advanced apologies for no citation) facebooks revenue indicated by their s-1 filing was 3.7 billion with 0.845B users.
This is a real question not rhetoric: Do you think snapchat can achieve these numbers given 3 years?
I do expect the revenue to ramp significantly for FB, TWTR, IG, Snapchat etc over the next 3-5 years based on client demand. In five years time, all the strongest aspects and best practices will really be established by brands and agencies and the ad dollars will subsequently follow. Much of the overall digital budget is moving quickly downstream to social platforms. This pace will quicken over time as all brands will need to spend on these platforms to fulfill reach capabilities. All big brands need to be able to reach millions of users at scale which comes with significant media investment or revenue for these social platforms. We're only four years in and it will be an area I am betting the next 5-7 years of my career on.
With that said, that is probably the least percentage reason as to why people use it. The greatest being for sending half naked photos to strangers.
All the person wants is confirmation of existence, and most of the time they are not actually interested in a real conversation.
That because you, personally, don't understand why you would do such a thing therefore said thing is invalidated.
It's lazy.
Additionally taking that point of view outs you.
Much like how when I was 16-23 and creating things on the internet when there was only 100MM users and people were wondering why anyone would want to spend all that time on the computer.
Or ever make a webpage.
Or put their information online.
Or meet people you've only emailed.
Or use a credit card to buy things.
All in all, the answer is always: there are 7 billion of us out here, the world doesn't revolve around you, grow up.
Snapchat has more features than sending a simple text. I still use text message pictures when I just want to send a picture. Snapchat lets you caption and draw on photos, which is a big draw. The erasing part of it is a feature too, and not just for nude pics. For example, sometimes I send off color humor to my friends and knowing that the joke's going to go away in 5 seconds makes me less hesitant to send. I don't think my friends themselves are going to screenshot the pics and try to disparage me, but I would feel uncomfortable if I were to email something to them that may accidentally be seen by an SO or parent.
I'll grant you the feature of drawing on pictures though.
I'd argue it's stupid that we archive and collect every meaningless conversation we have.
Between my SO and I, for stuff that's more memorable and may want to be saved, we'll use email, but for stuff like "look at this weird sign I saw downtown", we'll use Snapchat. An app is all about its use cases.
Another way of phrasing that argument is that if you look through my snapchat screenshot folder vs the received images from my SO, the snapchat screenshot has a higher density of content worth keeping.
I'm not concerned or uncomfortable with the message itself; my concern is that the message goes exclusively to its intended audience. An email or text message can sit around and eventually be viewed on accident or by someone nosy. At least with Snapchat, I have a level of assurance that this possibility is minimized.
Hell, most of us do it in real life. I say plenty of things I wouldn't necessarily want provided to my mother or employer, and small audio recording devices are cheap. I trust my friends and partners to not save and share unflattering snaps the exact same way I trust them to not record our real life conversations.
If you're planning to run for President some time in the future, maybe it's worth it to always act as if the public is watching. I think the rest of us are fine.
It might seem silly from the outside, but that's actually meaningful because it gets people used to the idea of modifying the "real world" with a contextual addition.
I closed Snapchat and didn't use it for the entire day. I'm boycotting the X-Men movie out of protest.
Seems you have a pretty good life.
I'll be darned if an insurance provider can make a filter fun
It's also something most small businesses can't really make good use of, unless they are in the entertainment/lifestyle businesses
Snapchat allows a follower to consume all of the stories that they follow in a single stream. You only have to tap quickly to go to the next media item. One can also skip one story and move on to the next with a single swipe.
The fact that everything has to be a direct photo or video from a phone also makes every story feel less manufactured and more genuine. For example, I can go to an NBA player's Twitter account and find that personal tweets and messages from their sponsors are completely mixed in a single feed, while their Snapchat feed is all about their day-to-day personal life (which some find much more interesting).
It's the opposite of a link blog, which is what I mostly do; I don't consider my own life to be nearly as interesting to the audience (presumed to be mostly people I don't know) as interesting stuff I can find on the Internet.
The core functionality doesn't necessarily require the network effect to be useful, unlike Facebook, so there is theoretically less reason to stick around if the monetization ramp-up negatively impacts the user experience.
I imagine that's what they do.
Then I imagine they're "deleted" off of their servers, but not before being copied to another database that they use internally which isn't attached to the original servers directly.
"...we automatically delete the content of your Snaps (the photo and video messages that you send your friends) from our servers after we detect that a Snap has been opened or has expired."
Note that the deletion model is different for non-Snap media:
"Outside of Snaps, the rest of our services may use content for longer periods of time, which means those services may follow different deletion protocols. So, for example, we retain your Story content a bit longer than Snaps so that your friends have more time to view your Story."
Disclaimer: I'm an employee of Snapchat.
I think you hit the nail on the head when you said "I think there is legitimate reason to be doubtful about the appeal of these products because they have nothing to do with chatting with friends".
In my opinion, when Snapchat is truly forced to monetize (such as twitter/fb after ipo) it will dillute the core product to the point that people will search for alternatives.
At that point a competitor will get some VC funding after grabbing some users and start the cycle again.
I view this behavior by SV to be just as damaging to the state of the tech industry as housing derivatives were to the housing industry.
I just view the constantly aging 18-24 year old demographic as the main driver of viral growth these days. As that demographic ages out a new flavor of the week will emerge.
Though I have heard the SnapChat CEO is a bit of an egotistical assclown, so he might ride it out alone until the bitter end. He also despises Microsoft, so that rules out one buyer.
Twitter's valued at only $10 Billion. Snapchat just raised at rumored $18 Billion valuation.
I sincerely believe WhatsApp could have survived independently with a $1/yr subscription. They hit a sweet spot of having a 9-digit user base, a small team and not raising crazy amounts of venture capital.
Im not going to say snapchat is or isnt worth $20b. I am going to say that I am sad that so much energy and money is being thrown at such a trivial application.
Im a software engineer, and i like solving real problems. I cant imagine working at snapchat and trying to motivate myself to be excited about its useless app.
The essence of business is solving problems that are important to other people with solutions that are interesting to you.
That sandbox is a lot bigger than the sandbox you & I like to inhabit. The set of folks interested in technical programming & startup-related news probably numbers under 100K. I was an admin for a Harry Potter fansite in college that had 100K registered users, close to 1M when guests were counted, and we were far from the largest Harry Potter fansite. The set of folks who like clickbait, celebrity gossip, hanging out with friends, and making funny faces is a couple orders of magnitude larger than that, probably past a billion.
People are very different in their refined passions but alike in their base desires. That means that anything that caters to base desires, by definition, will have a market size much, much bigger than sites that cater to refined passions.
Turns out I was right - much of the Instagram and SnapChat usage is coming out of the pool of attention that previously belonged to Facebook - but the cycle time seems to be ~10 years, and getting longer with each generation of social software. If the history of mass culture & mass consumerism repeats itself, eventually the cycle time will be greater than a generation - forms of social interaction for the baby boomers stayed roughly constant for their whole lifetime. At that point it's meaningless to talk about shifts to the next big thing, because we'll all be dead before they happen.
http://www.wired.com/2007/10/facebook-future/
So if facebook is the benchmark, it doesn't support your valuation of $200B for snapchat with 50M in revenue.
* GM * Ford * Honda
Combined. That is ridiculous and just highlights how big a bubble is brewing in SV.
We value a couple hundred million fickle users more than hundreds of thousands of actual employees, physical factories, and entire supply chain industries.
The valuation (market cap) of a company is a reflection of the value of the assets that the company owns. That includes IP, trademarks, brand assets (somewhat perversely, this also includes user habits), business relationships & contracts, any resellable physical goods or cash that the company owns, and all future cash flows that will accrue to the company. Basically, the stuff that an employee, supplier, or customer could not take with them if they chose to do business with someone else.
Now, there's also the concept of economic value, which is the value that customers of a company (or industry) are willing to spend on its product. This can be reasonably proxied by the total revenue of the industry - for your GM + Ford + Honda example, that's about $150B each, or $450B (and leaves out the 800 lb. gorilla, Toyota). That's a lot larger than the total $60-80B market for all brand advertising.
But building cars has a long & large value chain. GM + Ford + Honda can't do it all on their own. They each employ roughly 200,000 people, many of whom are relatively highly paid thanks to union agreements. They have literally thousands of suppliers that they buy parts from. These suppliers themselves need to buy parts and supplies from labor-intensive industries like mining. As a result, the company captures comparatively little of the profit from all of this work. Facebook, for example, makes about $6B in net income off $20B in revenue, while GM makes $10B in profit off $150B in revenue. This also implies that further growth will benefit companies like Facebook or SnapChat much more than it would companies like GM: if margins stay the same, Facebook gets to $10B in profits with $30B in revenue, while GM would have to get to $300B in revenue (probably not happening) to get to $20B in profits.
It's a plus, from a shareholder value perspective, that SnapChat only employs 200 or so people, and their largest expense is paying Google for AppEngine bills. It means that whatever value SnapChat creates, the shareholders will capture almost all of it. Indeed, based on how often car commercials appear on TV, it's likely that a good portion of GM & Ford's revenue will become SnapChat's profit, just like how a good portion of SnapChat's revenue becomes Google's profit.
I completely understand that from a shareholder perspective companies like facebook and snapchat are huge wins.
However my argument is that as a society these companies have very little value. I believe that the current wave of tech startups are the equivalent of shareholder junk food. I nice relatively immediate return, and no real long term value.
Was valued at 25B in 2000, ended up getting acquired by Yahoo for 235M. In terms of stocks - from $241 down to $1.63
That easy replication of the product is exactly what I'm talking about. Search engine is actually a much more sophisticated setup and even in that space multiple companies went belly up.
Those guys are all millionaires now. They don't give a shit about anything but money and extracting everything they can from their users before they fizzle out and die.
If snapchat shutdown tomorrow would anyone actually care, or would they immediately shift to the next best platform?
Compared to say a public utility, car manufacturer, global shipping company, etc.
There are real problems in the world, and snapchat doesn't solve any of them. There are real companies trying to solve these problems, and snapchat is worth more than most of them.
Our obsession with "incredible forms of communication" is in reality just a VC fueled gold rush capitalizing on the current flavor of the week.
You can say this about a lot of great companies. Toyota shuts down tomorrow, I buy a Honda instead. Sure, I wanted the Toyota, but I'm not going to lose any sleep over it. UPS shuts down tomorrow, I use FedEx. Apple shuts down, I use Android. Starbucks shuts down, I go to Peet's.
Snapchat employ's next to no one in comparison and is worth more than entire industries.
These people are already connected, they can communicate on Twitter, FB, SMS, email, phone, skype, gchat, facetime, whatsapp, line, vine, periscope etc etc.
Snapchat is just the current prom queen. Everyone wants to be her date, but in 10 years she will be working at Dairy Queen.
First you compared Snapchat to a completely different industry (automotive) to imply it has an inflated valuation (as though tangible products and heavy manufacturing somehow make a company more legitimate). When a commenter replied with an excellent rebuttal in favor of Snapchat's market position, you instead made the argument that Snapchat does not contribute long-term value to society.
When the parent commenter criticized this viewpoint by drawing a connection to HBO and countering that not all businesses need to change the world, you claimed that people don't need to be any more connected than they were before Snapchat, since they had things like Facebook, Twitter and texting. Why build different things? Why not just be content with the communication platforms we have now? How about we just don't develop things people clearly desire because, "eh, fuck it, they've got general ways to talk to each other already."
Finally you circled back around to being incredulous that a company with only 200 people could be worth more than entire industries and "supply chains." Of all the market analyses available, like margin comparisons or growth potential, you chose to zero in on the number of literal employees as some sort of indication of impact.
How long are you going to move the goal posts? You're one of the most active commenters in this thread but your rhetoric, particularly the bit involving the automotive industry, reminds me very strongly of the way in which people who are too set in their worldview can't fathom the value of new and different technology.
Judging by the political valence of your "VC gold rush" comment, I assume this is where your bias comes from. That and the automotive comparisons lead me to believe you're deeply uncomfortable with the idea that a small number of relatively wealthy, skilled elite can completely dwarf industries built by the comparatively unskilled masses all the while enjoying cushier jobs, better social status and wild employability (to put it as starkly as I can).
Follow this thinking deeply enough and it could even be expressed as simply as, "It's not fair." But that's leverage for you.
If you want to really debate about the future value of Snapchat, why not add some real nuance to the discussion and talk about its advertising platform's advantages (or disadvantages) compared to Google and Facebook?
But it can never be that simple, can it? We got to grow! monetize! have another fundraising round! justify it all with increasingly complex features of progressively marginal utility that further dilute the core funcionality that made it so popular in the first place.
Imagine if HN were to succumb to this disease, it would be a travesty.
Think about that.
In re "is this just 'damn kids these days' speak", no, I suppose I'm one of them. But if a picture's worth my while then don't make it arbitrarily temporary; if it isn't don't send it at all.
It makes no difference to me whether or not shapchat succeeds, just as it makes no difference to anyone whether or not you get their snapchat message.
(It's relevant if you're going to say that Snapchat Software Engineers' problems aren't "real".)
* Liver transplant protocols
* Military VR for PTSD therapy
* Early R&D for self driving cars
* Long range point to point wifi systems being used in Africa
* VR motion capture studio used in the most of the Marvel movies
* Built several prototype zero net energy homes
* Built several solar concentration array in Haiti with a team after the earthquakes
* Tidal energy generation prototypes
The list goes on.
You realize that social media has created tens to hundreds of billions of dollars of economic value right? Even Twitter, which has struggled has created billions of dollars of economic value. From a utilitarian perspective that is worth far more.
Respectfully, I find this "other peoples' work is shit and meaningless" attitude off-putting. As someone who does similar R&D work as you (see profile), here's my perspective: Be grateful for getting to work on interesting problems, and don't be so quick to dismiss others just because it doesn't float your boat.
I did say I would have a hard time motivating myself to work on something so trivial. It is why I turned down the job.
Scale is a solved problem, their whole infrastructure is based on Google. They brag about having 0 ops employees.
What are they actually building in house? A UI, some photo filters, and a mobile photo app.
Not worth $20b and not worth a couple years of my professional life.
I don't think making movies is trivial. It has a large effect on culture and really at the end of the day, as humans, all we have that's uniquely ours is culture (for various broad definitions of the term). Think about how much Sci-Fi movies, novels, and similar ideas contributed to our drive to go to the moon - as a society, not just a country.
Snapchat affects culture, and really what's more powerful and impactful than that? It gives people an ability to tell their story in interesting ways. It gives people a platform for expression. You get a brief, unique glimpse into someone’s actual life from anywhere in the world. This ability to affect culture isn’t unique to Snapchat by any means, there are lots of things out there that affect culture in unique, interesting ways but I don’t think their effects can be understated or written off.
I think the crux of the issue is, people have a narrow definition of "solving problems". The "problem" has to be clear cut with a clear outcome otherwise it isn't a "real problem". But I don't agree with this type of thinking.
There's something Steve Jobs said in a talk that’s stuck with me ever since. Here’s the quote: “The most powerful person in the world is the storyteller. The storyteller sets the vision, values and agenda of an entire generation that is to come and Disney has a monopoly on the storyteller business. You know what? I am tired of that bullshit, I am going to be the next storyteller”.
The rest, as we all know, is history. And really, he has a point. Just look at Facebook’s effect on global culture. It’s incredible in its pervasiveness. We’ve entrusted the group of people building Facebook to drive this effect on culture at a scale we’ve never seen before. It’s a huge responsibility and they have to balance it with business interests which as you can image is very very hard.
But to write off something with such a large, global scale is incredibly short sighted. We underestimate the effects of these things on our lives greatly.
Look, I’m not a Snapchat shill by any means. I don’t even use the product that much. But I try to understand it, and part of understanding the product is understanding the impact. Put aside the nature of the product for a minute, forget that its a photo sharing app, though that is a simplification. Think about just the scale of the application. The scale is absolutely crazy and I’d venture to say that any product with that kind of scale, engagement, and usage patterns WILL have a large impact on culture. As a Software Engineer, that is incredibly exciting to me but at the same time I see it as a very unique responsibility. We need good people building these types of products who understand the full extent of the consequences of what they’re building. The alternative, is not great.
Now whether you think the people at Snapchat have these best interests at heart is a whole different topic of discussion, but I’m tired of people writing off these huge software phenomenon as “just a photo app with no value”. That’s a lazy sentiment and I’m calling you out on it buddy!
Snapchat isn't an accident, it is a well engineered platform built by intelligent people. However it caters to the lowest form of communication that I can think of.
If Snapchat is having an effect on global culture, then god help us. The business itself may have a monetary value, based on its user base. Its product and its effect on communication is toxic, and should be viewed as the junk food of online communication.
"We wanted flying cars, instead we got 140 characters."
Go to the movies? Play a video game? Watch a sporting event? All of these are mostly meaningless but fun activities.
I think it's great that a lot of people are working hard to build fun things for other people.
The existence of the one doesn't invalidate the other. There's plenty of room in this industry for both types.
language aside, you're hitting on an important idea that a lot of people are missing:
'trivial' doesn't mean useless, but this specific type of artistic agency and communication are unfortunately the only means of expression most have when there are no economic means of personal expression (i.e. going back to college, affording consistent healthcare, paying rent without going in debt, having disposable income to go out with friends, buying materials/server-space to use as means for artistic or scientific personal expression rather than needing to rely on a pre-programed photo-filter).
there's an honest sadness to the idea Snapchat is funded so heavily when the same amount of money could be used to fund multiple small businesses who might need to integrate tech into their operations and who can create jobs for people who need them
Things that seem extremely trivial, like chat, or the ability to upload photos, become quite an engineering feet when your measuring the amount of photos uploaded at terabytes per hour or more.
Scale these days is a solved problem, there is nothing they are doing scale wise that I can't do in a couple weeks using AWS.
AWS Lambda functions make on demand filters and photo editing trivial. It is one of their demo functions.
Excuse me for being blunt, but this to me seems like a statement someone would make who has never worked at this scale.
Both high burst scale after Super Bowl ads and long running massively multiplayer games.
I am not saying that building services that operate at a massive scale is easy, but there is a wealth of talent and tools out there to help you achieve it.
The fact that all of snapchats infrastructure is provided as a service makes my point for me.
Someone like Snapchat periodically surprises GCP with millions of QPS, something AWS would deem akin to DDOS. With AWS, you'd need to carefully setup infrastructure that statically accepts such scale. You need to plan, test, deploy resources, measure, etc etc. Snapchat has to do absolutely 0 of that - they deploy code. This is a major difference between Google and AWS - with one you can setup scale, but you pay for it, and with the other you get scale as part of your service, out of the box.
Out of the box I agree with you, GCE is much more capable than AWS.
However in my experience AWS is just as capable and much more flexible once it has been setup. Also AWS Lambda functions give you the ability to "deploy code" and has proved to be massively scalable.
I feel that "carefully setup infrastructure that statically accepts such scale" is not an accurate way to describe top tier deployments on the AWS platform.
Something like this is impossible on AWS without pre-warming, pre-setup, or maybe even calling someone - https://www.youtube.com/watch?v=xT6tQAIywFQ&feature=youtu.be
Here's another example: EMR versus Dataproc.
Dataproc has per minute billing + very fast startup times (sub 90s for decent-sized clusters). So with Dataproc, you can rethink how you run Hadoop. Rather than starting with a cluster, which you fill up with jobs, you can have "cluster setup" as part of the job path. This is possible because you don't pay a large penalty in startup, nor do you pay a large penalty in per-hour billing granularity. Oh and Google is much more inexpensive (http://fortune.com/2016/01/08/google-amazon-cloud-price-war/).
The beauty of Snapchat is that you don't need to think about what you are posting: It's ephemeral, it's kept close to the vest (you choose explicitly who sees it), and above all, it's without reservation. I don't consider the appropriateness of my content because I choose exactly who receives it, just like how in real life you probably speak differently around your friends than you do your co-workers, or your family, without really thinking about it.
Snapchat provides a medium for users to share content without the baggage of social validation that other networks like Twitter and Facebook are beholden to (intentionally and unintentionally). Nobody can see how popular your content is but yourself, and you control the reach down to the individual. No other content network is like this.
Plus, you can draw bunny ears on people.
Exactly why it holds no value at all for me.
On Snapchat, the communications are all shortly lost to the sands of time, like most real-world interactions. This has a big effect on how people orient themselves with the app.
I'm not saying it is or isn't worth $XX billion, but it's not something to disregard without any thought.
Perhaps someone with some experience can shed some light here, if you joined snapchat 2 or 3 years ago are you seeing all of your supposed value evaporating away?
https://media.licdn.com/mpr/mpr/shrinknp_800_800/AAEAAQAAAAA...
With this latest round it exceeds $20 billion.
I hope that's not the case.
It is just more people that snapchat has to pay back after an exit before they pay their employees.
Snapchat employees around 200 people, that works out to 9m per employee for this round.
I am 30+, use it occasionally, and see more and more of my older friends signing up. Especially those friends far away from the echo chamber. This fundraising feels smart for investors who want a great return and for the company to use to get to an IPO.
If you don't use Snapchat, or haven't used it in a few years, it is probably time you take a second look.
I have no problem with snapchat the app. I think it is dumb, and don't enjoy using it, but that doesn't mean that it shouldn't exist.
What I do have a problem with is Snapchat being put on a pedestal, and perpetuating the SV cash grab business model. Get a bunch of users with a trendy app, data mine the shit out of them, and serve them ads until the app folds. There is no lasting value, and it is just the kind of rampant speculation that collapsed our industry in the past.
FB acquired Instagram for its user base. Amazon acquired Twitch for its user base. Google acquired Youtube for its user base.
How many snapchat users do you think also use those apps? How much additional value is being extracted from them via snapchat?
That's one of the reasons they are so valuable - data. Data is so valuable to companies - it gives them insight into how consumers behave. Gett Taxi just raised $300M from Volkswagen and it's not because of their tech. It's because they have data on how urban residents move and travel. Google released TensorFlow and gave everyone access to easy to use and super advanced neural nets and they do this because it's not actually their algorithms that give them their competitive edge - it's their data. More data beats a clever algorithm every time.
I think Snapchat can be profitable at some point but it would have to be a blockbuster in terms of revenue/profit to justify an 11-digit valuation.
You would think people would be a little more skeptical after watching the twitter downward spiral.
It's useful and fun to a large number of people and definitely has some non-trivial value.
Does it have enough value to justify this kind of money being plowed into it? That's where I'm not convinced. These are big numbers and for them to ever make a return the revenue growth would have to be really really huge. I can't see Snapchat becoming Google or Facebook since its interaction profile is too narrow and brief.
We're basically talking about an ad-engagement and profiling medium here.
Google has huge value as an ad platform because they serve ads at the time of maximum intent -- their ads are targeted to what you are looking for right now and so they're more likely to convert than ads served at random times.
Facebook has huge value as an ad platform because they have so much data to target ads accurately and gather metrics about who engages with them. Many people use Facebook ads not as primary ads to drive conversion but as 'probes' to develop customer profiles, so it's almost like a focus group as a service.
What monstrous value is Snapchat going to provide in this space that will generate returns higher than the S&P 500 on many billions in investment over the next, say, 10 years?
1. http://www.slate.com/articles/technology/technology/2015/01/...
1. Understanding that the whole point is to lower the bar of entry for visual communication because it's low risk
2. The "Stories" aspect lets me get intimate with my friends around their day to day, when I can't be around them.
2.a. Watching others who aren't my friends who are giving good or interesting info is incredible to me. Snapchat actually allows for lifecasting in a way that is not obtrusive or complicated as it only requires a few seconds at a time.
Those things are pretty breakthrough for communications IMO.
(I was pretty stoked when I saw the "Hide all from Buzzfeed" option on Facebook.)
It's the cynic in me, but by a series F, and needing 2 billion, this feels like the sort of funding where early investors are propping the valuation of Snapchat in order to sell off to someone like Yahoo for a crazy amount of money, where the product will go and eventually die. All in the name of advertising. I guess I just don't get it.
The $250-$350m forecast for 2016 is completely reasonable. Hitting that target still means a 60x valuation (and props to Snapchat for getting that kind of valuation these days), but I don't think it takes a delusional investor to see Snapchat passing $1b in just another year or two, and soon going well beyond that.
They probably don't need 2 billion but can grow faster by making use of this money instead of going for some aggressive monetization. I don't get why everyone acts like Snapchat is unable to monetize the platform — they just don't want to if they don't need to yet.
I'm not convinced that's true. Reportedly, in 2014 they made 3.1 million in revenue and -128 million in net income [0]. I don't think a difference that's two orders of magnitude is a function of "not wanting" to monetize the platform. I'm convinced they're a <100 million/yr in profit product.
[0]: http://gawker.com/snapchat-lost-a-ton-of-money-last-year-170...
"the company has estimated that revenues will be between $250 million and $350 million for 2016, and between $500 million and as much as $1 billion for 2017."
Incorporating your numbers, what I see is a business that is plausibly on a path to grow from $3m to $1b in revenue (~30,000% growth) in 3 years.
If you an investor targeting growth companies and you pass on an opportunity like this, you should be fired. Snapchat isn't General Mills, and it should not be valued using the same approach.
2) Also from TFA: "Snapchat’s revenues in 2015 were $59 million (recall that there was no real monetization effort in the first part of the year, and only the beginnings of it in the latter part of the year)."
I'm not privy to any internals at Snapchat, but based on the other metrics in the article, the projections are not implausible at all. But yeah, it's still not appropriate for people whose idea of risk is owning Procter & Gamble.
1,800 Million, right? Stop me when the math goes wrong.
Divided into bundles of 200k: 9000x.
Let's say each member of a team costs 200k/yr. High for some, low for others, whatever.
1.8B dollars is enough money for a team of OVER NINE THOUSAND people.
What... exactly is taking that much effort, here? What is this money fueling? I honestly boggle to imagine.
More realistically, the money is probably for tech overhead. Server space, software licensing, money for keeping all their servers working for a while (support, replacement servers/drives) etc.
So a combination of them not having their own infra like FB does, and just the nature of the data they are responsible for is very heavy.
> paying off initial investors
In reality it is just everyone trying to get their foot in the door so that they can get a piece of that sweet "unicorn" pie.
Snapchat runs entirely on Google Cloud Platform, and have famously declared that they have 0 Ops people because everything they use is fully-managed and no-ops. This is one of the reasons they are able to deliver features at such a rapid pace - they aren't worried about scale or reliability the way anyone at the scale is on-premise or on AWS/Azure.
There is no such thing as no ops. Only someone else doing ops, no more than I can have TensorFlow write code instead of developers.
Some folks discuss this more elegantly - http://www.cloudtp.com/2016/01/21/dont-let-vendor-lock-in-fe...
You make a good point on No-Ops vs Ops. I think it's a gradient. I also think that Snapchat is on the far far left (on No-Ops edge) against virtually any other large-scale technology company in the world, Google included (singe Google is Snapchat's Ops largely), largely because of the nature of Google AppEngine.
It takes minimal effort to scale infrastructure these days, which is fantastic.
It also reinforces that there is nothing special about snapchat besides its user base, which is mirrored on half a dozen other social networks.
Can you expand on this? How/why would anyone developing a potentially high-traffic app have to worry if they are e.g. leveraging AWS fully? How does that compare to google cloud?
You can certainly replicate their scale on AWS/Azure.. or Google Compute Engine for that matter.. but you'd need to do a whole lot of non-trivial work around scalability, durability, etc etc. Snapchat runs light on this front, allowing them to focus on launching features rather than keeping the lights on. No one even remotely close to Snapchat in scale runs as lean as they do, and that luxury is afforded largely by Google AppEngine.
Let's be very clear here. It's afforded largely by Google AppEngine and lots of cash.
I've been using it for a few weeks to send a picture or two to the few people I know who use it, but it seems pretty limited. I follow a few "famous" people on it, and they basically just post random images of them walking around NYC or them traveling. I don't yet see the benefit.
The big breakthroughs never happen. We just continue to iterate and A/B test ourselves into a convenient oblivion.
Eventually we increase the ease of texting to the point where we're reading minds and the user never has to touch their phone.
I may be serious, I can't tell.
The Snapchats of today are just looking to do things differently enough to make some coin before the real next big thing arrived. It's like how much customization for AIM and other desktop messenger accounts existed before smartphones, but then after smartphones became ubiquitous, there is no "profile" or anything that takes up real estate. Just your name and your messages.
Going back to industrialization, just look at bikes. There were zillions of kinds of bikes in that era but nowadays we only really know 2: on-road and off-road. So even if things seem crazy now, it will only be crazy in retrospect as we live through a more technologically reasonable future.
Mainly, I use it to follow sexy Instagram "models". I also add vacation photos to my story to make my life look more exciting than it typically is.
It's kind of depressing.
Also being able to send a quick video or picture, or do a live video call is nice too...
Most people complaining haven't even used snapchat or know of all its features.
As someone mentioned earlier, it's less intrusive than a call, and gets information across more efficiently.
On facebook you only upload posts/pictures that matter, on Instagram you only upload pictures where you look really good or a picture of food (I personally hate it, unless it's something unique) whereas on snapchat you'll send pictures to friends where it doesn't matter how you look.
I mostly:
- (text) chat
- receive selfies, cat pics, random day-in-the-life stuff
- send selfies, cat pics, random day-in-the-life stuff
- occasionally screenshot a snap, the other person immediately gets notified
- view people's stories (i.e. a public snap)
- sometimes directly reply to a specific story (they see the story in question)
The 'Discover/LIVE' section, for sponsored content, I basically never use, so I can't comment on it. Once, I clicked the LIVE for Formula 1 in Dubai, and it was a compilation of short videos and snaps from other users at the Grand Prix, which was cool.
I like that several UI/UX decisions are geared towards positive reinforcement:
- everything is private, friends-only, recipient-only, ephemeral by default
- each recipient has to be selected manually, so you if you get a snap you know they specifically selected you
- you can see who viewed your story
- you can't see who views other people's stories, so you won't compare yourself with popular people like on Instagram
- you get symbols next to your friends' names that show how frequently you interact (https://support.snapchat.com/a/friend-emojis)
What I found was the limited and spontaneous nature of snapchat works well because it is much less formal and easy than a Facebook or Instagram post that I have to "compose".
I.e, i can take a silly picture of my dog and put a sticker on it and fire it out there, without having to worry about shot composition/hashtag use (Instagram), or content/grammar (FB)
That's exactly the draw for many people, and why it's so sticky. It's about as close to a genuine in-person conversation as you can get. I don't think of it as low quality, just low reach. I speak more colloquially around my friends than I do my employer, and I like Snapchat because it similarly allows me to communicate "at ease".
Facebook - Accomplishments/events I want shared out to a broad network. Highly "filtered" view of my life (and my friend's lives).
Twitter - Less content but less filter, more off the cuff thoughts or broadcasting something I find interesting to a broad network of followers.
Snapchat - High content, no filter. Snapchat photos can be "bad", things in them can be mildly inappropriate, and the broadcast distance is relatively small.
If you don't personally see the value of a low/no filter network with your friends, then it probably isn't for you.
Snapchat (if they used it) would be a good way to stay casually in touch with them.
I don't really get it, but she sends me goofy pictures or videos and I'll do the same. Could easily do it over imessage/txt and we do sometimes. I think she mostly digs the "my story" fanout aspect of things.
Facebook just recently released watered down emoji reactions. Snapchat has it made - they have infinite emojis. You just make a face and hit send.
hijack#2 (slot machine): you get a notification when you receive a snap but you don't know what it is until you open it
hijack#3 (Fear Of Missing Something Important): snapchat stories disappear after 24hr, so if you don't wanna miss content from your friends you must make sure to log in at least once a day
hijack#4 (Social Approval): when you post a story you can see how many people viewed it
hijack#5 (Social Reciprocity): when someone sends a snap to you personally and not to their story you feel compelled to send something back
Remember Secret? Founders got $3M while investors with preferred stock even couldn't recoup their loss.
I can't help but think employees with common stock are always the losers here. Founders' "common stock" is really given preferential treatment -- it's obviously more liquid. Your average employee didn't get to sell his shares directly to some poor VC before the company went under.
only logical thing is founders taking a load of money off the table
If anyone from Snapchat is monitoring this convo, I would implore you guys to prioritize your API rollout. Provide the tools that allow your users to be able to make data driven decisions. Building an ecosystem of creators who can figure out how to monetize their Stories better than any one else can is "the key"
There are programmers who are interested, there is a public that could be convinced. All we need really is to solve the human problem or aligning money with incentives.
There should be a high quality social network where you use personal filters rather than relying on central intelligence to do the heavy lifting.
Rather than be beholden to people who are willing to invest billions in a free product so that they can traffic ads and/or data mine.
I think Snapchat has had mild success with monetizing Discover and Stories. However, I think correct course of action is moving from a incentivizing content distribution role to incentivizing content creation role. For example creating partnerships. What you have right now are middling ready to explode and fame driven celebrities like YouTube had before partnership incentives. Snapchat is exactly there in their timeline.
I feel as though that has failed to materialize, and their new demographic is "relatives over 50 desperate to appear 'hip'"
Evan: "I'm coming for you, you know you'll have to buy it all sooner or later, try not to insult me with your next offer!"
Zuck: "In your dreams kid!"
I think Zuckerberg is extremely paranoid about Facebook being displaced. Facebook knocked MySpace off the throne, and everyone predicted Facebook would suffer the same fate. It hasn't happened because Zuckerberg has been strategically paranoid.
Even after getting a slow start in mobile, he threw ridiculous amounts of money at the situation until they were back on top.
I think the present-day VR hype is due to Zuckerberg being paranoid that VR would be the next mobile, and wanting to get ahead of it. Everyone followed his lead and people are betting the farm on VR being the next big thing, when that's just not clear at all. But for Facebook, spending $2B on Oculus was an ounce-of-prevention purchase.
Surely he (Zuck) will run out of cash and stock with which to make $20 billion dollar acquisitions sooner rather than later?
While Facebook may be less hip than it once was, the company now owns mobile (Facebook, Instagram, Facebook Messenger, WhatsApp). They would have loved to had Snapchat too.
Snapchat might be worth a lot, but I'm just sick of companies like this being valued so high, simply because they provide literally no benefit to society.
If Snapchat went down tomorrow, would it really affect anyone? Nope, the World would keep on spinning.
It's time to incentivize people to make a difference, not build photo sharing apps. There are real problems in the world that desperately need to be solved, yet we're getting rich off dick picks and calling ourselves the "innovator of the century." Yeah...no thanks.
What if there was a committee of experts -- leaders in the field -- who decided what startups got investment? They could truly weigh the cost-benefit analysis.
Of course, it would only work if there were some enforcement mechanism. So unauthorized coding would need to be outlawed. At least you couldn't spend any money on it.
We'd have to pick the right experts, too. That shouldn't be too hard, we could start right here on HN! Lots of smart people. The free market is so random, amoral, and inefficient. Obviously a group of well-educated, experienced software engineers could allocate labor way more efficiently.
This can't fail. When we get the pesky market out of the way, the sky's the limit! Progress together! History marches on!
The value of something is typically a combination of different values, not just the intrinsic worth to society.
"they provide literally no benefit to society"
broadly could apply to lots of industries. Movies, TV, pro sports, music, tourism, etc. People will take issue with the inclusion of some of these, but that's the point: "no benefit to society" is entirely subjective. Another way to look at it is the benefit to society is "fun", and that people value fun things.
So while I am in general agreement overall, I think it's not really fair to single out tech companies for being exceptionally efficient at providing the "fun" benefit to society.
They're busy working.
VCs should change? Fine, be the VC who only invests in ideas that have social impact. There are tons of VCs like that. They don't get a lot of LP money, but some are doing just fine.
Maybe the LPs should change? Fine, be the LP who doesn't invest in a VC who's investing in Snapchat. You can explain to your investment committee why you're missing out on returns, and when that means that a State pension fund can't pay teachers their pensions -- well there's a fair argument that better returns are good for everyone.
Maybe it's the consumer's fault? Maybe the consumer shouldn't enjoy Snapchat? The great thing is, you're free to not enjoy Snapchat.
Do you think it's the government's fault? Maybe they should prevent people from enjoying Snapchat, or incentivize something else?
I get it: you think there should be financial incentives from the government? Is that it? Tax money to go to the "right kind" of startups, the ones that would get praise on HN from Serious Engineers?
Well, that sounds to me like "we can't get people to voluntarily invest in these ideas, so let's coerce the public into being LPs in risky ventures that weren't good enough for private markets." And, so: no thanks, I'm good.
Having your messages disappear was kinda cool, but they're starting to ease up on that a little (you can re-view some snaps, always possible to screenshot the app to save the picture). The whole dog-face, barfing rainbows thing is getting tired now, everyone knows how these work, it's nothing special any more. They have some sponsored content, but the user is under no obligation to view it.