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Comment by mrweasel | Hacker News Reader

Well maybe not zero, but certainly not anywhere near $24B. There is no clear way of injecting ads into Snapchat, and in many markeds users could just revert back to SMS at no cost, so charging for the service will only work in some markeds. Assuming that engaged users equal profit is more or less the reasoning that brought us the .com bubble.

I won't suggest that that one could'nt turn a profit on Snapchat, but one false step and those 300 million users will leave faster than they came. They've already been taught that Snapchat is a free service, that will be hard to change. And VCs are ready to fund the next Snapchat the minute that the IPO hits, so the users won't have to wait long for their new free alternative.

Snapchat is a fun opportunity, if the price where $10-20 million.

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Sorry, but this is nonsense. Snapchat already has 2 forms of ads (paid filters and sponsored stories), and $400m in revenue on "only" $450m in costs. Saying SMS will replace snapchat is like saying horses will replace airplanes; anyone under 30 with a smartphone is way past that. For me, only a little older than the main snapchat demographic, it's replaced most of my use of Hangouts (which replaced SMS, but is basically interchangeable with whatsapp/whatever as far as I'm concerned), and completely replaced Facebook. If I used twitter, it probably would have replaced that too. I have several snapchat friends that I literally don't even have their phone number.

Get a few big celebrities using the snapchat glasses courtside at an NBA game or from backstage at a concert or something and watch snapchat explode. I was at a wedding with those glasses and you should have seen how much everyone of all ages loved the glasses.

If their valuation was <$10B I'd be all over this IPO, just $24B seems way too high to me (I also think the whatsapp $19B was ridiculous). Their only risk is being replaced the way I think snapchat will replace Facebook (although I don't think Facebook will completely die), which as the evolution of websites and smartphone apps has shown no one can predict.

Their expenses were over $900m, I don't know where you got $450m from.

You're right, the linked article says "cost of revenue" was $450m which I assumed was a non-technical term by a writer trying to pad the article out, but the S-1 has it all broken out including that. With everything else it was over $900m. The S-1 has it defined as things like their infrastructure costs (bandwidth and such?).

> Well maybe not zero, but certainly not anywhere near $24B.

Sure that's a reasonable opinion, one that I agree with.

> Snapchat is a fun opportunity, if the price where $10-20 million.

This is just out of touch. Show me another platform with the level of reach, engagement and usage that SnapChat has that's worth less than $5B. You realize Snap have generated $400mm in revenue last year right? I think you just have a fundamental misunderstanding of the product, the company, and their place in the market.

> There is no clear way of injecting ads into Snapchat, and in many markeds users could just revert back to SMS at no cost, so charging for the service will only work in some markeds.

There is a very very clear way of injecting ads into SnapChat and that's what they've generated the $400mm in revenue from. In fact, it's the same method that Instagram stories uses - sponsored story ads placed between organic stories amongst other media centric partnerships.

network effects and product vision are pretty valuable, maybe not 24B, but certainly way more than 20m

Facebook also IPOd with minimal profits, 300 million users who would never be willing to pay for the service, and hordes of VCs ready to fund their competitors. Snapchats mileage may vary, but facebook now generates lots of ad revenue.

This is exactly what I meant, thank you for putting it so eloquently.

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