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Comment by robmil | Hacker News Reader

It's at such a fragile point, though. Monetising a previously entirely free service is risky at any time, but there's lots more risk than usual here (fickleness of audience, existence of competitors, fundamental simplicity of offering).

We've seen plenty of startups fail at this point before; is there anything to suggest Snapchat will beat the odds?

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Assuming an average valuation/yearly revenue ~= 20 it means that for $3.5bn the should make $175m a year. If they have 350m photo shares a day (!!!) this number seems very well within their reach. They can even afford to monetize less aggressively and thus more user-friendly. I think it's one of these cases where numbers are so huge that they work in their favor whatever they do.

20X revenue would be a really high valuation even for a SaaS business. 6-10X would be more likely in the long run.

The company is very hot right, basically selling expectations thus I think well above 10x. In any case $350m with these kind of numbers still seems very feasible. Won't you agree?

When Twitter had ~$140M in revenue their price was ~50x revenue.

Source: http://www.quora.com/What-are-revenue-multiples-for-technolo...

It's a fair point, but to be honest, I think if anyone is OK with an ad-supported product, it's teens. They're used to free services being supported by ads. They get the tradeoff.

So I don't think the ads will drive them away, but they are an inherently fickle group, so something that is shinier, newer, and doesn't have every parent on the world using it will always be appealing.

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