Rejecting Billions, Snapchat Expects a Better Offer
nytimes.com
nytimes.com
I also think a lot of people (myself included) find it hard to comprehend how much money can be made selling stickers in messaging apps. It's mind-boggling, and Snapchat, processing 350+ million messages a day, is in a very strong position to leverage that eventually.
All that said, I'd accept a $3B cash offer in a heartbeat if I were in their shoes. I wouldn't be confident in Snapchat's long-term survival. It might double its user base in the next year and then swiftly die when the next fad comes along. I feel that timing will be critical here. If they wait too long, they could lose it all.
(Edit: I actually read the article after my post and saw the section about Benchmark Capital's $13 million investment. The rest of my comments still stand...)
Now if you meant they have built such a large following that a buyout is inevitable, and/or they stand to make a lot of money by introducing a business model into the equation, then I'd agree. However, that does not change the fact that the owners are incredibly greedy not to accept a $3 billion cash offer, especially considering the fact that there's no guarantee they can come up with a viable business model at all. Now that they've turned down an arguably hugely inflated offer, they may have made a huge mistake in the long run.
Let's not forget that Snapchat isn't exactly a difficult product to clone, and the only thing going for them right now is user numbers. If they introduce a poor money-making mechanism into it, users will not hesitate to flock to the "next big thing" instead of forking over cash or dealing with intrusive ads.
Hard-nosed seems like a better term. In many cases indistinguishable by obserbation, but Greed is both pejorative and moralizing. Absent special knowledge of the principals state of mind, its use also seem presumptory.
You can look at this another way -- Maybe greedy would be taking the life-changing amount of money here, and they're not because they actually like their jobs.
I'm not trying to be difficult; I really don't understand this statement. Are you talking about paper-and-adhesive stickers, like my kids use to plaster Strawberry Shortcake everywhere? What do those have to do with messaging apps?
http://thenextweb.com/asia/2013/07/12/stickers/
Line is now supposedly making $10M/month just from these stickers.
Thank you for clearing that up though. I had no idea that such things existed.
Excerpt From: Nick Bilton. “Hatching Twitter." — “Biz and Ev had driven down to Facebook’s campus a few days earlier to meet with Mark. Like most meetings involving the chief of Facebook, it had been almost unbearably uncomfortable”
Looks like founders don’t want to work for Zuckerberg. Any company looking to sell to Facebook would need a 50% Zuckerberg premium.
Even FB itself listed Zuckerberg's voting power as a potential risk on its own S-1 filing. ”So long as the outstanding shares of our class B common stock represent a majority of the combined voting power of our common stock, Mr. Zuckerberg will be able to effectively control all matters submitted to our stockholders for a vote, as well as the overall management and direction of our company.”
What's to stop Zuckerberg from just directly diluting every other shareholder ?
(and of course, that's exactly what probably happens right now, because Zuckerberg gets more stock options yearly than anyone else, so his voting power does not dilute over time)
Please don't see this as an attack on Facebook. It's hardly alone in doing this. And I do agree that Zuckerberg is probably a lot more qualified to run Facebook than any (set of) investors. Still, why take the risk that he might "cheat" ? Why are these shares selling ?
In 2010, Google offered to buy them for $6B. One year ago today, GRPN hit its lower point in history: its marketcap was less than a third of what Google offered originally. Andrew Mason was fired after soon after, after missing estimates, again.
The stock recovered considerably since then ($6.9B market cap today), but it's a reminder for young entrepreneurs that the market is ruthless with one-trick ponies.
Unless you have something on the table from Facebook, I fail to see what's their long term strategy.
"Q: A company wants to buy us, what to do? A: Sell"
I don't think truer words were ever spoken.
Are they really taking themselves that seriously?
Dropbox could get away with it, they have a good source of revenue. Not something like Zynga.
Then you can use the 3B to either go on vacations or build something even cooler.
Edit: nmb found it: http://www.jamesaltucher.com/2013/08/the-ultimate-cheat-shee...
You can't buy that with money.
If Instagram's 1B was already excessive what's 3B for Snapchat?
You're mentioning valuation, but the 100M do not exist. Yes, things have the value they are bought/sold for but selling 10% of something ends up skewing those values.
Yes, it's a definitely cool experience. The you can pocket the 3B and go have another fun experience with another company (or even at the same, unless the company is absorbed/shutdown)
Facebook is willing to pay it, investors are willing to pay it. That's the definition of valuation.
Oh yes, if Facebook is willing to pay for it, the price tag today is 3B (and I would definitely go for it because I think it's worth less than that)
They need to be profitable one day.
November 2013 - 350 Million Photos Per Day
That's some serious growth. Seeing that much growth over a nine month period probably has a huge influence on why they think a better offer will come around.
I'm in my mid 20s, and I already don't get Snapchat. When my friends use it, I almost feel like they're trying to stay attached to being young - like they're sending each other snaps simply because it's "what kids these days do". Isn't that the textbook definition of a fad?
I am not really sure who would offer Snapchat more than $3bn. Maybe Google will buy them out of fury, over all the data they're deleting (can't organize the world's information if it's getting deleted).
Also, there's no way they're actually deleting all of those snaps, right? That's sure to be a scandal at some point, when someone figures out how much of the data they're keeping. Maybe not the images themselves, but I'd love to build a network out of the "who sent snaps to who" data.
“I’m facing a crisis in this industry, said Mr. Ma. “Young people, the things they like on the Internet, increasingly I don’t understand it. This is my biggest worry.”
I don't know what that says about what kind of software I should be building, if it says anything at all.