Comment by joering2 | Hacker News Reader

Comment by joering2 | Hacker News Reader

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> And if I acquire Snapchat, that gets me.......what?

It gets you solid 3-7 years of billions of eyeballs to monetize from, and nobody is better at monetizing than Google or Facebook.

There are 2 reasons why GOOG/FB are interested in picking Snapchat up. #1 user base #2 traffic. No other reasons.

#1. When FB strategist comes to Zuckerberg, he tells him: "listen this company is making dent in our traffic. If its continue the kids that abandon FB for Snaptchat will create $XX billions (sum A) of a hole in ads sales. So you need to go out and offer X% of sum A and pray they accept it.

#2. When FB ads vp come to Zuckerberg, he tells him: "listen, here are my ideas how we can serve ads to those billions of eyeballs. This will create $XX billions (sum B) of profits for Facebook. So you need to go out and offer X% of sum B and pray they accept it.

Thats it.

As of whether its a "startup" or not, I say it is exactly for the reasons other says its not: revenue (or lack of it). I don't think you can call a company "startup" only when they have a business model and or revenues. Snapchat through millions of uniques proved to the world they do solve some kind of problem, even if its as silly as flashing photos of a drunk teen for 5 seconds.

Edit: so the wisdom of the day would be: build a service for a huge user base that is important to facebook (youngsters), preferably on mobile (that is a future of computing/socializing).

Revenue (or lack thereof) doesn't determine "startup" status and I never said it did.

A startup according to Blank is a group if people in search of a business model. I am making the claim that SnapChat is not searching for a business model, but rather an exit -- by being a juicy component to someone else's model.

> I am making the claim that SnapChat is not searching for a business model, but rather an exit.

And you base that on the fact that they just declined $3B from FB, and presumably $4B from Google.

Sure, they built all that service to decline both offers and close down the doors. Sure, Snapchats owners and VC are mentally ill and they declined buyouts because they are not searching for a business model themselves.

/sarcasm.

You aren't taking into account the value of money to people that are already rich.

Also, they have the scale to start testing monetization, but they are not, because they'd rather increase the value of their exit to an acquirer by growing users.

They want a larger exit.

@wpietri

> People build companies to flip all the time.

This doesnt seem to apply to SnapChat as they just decline huge exit offer. I mean what bigger proof you need than $3B ?

> They could just be young, foolish, and arrogant

you mean VCs with hundreds of years of experience (combined) that do VCiing for living? Don't think so.

@wensing

> They want a larger exit.

Most likely not. Did Facebook look for "a larger exit" ?

There's no reason to think that they're planning to build a real business. People build companies to flip all the time. Sometimes they turn down offers because they think they can get a better deal later. Sometimes they're wrong, and end up deeply fucked. The stakes here are higher than normal, but the patterns are the same.

Note that they don't have to be mentally ill to turn down a big offer. They could just be young, foolish, and arrogant. College-age entrepreneurs are known for many things, but humility and wisdom are not items typically mentioned.

It gets you solid 1+ years of billions of eyeballs to monetize from, and nobody is better at monetizing than Google.

I updated the statement to reflect what I think would be a best-case scenario for any acquisition. I think Google could monetize it the best, but then they would put the Google-plus-kiss-of-death on the service, and that would be that.

The strategy of rolling yet another billion-dollar-picture-based-app into the fold at FB would be a tired story. They've been ineffective in monetizing FB, they haven't yet monetized Instagram, but they'll be good at monetizing Snapchat? I don't think that's a good bet.

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