Comment by wf | Hacker News Reader

Comment by wf | Hacker News Reader

Alright, I really can't take it anymore. Is there any good literature explaining why users of Snapchat are worth this much? From my limited perspective it seems a lot of the services valued so highly for their user base have an incredibly hard time generating revenue from those users, particularly from short lived services like Snapchat. I keep seeing "promise" and "expectation" but what are those things when you're talking money? I read on NBC News estimates put the number of users at 50-70 million. What kind of ad revenue can you expect from that many users in an app where interactions are short lived on a single screen? What would be the conversion rate on IAP?

I'm extremely skeptical this company could be worth this much. 10 billion / 70 million is $142 dollars per user. (Supposedly this metric means something as FB paid $42 per user for Whatsapp?)

Not to mention, how does a company with the leadership this company has get valued this highly? I would think when the Controversy heading takes up 70% of your Wikipedia page that would negatively impact your business, obviously this is having the exact opposite effect though.

For investors, controversy is seen as meaningless (and sometimes as a good thing) unless it's hurting the business. In the case of Snapchat, it hasn't. As for making money, one shouldn't judge their ability to do so based on how the product looks today. More than half of Facebook's revenue now comes from mobile, a product that they only perfected a year ago.

It seems like Facebook had a relatively clear path with already having the news feed. Keeping users on a single page absorbing information with ads intermingled unobtrusively, but with Snapchat I'm in any of three views for just a few moments before I close the app again; all that to say, I just don't think it's a very good comparison.

That's the point I was making. As it is now, it's hard to see where they would fit in advertising or whatever. It's better to look at the product as a foundation. Having tens of millions of users using your product multiple times a day is a good starting place to build on.

So apparently a mere starting place, which may or may not yield any actual profit (in an unspecified amount) via an unspecified method at an unspecified date in the future, is worth $10,000,000,000, about four times as much as Google's IPO, keeping in mind that Google had a real profitable business plan at the time?

Perhaps a future user has to tap the promoted snap before it deletes in order to "find out what happens next" or "get a coupon code." This would make the CTR (if that is what you could call it) of the sponsored snaps high, but you're still trying to convert teenagers.

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