Snapchat has raised $485M more from 23 investors | Hacker News Reader

Snapchat has raised $485M more from 23 investors

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74 pointsdrum107 comments

I have never used Snapchat so I might be off here but if I understand correctly, its main distinguishing feature is the ephemeral nature of content shared with it.

I find the concept of imposing artificial constraints on apps/interactions fascinating. Twitter was arguably the one to popularise the idea with its 140 character limit (perhaps by accident, the limit was initially there to support SMS) and now Snapchat (ephemeral posts). Are there any other apps that play on this theme?

Makes me wonder if there are other apps out there waiting to be "constrained". Here's some dumb ideas off the top of my head. What about a social network where you can only have 10 friends? What about an email inbox where you are limited to receiving X emails/hour (perhaps senders could bid on delivery priority?). What about a HN where you are only allowed to comment once a week? What about a continuous delivery system where you are blocked from releasing after you reach a quota of defects (I heard Google uses such a quota system internally)? What about a package repository which rejects packages with over 150 lines of code or some other quality metrics?

> What about a social network where you can only have 10 friends?

Path (https://path.com/) originally started as a social network where you could only have 150 friends

The limit was originally 50, then they changed it to 150 (and then 500?) and then removed totally.

That's unfortunate, I quite liked the concept of limiting the size of your social graph to one you can actually manage.

Seems like good idea in theory, but what if you have 50 friends and you want to add a new one? The network will force you to delete one friend.

Might just mean that you need to reclassify how close people are before you think of them as friends. I know lots of people, but I don't really want to interact with them on a regular basis.

It was a concept that techies seemed to like, but restricted its viral growth by design. In reality, not many people care enough about their "social graph" to curate and restrict. It's sort of why Google+ really diminished its "Circles" concept - a large percentage of people made a few circles and just lumped everyone in those, rather than multiple heterogeneous circles.

Reminds me of Slashdot's mod system where you were only given five mod points at a time at (IIRC) random intervals.

The Atlantic has a one-link-a-day social network, http://www.niemanlab.org/2014/08/this-why-atlantic-media-is-...

The next frontier in this respect is in the recruiting field.

Hello LinkedIn ;)

Oh yes please. Linkedin has been feature creeped to hell and hardly a minimization in purpose at all.

Imagine linkedin stripped down to a singular perfect professional profile? Instead of a maze of categorizations, all vaguely similar and meaningless.

Unfortunately, as is the case with all social networks, the functionality is secondary. Ubiquity is the game and sometimes that momentum is established just by being first.

I'm unsure if I'm doing it right but I've never used LinkedIn to secure an interview or job for that matter. I haven't met anyone who had done the same either and my Facebook LinkedIn friends list is basically 1:1.

I wonder what it would take for a MySpace Facebook migration for LinkedIn.

A significantly better product and/or at a lower price point that has enough marketing and buzz to spur a mass exodus.

There's a tipping point wherein there's enough momentum among a competitor to at least induce someone into signing up, if not fully converting.

In this respect, the feature would even be to hide the profile.

I think it is mainly to catalyze the certain interaction among users.

Instagram has restrictions on the aspect ratio of pictures.

Sometimes I like to consider an analogy between social networks/apps and bars. Just like a bar has a certain decor or a unique beverage or some other quirk that gives it its charm, each popular social network has some different constraints that give it it's unique feel.

> Instagram has restrictions on the aspect ratio of pictures.

I definitely think this is one of the reasons Instagram is so popular, together with the low resolution. It lowers the bar for when a picture is as good as it gets which makes people more prone of posting it.

wasn't Path, the restricted social network?

What's the next big thing in social networks? Are there new social networks apps that are trending right now?

My younger girl cousin told me it's still Snapchat for her and WhatsApp is so 2013. The artificial restriction to one device bothers her (no website version).

A friend lost his WhatsApp chat conversions as someone stole his phone.

How about a video recording app that punishes you for shooting vertical.

This talk of bubbles reminds me of 2007 when everyone, including all the experts, was certain Facebook was a bubble at a valuation of $15 billion after Microsoft invested; now it's worth $200+ billion. Then in 2012 after Facebook's hugely publicized botched IPO and Nasdaq error, all the experts again said the web 2.0 bubble had burst; the stock price and earnings have since doubled. Unlike the big blowups of Friendster, Myspace, Digg, etc..these post-2008 web 2.0 valuations have proven to be extremely sticky. Pinterest, Twitter, Dropbox, Air B&B, Tinder, Snapchat, Whatsapp, Uber, Instagram...all keep going up with no end in sight, year after year until either IPO (which finally creates volatility) or buyout. There's hardly any big failures or blowups, except perhaps Zynga and Groupon (although it's still worth $5 billion). My prediction is these web 2.0 valuations will keep rising for many years to come because that is the path of least resistance, and the investor demand and user growth for these companies is seemingly unquenchable. The unending web 2.0 boom and unending wrong predictions about its demise show how these 'obvious' parallels to the old tech bubble of 1995-2000 are just so wrong. There's more at play here, such as the investor flight to quality (more money chasing fewer companies), huge user growth, huge monetization potential from smartphone engagement, the very large millennial population that use these services, and ability of these web 2.0 companies to carve out niche dominance and then keep it. Within the next year or two, we're probably going to see Uber being worth $100 billion before IPO, Snaphat $50 billion, Tinder $10 billion, Air B&B $50 billion, etc. Take every valuation and quadruple it. Back in the 90's, $100 million was a big deal; now that's just a rounding error or the equity of just a single early employee. Insane, but very prosperous times we're living in. And it's got a long way to go.

There were plenty of cheerleaders back in the late 90s too, saying it's just the beginning.

Most of the social companies have yet to really show they can be profitable other than being bought out. Valuations are often grossly overinflated.

AirBnB and Uber are both skirting regulations and pushing risks onto their userbase. Regulations or a few continued instances of bad PR could pop their valuation bubble in an instant.

Compare companies overinflated valuations with how much they are actually being sold for or how much they're getting through IPOs.

I feel like Airbnb and Uber are both large and popular enough, at this point, to push regulation in the direction they see fit. Anyone standing in their path will be labeled protector of the old monopolies and anti-consumer.

Regulation change doesn't benefit only Uber though. It benefits all current riding sharing companies, as well as any future ones that might join the fray. In that sense, regulation change doesn't increase Uber's intrinsic value at all. If Google, for example, joins the ride sharing game then Uber will be in serious trouble.

Google Ventures is a major investor in Uber - does Google often invest in companies that they go on to compete with?

If they can build an entire fleet of automated cars? Abso-freaking-lutely. How much would you be willing to pay annually to not have to own a car but have one available at your fingertips at any time? My car payment + insurance comes to be about $7000/year. Throw in gas prices and we're probably at around $10,000 per year for my vehicle.

Factor in my girlfriend and our household is at around $20k.

If Google can charge me $10k-$15k annually to not own a car but be able to have it available all the time? What's $10k * 137,000,000? [1] At those levels, the failed Uber experiment can be a whimsical write-off. Or perhaps it's a strategic venture to handle some of these pesky regulations we're always talking about Uber fighting.

I don't want to own a car. I just want to have the freedom to be mobile at a moments notice.

[1]: http://cars.lovetoknow.com/Car_Ownership_Statistics

The problem is the underlying market for Uber (taxi and hire cars) can't generate enough profit to support their current valuation. When you add in that Uber and similar companies are destroying the monopoly rents that the industry was enjoying then the problem is even worse.

Maybe in the US (but I think thats debatable). Not certain for the Rest of the World, for example the EU sees regulation as being pro-consumer - it protects the consumer from bad practices from a company.

To me, its clear there is a non-zero risk that both businesses could get squeezed by regulation - the investors are betting that there won't be an impact from regulation or that the cost of following the regulation will be worth it (which you'd expect if you've got the scale to follow through).

The thing you should keep in mind about stock market commentators, amateur or professional, is:

"If this person actually knew what they were talking about, they would be investing and making a fortune, not telling me about it"

It doesn't matter how smart they are, how many awards they've won, or how successful they've been in business. If they're making a public post about it, it's because they don't really know anything. If they knew, they would keep it quiet and invest.

you can do both though can't you?

if you think company X is going to do well, you invest in them, and then comment about how amazing it is. (That might drive up the price even more).

That is actually a common fallacy.

If you know what you are talking about, it is still in your interest to let everyone else know after you have purchased shares so that your shares will rise faster and higher.

Just because you are confident that something will go in a certain direction without telling everyone, doesn't mean you won't benefit from doing so.

As many economists like to say, markets can remain irrational longer than you can remain solvent.

Your saying really only applies to trading algorithms.

Yes it is called talking your book. Very popular.

The concept of a valuation being overinflated for a company that's trading publicly is kind of hilarious.

It's worth exactly what it's trading for at any given moment, by definition!

While I agree with this sentement in general, the market price can be distorted by supply constraints. Ask all the people that shorted VW back in 2008 and got caught up in a short squeeze that made VW the most valuable company in the world [1].

1. http://en.wikipedia.org/wiki/Short_squeeze

I agree with you but I think Uber will devaluate to some extent and I don't see Tinder surviving...

The mainstream narrative, by definition, is always wrong with respect to investing, whether it be skills, tech bubbles, etc. The best thing to be is against consensus and correct, as fb was back in '06 when it was clear to everyone from middle schoolers to rupert murdoch that myspace was the ultimate in social networking. So, what say you about the future?

I believe what you're saying is "this time is different."

No, it isn't.[1]

In the ascent phase of the bubble, everyone but uber-bulls is proven wrong. But what matters is whether what is happening today in terms of valuations and capital raising/spending is sustainable. I believe it isn't. AirBnB or Uber or what have you may be a great business, but a great business can be a lousy investment at the wrong price.

So you may continue be right, in the sense that share prices may keep going up, but that doesn't mean investors participating at these levels--or at the quadruple levels you forecast that may indeed come to pass--are being rational.

What's happening now doesn't have to be exactly like it was in 1999, just like what happened in 1999 wasn't exactly like the Nifty Fifty stock bubble of the late 1960s.

PS I had a front-row seat in 1999, as I worked for a well-known VC firm on Sand Hill (still there, still well-known).

[1] http://papers.ssrn.com/sol3/papers.cfm?abstract_id=240371

The current boom is the classic case of the market can stay irrational longer than you can stay solvent. While I agree that the valuations are detached from reality, there is no way I would attempt to try and short any of these "new darlings".

>after Facebook's hugely publicized botched IPO and Nasdaq error, all the experts again said the web 2.0 bubble had burst

I'd dispute Facebook's IPO was botched if you are treating it as a real business rather than a bubble stock. With a real business you may as well sell stock for what buyers will pay and if the price subsequently fluctuates then that's what stock prices do. The idea that flotations must be underpriced so you can give the impression of price growth and get more investors later is more of a Ponzi scheme way of doing things.

While I can't speak to the intent of the grandparent, independent of pricing strategies, Facebook's IPO was botched at the execution level: NASDAQ fell over under the load and transactions were a big mess [1].

[1] http://dealbook.nytimes.com/2012/07/01/facebook-not-feeling-...

EDIT: upon re-reading, sounds like this is exactly what the GP was referring to.

I completely agree with the more money chasing fewer companies idea. I think this interview with Marc Andreessen explains why there is more money for fewer companies: http://www.vox.com/2014/6/26/5837638/the-ipo-is-dying-marc-a...

The average investor loses in this scenario. Back in the day, retail investors could invest in the growth of companies. These days, the companies don't IPO until they've already grown to be very large. Definitely doesn't help the wealth gap

I wrote a response to that

https://www.linkedin.com/pulse/20140801044817-921366-marc-an...

Snapchat originally set out to raise $40 million, but demand for the round skyrocketed, and it decided to shoot for an ambitious $900 million instead. When that didn’t work out, it dialled it back to $500 million.

Mind boggling.

On what does a software company spend half a billion dollars?

Other software companies. Lawyers.

Marketing, enterprise sales? Also, snapcash.

Marketing.

You don't spend heavy marketing dollars on a free app. (Not in the way most people would define "marketing", anyway.)

This is what I was thinking. And they wanted even more than that! I can't fathom what $900 million would buy, but it seems like at a certain point, it'd be in their interests to stop giving away equity, no? $900 million is a big chunk of a company pretty much regardless of valuation.

split it evenly between the employees and all retire

So really, they have no clue how much they need/or what to do with the money then. The difference between 40 and 900 Million is quite staggering.

I always thought if you raise money the investors want the money back in the end. Maybe they want even more than they invested. So if a company raises more money than some of the old players of the game who actually having big revenues one has to think how much revenue the inverstors expect from this company in the next years. It seems like everybody only bets on Snapchat being bought by a bigger player which is a strange model of buisness case because there is no value but only assumptions generated. I believe (and that is very subjective) that that kind of investing is sickening the whole industry, it feels more like some sort of speculation which caused already problems in the banking sector. But it will be fine as long as the majority plays along. I found myself feeling rather conservative when I think about a valuation of one of those startups comparing them to other companies and for me that doesn't work out. Maybe it's because the whole market changed the last few years but maybe it's the b-word. I look forward to find out.

I'm incredibly curious about how they're planning on monetizing, considering that that recent stab at pushing micropayments was a major flop. Ads that aren't full-fledged 'snaps' (and don't feel spontaneous) seem like a sure way of pissing off their userbase. Stories seem like an effort to push for fb's ads strategies, but whether this will pick up and become a real competitor is questionable.

Props to them for not getting acquired though, and pushing on.

It doesnt matter. As forrest pointed out, users are king, monetization can be delayed to infinity as long as someone with billions of dollars wants said users. Snapchat is far more engaging with younger users than fb, and fb is valued over 100 mmm. As I said awhile ago, rock on, Spiegel and Murphy.

Yeah, but Facebook is valued that much because it actually makes a lot of money right?

Has Snapchat made a dollar?

>I'm incredibly curious about how they're planning on monetizing

they have just got 485M - sounds like a successful monetization to me :)

Isn't that bubble logic?

I'm curious, can you point to some numbers regarding micropayments in Snapchat being a flop?

It seems like Yahoo! makes more money investing in other companies than it does as a company. They seem to invest lots of startups, including this one, that end up being huge.

Let's waste an enormous amount of resources to create Yet Another Messaging App. That's exactly what the industry and humanity in general needs to advance!

Yea but but... this one is different. It it... well... it deletes the messages automagically too! Well worth the billions, don't you think?

It's still difficult for people sitting outside North America to make sense of these high valuations. To me, dropbox and youtube were even interesting case studies. It all seems quite simple now, but in the initial stages, people wondered how they are going to make enough revenues to recover the infrastructure costs. But I have begun to see a clear trend in how the Social Apps, Sharing (Rental) Economy apps, and Ecommerce are behaving at different places across the globe.

100 Million users of a social app in US (followed by other western countries) are several times more revenue generating than the developing countries. The one metric that matters here is the Average Revenue per User (ARPU). Mobile advertising is growing in second and third world countries, but still lags behind. Not to say that users elsewhere are any less useful; Facebook has a huge focus on the Indian Market.

Apps for rental(sharing) economy, Uber et al, work more evenly everywhere, since they bring a straight cut out on the amount paid.

The segment that seems to works most at par globally has to be Ecommmerce. Amazon committed a $2Bn investment in India in 2014, as Flipkart got over 1.5Bn in funding.

Big raises like this are primarily secondary. Probably someone like lightspeed selling out (was mentioned in leaked email http://www.businessinsider.com.au/snapchat-ceo-evan-spiegels...).

My rule of thumb for awhile has been that if you can get one hundred million users (100,000,000) you can sell your company for one billion dollars ($1,000,000,000). It doesn't matter if you have any revenue or not, 100m users = 1b dollars.

Snapchat is at 200m users, but has doubled since August. If you think it's headed for 500m users then 10b is only a 2x premium for an unusually large pool of users in one place.

WhatsApp sold for 18b with 500m users. It was headed for 1b users so 18b is a similar 2x premium.

At first I thought the math didn't work but I guess it does. Users are king. Engaged users are directly convertible to money.

Engaged users are directly convertible to money.

I don't see how this is a given. Monetization is no simple task, otherwise Snapchat etc... would have a fairly straightforward way of implementing it without disrupting the core business. Last I checked there is no good strategy and the in-app purchases doesn't seem to be working that well outside of games. The idea of push ads like they are doing with their snapchat self-promotion stuff is a recipe for disaster from unsolicited companies.

making money is almost never a problem. Everyone says it is and then the said company blows the doors off expectations . Facebook did it with mobile in 2012 when all the experts said it couldn't be done. Mobile engagement is higher than desktop. Look at amazon and how long wall st. has ignored profits. All the company need to do is flip a switch and the money will pour in, and the users won't leave either, despite all the predictions that they should.

Maybe Snapchat should sell that money switch to Twitter. So far, they're only alive by raising more and more money. Same for Splunk, box, and others.

Look at amazon and how long wall st. has ignored profits.

Totally different. Amazon has revenue - they just take that revenue and pump it back in. Snapchat etc... doesn't and can't even prove they will have revenue.

Establishing a monopoly is more valuable than monetizing, which is what Snapchat has. You can monetize later, but you can't snatch all the users later.

Monetizing users is hard as hell. Selling highly engaged users to investors to let them take a crack at monetization is easy. That's the conversion I was referring to.

That's a shell game. It's not how you run an economy - not that Snapchat or its investors are trying to make a fundamental industry.

The reason I even say that is because of the dollar figures thrown around. The numbers for this shit are staggering.

Scarface: "In this country, you gotta make the money first. Then when you get the money, you get the power. Then when you get the power, then you get the women."

Slashdot formula for startups: 1. Idea. 2. ?? 3. Profit.

What I think it is: 1. Users 2. Power. 3. Profit.

Daily repeat traffic.

First, not all users are equal. It could be that the userbase of Snapchat is especially important (being young trendsetters) rather than the mass of users joining because all their friends are there.

Second, when Facebook bought WhatsApp, it wasn't for monetization but for taking a threat off the market. WhatsApp and Facebook compete for the time of the same users; I don't think you could ever put the actual financial value of WhatsApp at $20b; but it could very well interfere with the plans of your $100b+ business which goes after the time and networking effect of the same users.

I feel like at this point Snapchat and Facebook are playing chicken. This will end up as an acquisition deal. Snapchat could never monetize to warrant that valuation, while Facebook would pay a lot of money to, again, win the engagement of these users slipping away from its platform. There aren't too many ways Snapchat could translate its paper value into cash: only an IPO (not a chance, they're not IPO material) or an acquisition by Google, Microsoft or Facebook (others aren't big enough for placing this bet, and Apple doesn't seem to care enough about services to make such an acquisition, especially with the slightly shady element of the Snapchat concept).

So Snapchat and its investors will come together to push the value higher and higher until one of the tech giants break and buys the thing. I doubt Snapchat remain an independent entity while justifying this valuation. They are in competition with the next big thing.

Users are king? Is that different than eyeballs?

Honestly, I am surprised Snapchat is still around. I never receive or send Snapchats to my friends any more. About one year ago me and my friends used the app on a daily basis, it was fun and you could send funny things, now it is mostly dead whenever I do check it.

It was only ever a trend. They should have sold it when they had the chance to sell to Facebook, because if the numbers are to be believed, they're not doing that well. Eventually we will see Snapchat either pivot or die.

I think you're completely wrong here. My 7th grade cousin is on it every minute of every day (battery-permitting). So are all of his friends.

I don't think you're the target audience (but I don't know how old you are, sorry!). Truth is, pre/young teens are all over Snapchat and Instagram, and I don't really see an end in sight.

As long as Snapchat has a good case for maintaining the monopoly on ephemeral messaging the valuation is pretty reasonable. It's the best thing since IM and nobody else seems to get it. FB messenger could shake things up, but they seem reluctant. It's hard for any social/messaging incumbent to do it without cannibalizing their existing user activity. And they have 2 patents which may or may not be valid. My prediction is 1B users by 2016.

I wonder about the wisdom that hardware is cheap and programmers are expensive. "One source said that Snapchat has an over $30 million-per-year burn rate, and pays half of that to Google Apps Engine to host all its photos, though this number seems low to us."

With interest rates near zero for the last 6 years, what is really the value of money?

could you elaborate or be more specific?

Yes, The Federal Reserve has lent to banks since 2008 at a ~.15 interest rate. Banks then turn around and lend to you or business at a hire rate.

The reason that you are not getting interest on your bank account is because the banks don't want your money when they can get it from the federal reserves at cheap rates.

The federal reserves in 08 wanted consumers and business to spend money instead of keeping it in savings to spur the economy. (Let's not forget ~70% of GDP is consumer spending) Some will argue it has worked, others will argue it hasn't worked.

Snapchat is an example of an unintended consequences of very low interest rates.

http://en.wikipedia.org/wiki/Federal_Reserve_System

http://en.wikipedia.org/wiki/John_Maynard_Keynes

I don't see what any part of this has to do with the VC economy and you have not elaborated. None of the $485M is coming from banks. VC's (the 23 investors) don't borrow money from banks to invest into Snapchat, and LP's (their investors) don't borrow money from banks to invest into the VC's. And anyway these funds were mostly raised years ago. So I just don't see even a third-level connection (which would add years to the effect becoming visible.) Snapchat isn't something everyday individuals or banks are investing in - these are investments by VC's with funds already set aside for this purpose. If there's a closer connection with low interest rates, you haven't made it clear to me.

Not sure if I can really explain a complicated economic system in a comment section.

Please feel free to invest however you see fit, if you think that VC, stock markets, interest rates, speculation, investments are not intertwined, best of luck.

In the meantime I'll just leave this right here.

http://www.washingtonpost.com/blogs/wonkblog/wp/2014/07/22/j...

Probably I am alone here but I think that Snapchat is the biggest innovation in the social space since Facebook and not just because of it's ephemeral nature. Let me elaborate and give my view why I think Snapchat is great and one of my most used apps.

- To start, Snapchat changed my communication behavior heavily. Before Snapchat people used any kind of messengers when they had a clear intent to start an interaction with another person. With Snapchat you just send something. You do not want to start a conversation, often you just share what you do right now, how you feel and very often it's so close to what you are and not some polished something you would like to be. You share emotions in forms of pics also on Instagram and Facebook but this is different since the emotions you present there are highly curated, see below for more.

- There are no 'likes' and this is wonderful. The existence of likes sets us under pressure. If we post something on Facebook and do not get a single like it's embarrassing and leads to postings which are only of outstanding nature painting a distorted picture of our life. Facebook is anything but not reflecting reality.

- Sending and selecting a few contacts is so fast and I do not know one single app which has a slicker process. This again leads to so much more honest and personal messaging. Since I target on other platform many more people I have to take care about my postings. On Snapchat I can quickly select a bunch of people and leave those out who might be bored by a single snap.

- The process of taking a picture is different than with the stock camera of a phone. You take a pic which is NOT saved—usually it's immediately saved and if you do not like it you have to go the the gallery, delete it and confirm again that you want to delete it. This is very annoying if you take selfies. Snapchat turned this around and once you find the right shot you can send and/or save it. Small thing but so convenient.

- Features like slide-in filters, painting on the pic, amazing video calling are just nice amenities but again show that Snapchat's interface is just great and miles beyond other cluttered UIs.

- One feature which I want to mention is putting text on pictures, no rocket science but again sometimes so funny and shows similarities to those meme generators.

- Finally, the ephemeral thing is not the key feature but it's the brand and the DNA of Snapchat, everybody knows that there's no privacy, people can screenshot the snaps and share it, period. But it's about being oneself and understanding that the pictures are just 'throw-away products', no shiny thing kept forever. This again leads to a very honest snaps. Snapchat is not about looking good.

I encourage everyone who doesn't 'understand' Snapchat's success to try it, it strengthens the relationship to close contacts and friends much more than other 'social app'.

Magic Leap raised $542M and I don't know of anyone that uses their product so there is also that http://www.campaignlive.com/article/google-puts-542m-augment...

will be interesting to see what happens when the rest of the VC's get back to their offices on Monday.

Is it worth of it?. I dont think so.

I like Snapchat, I still can't grasp their plan to become the next great thing but at least they have a lot of users and their users 'don't want to leave'.

I always thought that Facebook were too big to fail, like in no one would close their account because of what they've invested there (friends, pics, etc...); yet, people are leaving it at an unprecedented rate. I remember Facebook desertion not being much more than a statistic even a year ago, now it's pretty common to encounter people that don't have an account there anymore. I think that the bandwagon effect that is behind the growth of online communities is a double-edged sword; once the trend shifts to users leaving, the more they leave the more users are likely to leave later and everyone snowballs out until there is no one left. Fortunately for Facebook, many of those peers left because of WhatsApp/Instagram, so business' still in the family... for now, albeit much less profitable. Sooner than later, FB will be gone and its place will have to be filled up by something else. Snapchat has a seat reserved in the post-FB era and apparently that is worth at least $20B.

Anyway, derailing the discussion a little, I'd like to hear what you'd think if 'Core Facebook' went out of business right now (but not WhatsApp/Instagram). Would you consider it a success or a flop? Was it a profitable endeavour or not?

I don't have a Facebook account but I do have WhatsApp and Instagram. I'd use a Facebook standalone messenger that didn't require a Facebook account to communicate with those that do if such a thing existed. I closed my FB account a year ago and I don't miss it at all. Sure there are times where someone asks if I saw something and it was only posted to FB but that is so rare now.

I imagine that one day I'd use many Facebook properties without ever encountering the news feed.

I'm pretty certain you can have a Messenger account with just a phone number, no FB account required.

> people are leaving it at an unprecedented rate.

[citation needed] (Even among teens Facebook's growth has not slowed much, let alone unprecedentedly.)

You make a fair point, I said that just from an empirical standpoint. As in, at the beginning of 2014 only a couple people didn't want to use Facebook and mainly because of dissident/im-not-like-everybody-else reasons (i.e. everybody was there, so much that there were even some reluctant to join). At the beginning of this year, probably 4 out of 10 of the people I meet do not have significant activity w/ the site, and the reasons are more substantial, like in 'because I don't like it anymore' (i.e. not everybody is in there anymore, and now people is instead reluctant of staying there). That's unprecedented and me and those people are exactly the demographic that drives the gain or fail behind these things.

> You make a fair point, I said that just from an empirical standpoint.

Usually when people use the word "empirically" it means they have some actual empirical evidence to bring to the table, not just random anecdotes.

If 40% of any segment of Facebook customers had substantially reduced their usage in the past year, that would indeed be unprecedented. I don't see a shred of evidence to support that supposition though.

But that's what empirical means...

It is what I saw in the past year, but you are right, I can't provide a completely verifiable and correct statistic to support my argument. Neither is it going to exist, because I don't think Facebook will ever state 'yes, we are going out of business'.

Must be hard to live your life based only on actual evidence all the time man. I can't imagine how much time do you invest verifying everything. Kudos for that.

well likely those people realized that all facebook really is a medium to exhibit your ego and that it's shallow and for narcissist. nobody posts facebook about what's really going on with their lives. nobody instragrams about things that makes them look bad.

>I'd like to hear what you'd think if 'Core Facebook' went out of business right now (but not WhatsApp/Instagram)...Was it a profitable endeavour or not?

Core Facebook probably would have been profitable. They declared after tax earnings of over $2bn for 2010-2013. I dare say they raised over $20bn from investors but much of that went on WhatsApp & Instagram.

In reality of course they are not going out of business right now and are worth quite a few billions.

They're worth $217b to be exact and have an EBITDA of $6b (on $11b in revenue).[0] They are effectively "printing money" at this point.

[0] - http://finance.yahoo.com/q/ks?s=FB+Key+Statistics

I would assume that evaluation includes all of Facebook, not just the core portion.

What exactly is "core facebook"?

FB without WhatsApp or Instagram (see the GGGGP)

But thinking about it more, my earlier post wasn't relevant to this thread since the message I replied to was just expanding upon the idea of Facebook printing money and it should be okay to include Instagram and WhatsApp revenues there.

I find it hard to believe that it is worth 2/3 of what google is when the revenues are 6 times lower, less diversified (if you can call oculus rift an investment). Printing money seems like an overstatement, they are financing it largely at a cost and I just don't see how you can monetize what essentially is facebook, a free chat device inferior to skype.

Social networking is based on communication. If we can say it is some kind of segment, given the market size does not change rapidly, any alternative emergence in communication leads to potential losing market share for existing players. Snapchat as a way to communicate is definitely grabbing the market share now. So as long as they can grow well, it will become the true next big thing(if they are not one already). I think the market share of communication point of view could provide some help to understand this. I found this out not long ago and believe this is one of the key dimensions to know the landscape better. I have not given any more deep thoughts on this yet.

I don't see fb going out of business anytime soon because their more lucrative market (middle-agers who actually have money, rather than their kids who don't) isn't going to be jumping ship. They're completely captive and the switching costs for people in their 30s-60s is so much more mentally taxing than for teens & young adults.

What I also notice about FB is that people are using it entirely for chatting.

The bubble has reached it's peak folks.

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