People need to stop focusing their criticism on how stupid the app is or how they're going to lose all their users. It's almost a meme by now of how people say this every time Snapchat is brought up. By now it's a foregone conclusion, and requires active ignorance and not really caring to keep an open mind, to continue to hold onto that belief in the face of tremendous evidence that 1) Snapchat is very popular, 2) Snapchat has been around for 5 years now and hasn't gone anywhere, and 3) Users of Snapchat use it very actively.
Personally, I think one good way to see why people use the product is to 1) be in a relationship, and 2) regularly send pictures of what you're doing / funny things you've encountered / your face, back and forth with your partner.
Where I feel like there is legitimate criticism of Snapchat is their ability to monetize. Unlike Google, there is no purchasing intent. Unlike Twitter or Facebook, there is little ability to target users beyond age/gender/location (and no amount of computer vision in the short term will change that). Their Discover / Live products (which allow you to see snippets from brands / news channels / publishers) are promising but unlike the core product, I think there is legitimate reason to be doubtful about the appeal of these products because they have nothing to do with chatting with friends.
I don't think anyone is debating the popularity of Snapchat.
I think you hit the nail on the head when you said "I think there is legitimate reason to be doubtful about the appeal of these products because they have nothing to do with chatting with friends".
In my opinion, when Snapchat is truly forced to monetize (such as twitter/fb after ipo) it will dillute the core product to the point that people will search for alternatives.
At that point a competitor will get some VC funding after grabbing some users and start the cycle again.
I view this behavior by SV to be just as damaging to the state of the tech industry as housing derivatives were to the housing industry.
I don't buy this scenario. The failure scenario I have in mind is their monetized products fail to catch on, and they are basically like Twitter - no other products that directly compete in that niche, but not a cash cow either. Or WhatsApp - very popular, not a cash cow.
I just view the constantly aging 18-24 year old demographic as the main driver of viral growth these days. As that demographic ages out a new flavor of the week will emerge.
Common misconception: Twitter has actually pretty steadily increased its revenue per user. Their issue is that their user growth has basically plateaued far short of the ubiquitous level they need.
Sure, but the statement that they were unable to monetize the product is incorrect. They have successfully monetized the product. They (so far) have been unable to keep the user base growing at a rate that a public company generally requires.
I know people who have worked at Twitter. Twitter's systems cannot be run, even in maintenance mode, by only a few people on AWS. Not only would Twitter crash / crawl to a halt on AWS, but that's not even enough people.
I think it's more probable that their value will come down from bubbling heights and someone will buy them. To me chat models aren't sustainable without it working in line with your other verticals. It's too hard to monetize. IMO no chat platform can survive without being attached to another product or service; or just a vertical that is similar. Not in the mobile age it's not. There are too many chat apps as it is. FB Messenger, SnapChat, WeChat, Slack, Skype, iMessenger, WhatsApp, Viber, Hangouts, GChat and that's not even all of them. There's no way there is enough market room for all of those. The sector will consolidate and imo will come back to the mean of there being maybe 4 big companies behind them. Really, if I'm Twitter and want to stop my stock from tanking, I get a line of credit and buy SnapChat. It actually makes sense with their model more than any other.
Though I have heard the SnapChat CEO is a bit of an egotistical assclown, so he might ride it out alone until the bitter end. He also despises Microsoft, so that rules out one buyer.
> IMO no chat platform can survive without being attached to another product or service;
I sincerely believe WhatsApp could have survived independently with a $1/yr subscription. They hit a sweet spot of having a 9-digit user base, a small team and not raising crazy amounts of venture capital.
I think paid providers can survive, but not ad backed ones. Skype has a paid offering for example and has a business platform, Hangouts has a business platform integration. Hard to do that with something like SnapChat, if you ask me. Eventually if everyone is collecting data, that data is going to become less valuable per user, so using that for valuation becomes nonsensical.
It's equity value is not all that relevant during a buyout, there are different swap methods, etc. It's not unusual for a company with a smaller market cap to buy a larger one. A lot is to be considered, ebitda, debt, liabilities, cash flow, book value etc. I also said that their valuation will eventually fall. We are in a private equity bubble, but credit is still easy to come by.
It's also the most widely used AR implementation - if somewhat trivial and non-complicated.
It might seem silly from the outside, but that's actually meaningful because it gets people used to the idea of modifying the "real world" with a contextual addition.
This. The sponsored filters show up in my friends stories all the time. I also see sponsored filters based on events and location. I actually find myself watching the sponsored stories pretty regularly too. It's a great way to fit news into small bitesized chunks, and I can't imagine the buy in for those is cheap.
They may learn to use those trinkets. Just imagine a button that says `Buy for $0.20 the X-Men Wolverine Mask filter` or just detecting user patterns: They detect an user mostly uses cat-faces filters, so they try to sell her cat-faces filters. Or that her snap-chats are mostly on restaurants, so they show her some restaurant ads with the same color filters she likes.
Fucking pissed me off to the max, actually. This week, they did X-Men lenses and REMOVED the face swap and picture swap features for the entire day. If I wanted to use lenses, it had to be X-Men for the whole day. What PM green-lit that shitty decision?
I closed Snapchat and didn't use it for the entire day. I'm boycotting the X-Men movie out of protest.
I'm a heavy Snapchat user and just sending stuff to a partner doesn't seem to be the main use case nowadays - it's stories (basically a video equivalent of Twitter and Instagram mushed together) or throwaway group sending.
Hey Peter. What's the point of stories? Seems like a more limited version of Twitter - you can post photos and videos on twitter too... and there you have 21k followers. Surely a better place to post stuff if you want to reach an audience?
It's mostly about the user experience of the follower, I think (more than the fact that the stories go away after 24 hours).
Snapchat allows a follower to consume all of the stories that they follow in a single stream. You only have to tap quickly to go to the next media item. One can also skip one story and move on to the next with a single swipe.
The fact that everything has to be a direct photo or video from a phone also makes every story feel less manufactured and more genuine. For example, I can go to an NBA player's Twitter account and find that personal tweets and messages from their sponsors are completely mixed in a single feed, while their Snapchat feed is all about their day-to-day personal life (which some find much more interesting).
Interesting. So the key point is that you're encouraged to talk about yourself and not other people or things?
It's the opposite of a link blog, which is what I mostly do; I don't consider my own life to be nearly as interesting to the audience (presumed to be mostly people I don't know) as interesting stuff I can find on the Internet.
It has a different use. If I'm posting links or stuff, it'll go on Twitter. If it's random insights, it might go on both. If it's real life, usually on Snapchat since a lot of people who follow me on Twitter don't care about my day to day activities, moving house, etc. Snapchat is for a closer, more personally involved audience. I unfollow people on Twitter who constantly post personal crap there but expect and enjoy it on Snapchat.
The monetization piece is interesting, because unlike FB, Snapchat has been all about privacy and anonymity from day one. Their recent ToS change makes it clear that this might not always be the case, and I'm really curious to see how their users react as they get more and more aggressive on monetization.
The core functionality doesn't necessarily require the network effect to be useful, unlike Facebook, so there is theoretically less reason to stick around if the monetization ramp-up negatively impacts the user experience.
I think you either misinterpreted the employees's comments, or they were mistaken. Our deletion policies are clearly outlined in our privacy policy (Snapchat.com/privacy).
"...we automatically delete the content of your Snaps (the photo and video messages that you send your friends) from our servers after we detect that a Snap has been opened or has expired."
Note that the deletion model is different for non-Snap media:
"Outside of Snaps, the rest of our services may use content for longer periods of time, which means those services may follow different deletion protocols. So, for example, we retain your Story content a bit longer than Snaps so that your friends have more time to view your Story."
Then I imagine they're "deleted" off of their servers, but not before being copied to another database that they use internally which isn't attached to the original servers directly.
I don't remember that. People thought that Facebook couldn't match Google-level ad revenue, but the monetization model was abundantly clear for Facebook as soon as it became obvious how much personal data they were tracking. Facebook IPO'd in 2012, at which point it already had over $4B in revenue, and had been generating revenue for years before that.
The much better example is Twitter, which people did indeed say wasn't monetizable, still isn't profitable, and has absolutely tanked since its IPO.
There were lots of question on whether they could monetize on mobile when they IPO'd. I think their stock went down 33-50% from their IPO price until they showed they could make the transition.
All the data showed that Twitter wasn't monetizable, yet people still threw huge valuations at it.
There is nothing wrong with building apps and platforms that don't have clear paths to monetization, I just don't see why any sane VC would ever invest in one.
Because good VCs make money on the ones that successfully monetize, not on consistent 10% ROI. That kind of return is great, but just be a PE firm if that's your goal.
Naw man, that's just how it goes in VC world. You have to play it like that. It's like a roulette table -- hard to hit a number but pays out 33x. Well, similarly, a very successful start-up can pay out 100-1000x and easily carry the other losers.
The difference is that Facebook was within reach of cashflow positive at all times in it's growth, ie if they fired non-core staff could be cash flow positive within months (source: Mark Zuckerburg talk I went to). It had ad's from within the first few months of existence, that was Saverin's role before he left/was fired but they always built that part of the business and revenues always scaled with expenses.
I actually see Discover as their only redeeming feature. The interface is fantastic for mobile. They should just publish a set of Discover tags that sites can use to format their content for it, and let people use Snapchat as a browser. As a messenger, it's...just another messenger.
The interns in our marketing department use it. I asked them to explain it to me, and they did. I still don't see the point in it. But everyone under the age of 25 does seems to see the point. And the advertising on it brings us business.
look, I am all for giving snapchat the benefit of the doubt (or I did a long time ago) it was actully the classic zuckerberg boardroom story peter theil tells all the time, except zuckerberg was yahoo to snapchat(i think yahoo was the aquirer but IDRP). Mark Zuckerberg was a the full package, a super talented developer and shrewd business man. Maybe he was cocky, maybe he was super clever, but he doubled down on himself because he knew his business, he knew his customers, he knew the product, and he mapped out the next 2-5 years in his head already.
Snapchat turning him down was an echo of that enthusiasm and market knowledge. Quiet determinsim & with only that to go on, the market assumed it was a zuckerberg story: knowing much more than everyone else and being able to see the companies future.
That was bold, and that took guts to do what snapchat did, and turn down money. However, facebook grew up in a totally different time. After 7 years facebook raised slightly less than this capital raise and it was just fundamentally a better/different company. But chiefly, Facebook's value materialized after this as Mark expected it to. By value, I mean on many levels. Snapchat's has not. The product hasn't evolved (again I don't use it, but apparently) very much. Facebook, adn the team stormed pictures, mobile, developer centric apis (becoming a core authentication cornerestone and identity tool), streamlining feed data, and matching algorithims. Snapchat, to a non-user, appears to fall flat in positive significant improvements. There seems to be one feature I have read about that is relatively new, that is universally hated. It is the only thing I have read about that seems like a departure from text messages I can never see again.
First off, advertising revenue was super important and a semi-reasonable monetization strategy back then. Facebook had officially won the network effect social game. It was the beneficiary of the largest social network to exist, ever. Also, their content was aggregated and stored and has been for a decade. They have massive amounts of user data and a distribution network. You really can't replicate 5 years of content in a single place and a network that is ~1/10th the size of earth. Facebook is google for people, it is a search engine.
Snapchat does not have a clear monetization strategy and the content they have is ephemeral. If a snapchat clone came out tomorrow, snapchat wouldn't be as sticky. Snapchat looks like twitter, the poster child for massive high engagement with disposable content and horrible biz fundamentals. In fact, twitter or facebook could clone snapchat probably super easy and enjoy crazy leverage and synergy. The only reason a 3rd unknown party can't is network penetration.
The thing about twitter, is that it is a realtime sentiment protocol that allows data-mining by forcing humans to condense thoughts into a single data object called a tweet. Creating your own data transmission protocol and having end-to-end control of it has huge potential. They can distribute their api & data objects to news, politicians, entertainers, hedgefunds and also allow advertising and purchase execution.
Uniting this data object with something like a hashtag allows them to track global trends. Where as Snapchat allows you to send dickpicks to horny girls you want to sleep with. So I am all for people trying to procreate and I have even had sex once or twice myself, but snapchat has a worse monetization strategy than twitter, and they really would need a facebook size IPO to pay back investors.
FB raised 16B in a horribly botched IPO. That would 10x the last money in, which has probably horrifying ratchets and clawback clauses. So, an admittedly super popular app that has existed for 5 years doesn't justify a 16B ipo at 100+B in 2 years like facebook did unless they think they can charge like $1 like whatsapp did, but that proved to be shitty for them. Was that acq. worth it? IDK, but certainly no PE firm would do it, only a huge company based 100% on realtie social connectedness.
I don't want to hate too hard, snapchat is cool (i don't use it myself) and many people find it a staple of their day. Especially trnedy demographics like postlennials. However, if my generation (millenials) is any indication, these kids are going to have way less money, be much less willing to pay, and came out of the womb with adblock, ublock and a propensity to jump around numerous social networks.
edit: fossuser pointed out, which I had forgotten/totally missed, that post facebook/snapchat deal facebook did clone snapchat with poke in a 2 week sprint and spent the next 1.5 years hacking on it. It did fail, and they shunted the project. Here is the IBM advert fossuser was speaking about and the Evan Spiegal quote[0]
"Snapchat does not have a clear monetization strategy and the content they have is ephemeral. If a snapchat clone came out tomorrow, snapchat wouldn't be as sticky. Snapchat looks like twitter, the poster child for massive high engagement with disposable content and horrible biz fundamentals. In fact, twitter or facebook could clone snapchat probably super easy and enjoy crazy leverage and synergy. The only reason a 3rd unknown party can't is network penetration."
This is fundamentally wrong. I'm an advertiser and I have seen so many Snapchat campaigns work tremendously well for brand advertisers. All for large established brands who are spending solid amounts with the platform.
Much of the hard work is ahead for the platform in terms of measurement and clear steps to defining and achieving ROI metrics such as awareness, brand uplift all the way through to DR elements such as traffic, leads, mobile installs and conversions.
The company makes huge strides very often updating media packs, incorporating measurement (Nielsen) etc. I expect very smart acquisitions in terms of continuing to drive user growth on the consumer side and build out of measurement / ads API to cater to the agency world in the next 12-18 months.
An IPO for snapchat is some time away but it is building a very real commercial organisation amongst brands, advertisers, agencies, the TV community (look at the viacom deal recently).
Also to your point here:
"FB raised 16B in a horribly botched IPO."
You can't say a company raised $16bn and had a horrible IPO. This really doesn't make any sense irrespective of all the ratchets and clawback clauses (none of which will keep any FB exec up at night let alone the CEO). Look at FB today, you should be kicking yourself if you had the chance or even thought about buying the stock at $17 when it was being shorted like crazy by Wall Street.
i agree, you make some compelling points. i would be interested to know more about how big a market the adv/data piece is and how yoh use it. i was wrong when i said they don't have a clear moneyization strategy. I should restate what i think now: it is still not clear to me what strategy would support the growth required from an investment of this magnitude demands
however, like pg said about whatsapp acq, it was like taking the atomic mass of company. who are you going yo believe, mark zuckerberg, the guy who is betting hos company amd his own money and furure on it after extensive talks, internal fb ops kniwl, and access to WA books, or TC pundits. (clearly my summary, not direct wuote. was video interview, tough to find source)
i do believe still, to disagree somewhat, that fb ipo was botched. point i was making is that facebook was a very strong company (at least rel to SC) and the IPO was indervalued because of scandal and technical errors. even undervalued, a comparative IPO for snapchat would still require a huge increase in real revenue and numbers.
it is a steep climb, if we say FB was $100B and dont adjust for the interference of several problems (glitch, scandal, info leak) snapchat would have to justify real profitability and massive rev growth. maybe they have that, but (advanced apologies for no citation) facebooks revenue indicated by their s-1 filing was 3.7 billion with 0.845B users.
This is a real question not rhetoric: Do you think snapchat can achieve these numbers given 3 years?
I believe Snapchat will not grow in three years to be a one billion user company (I'm happy to be proven wrong here though). I do believe that once the ad product matures in terms of ad formats, measurement, ROI across both brand and DR metrics there will be some strong revenue figures all at the typical 70-80% gross margin you would expect from a software business. So from a revenue POV I expect it to ramp significantly and faster than we would expect. They have raised enough money to build or buy the tech needed for a biddable solution, measurement capabilities and a platform of true scale. I would not surprised if they add a third party solution a la Video on Demand for Snapchat ads to be served onto to increase scale of the platform off the core Snapchat platform to drive more revenue via advertising. Lets also not discount things like stickers etc which have been extremely profitable for companies in the Far East like WeChat.
I do expect the revenue to ramp significantly for FB, TWTR, IG, Snapchat etc over the next 3-5 years based on client demand. In five years time, all the strongest aspects and best practices will really be established by brands and agencies and the ad dollars will subsequently follow. Much of the overall digital budget is moving quickly downstream to social platforms. This pace will quicken over time as all brands will need to spend on these platforms to fulfill reach capabilities. All big brands need to be able to reach millions of users at scale which comes with significant media investment or revenue for these social platforms. We're only four years in and it will be an area I am betting the next 5-7 years of my career on.
I outlined my thoughts, a large social network would have to do it. linkedin, google, twitter, microsoft or facebook. LinkedIn, twitter, facebook being the most profitable. Maybe apple, for the security, weird FBI hacking thing although their software has gone down hill. I digress,
what was the Facebook snapchat clone? I haven't heard of a large scale effort to clone snapchat yet. If I were to build a comparable universe of companies for snapchat, I would say it is a lot like tinder, twitter and foursquare.
It was called FB Poke and was built in 12 days after Zuckerberg flew out to talk to Evan and Evan turned his offer down. When it launched it was basically better than snapchat in every category, but people didn't switch to it.
Then Evan responded by copying Apple and saying 'Welcome Facebook, Seriously'. On an unrelated meta note I found this annoying because it originally came from people building personal computers and not dumb ephemeral messaging apps.
Maybe Snapchat can do what Facebook and Google have done and become a real technology company, but so far feels more like twitter (lots of users, but unclear vision).
look i have crazy theories which I think are sane and correct(they are) so I am willing to give this a shot. Can you please walk me through the next 5 years of how you see this progressing. As I said a lot, I am not a user but I don't find it compelling personally but i honestly would love to be proved wrong. If you could even do it high level, I would be really interested in core growth and monetization strategies. Even far out ones. 5 years I believe is the farthest out you can map a startup and be even pointed in the correct direction still. I just want to know what you think could be pushing their sails that I am missing.
Not parent, but here's how I learned to understand snapchat.
Think like a younger Millennial (18-25 right now). Their whole social lives have been in public on FB/etc. They're going through a horribly awkward time in their lives, but it's all public. When they act like an immature kid, or aren't sexy, or whatever, that is recorded for all time.
So they feel incredible pressure to be sexy/fit/cool/smart/doing interesting things. People take hundreds of selfies to find the one that meets (what they think) their peers expect.
The pressure to be cool and attractive is intense. With FB, there is no escape.
Now Snapchat offers the opposite. People can "let their hair down", not have to look sexy or be cool, because the message is just temporary.
Most of the time I want candids, not portraits. FB made everything a portrait (intended for consumption by future selves/others).
SnapChat brought it back to the present by making it temporary.
In a world at the cusp of robots driving cars and trucks, robots cooking your food, where eggs can be made from plants, the internet coverage will reach 100% saturation, where basic income is being trialed, and that saudi arabia is investing two trillion dollars of their assets...
Does it really matter to you that someone got billions of dollars so that 100 million people every single day gets an hour at least of entertainment intermixed with native advertising that snapchat charges $100k a day for?
Does the world really need you, personally, to worry and save them from this?
Does the world really need you, personally, to wander around a museum and remarking on how much a Picasso or Hirst is really worth?
Your ego makes you blind. Your cynicism makes you jaded. Go build something and don't stop until your work is being considered as such.
idk what about my comment seems disingenuous, i was actually really interested in this in case i missed some huge cool trend. i am interested in products and technology for their own sake. i would love to help the world pisitively, but i am sure it is not depending on me. i was just curious for a different perspective as i am contrarian to some extent, so i was asking for an unhoulds boundless guess at what snapchat could be to add more information to my appraisal of the situation.
> go build something.
i mean, i am. but again, i was just legit curious what i was missing. no need to be a dick about it.
edited out some info
> Brilliant and great insights building on what’s happening now and been happening in the tech industry. Interacting with someone/something that doesn’t judge me opens up a new dimension of conversations. It might normalize honesty in society.
"If a snapchat clone came out tomorrow, snapchat wouldn't be as sticky."
What makes you say that? Do you know how hard it is to get your social network to move to a new thing? The clone would have to have an amazing benefit, which Snapchat would be in a decent position to clone themselves.
> I don't understand why use cases 1 and 2 wouldn't just send a text message picture. Why would you bother with a 3rd party app that erases them?
Snapchat has more features than sending a simple text. I still use text message pictures when I just want to send a picture. Snapchat lets you caption and draw on photos, which is a big draw. The erasing part of it is a feature too, and not just for nude pics. For example, sometimes I send off color humor to my friends and knowing that the joke's going to go away in 5 seconds makes me less hesitant to send. I don't think my friends themselves are going to screenshot the pics and try to disparage me, but I would feel uncomfortable if I were to email something to them that may accidentally be seen by an SO or parent.
If you're that concerned/uncomfortable about what you're sending then don't send it in the first place. Once it's on the internet, it's there forever. Does Snapchat not have the feature now to save incoming messages for a price?
I'll grant you the feature of drawing on pictures though.
> If you're that concerned/uncomfortable about what you're sending then don't send it in the first place
I'm not concerned or uncomfortable with the message itself; my concern is that the message goes exclusively to its intended audience. An email or text message can sit around and eventually be viewed on accident or by someone nosy. At least with Snapchat, I have a level of assurance that this possibility is minimized.
That's an unnecessarily black and white perspective. In reality it's "once it's on the internet, it's possibly there forever" and snapchat is a step in the "it wont be" direction. It's entirely possible for someone to be willing to to take that risk.
Hell, most of us do it in real life. I say plenty of things I wouldn't necessarily want provided to my mother or employer, and small audio recording devices are cheap. I trust my friends and partners to not save and share unflattering snaps the exact same way I trust them to not record our real life conversations.
If you're planning to run for President some time in the future, maybe it's worth it to always act as if the public is watching. I think the rest of us are fine.
Well, if I take the example from above regarding two people in a relationship. It IS nice, in my experience, to have a running dialogue with pictures available from our relationship. There are plenty of great moments I've received that I would prefer not to just disappear.
I also agree with the sibling post on this one, but another line of reasoning is that when texting pictures or other forms of sending, the default option is that the photo is saved. When using snapchat it's the opposite. Screenshotting allows you to keep it if you want, you can replay it if you missed it, but if it's not anything exceedingly special or worth keeping, it is discarded. In todays world I find myself with far more data that I can keep organized, and a lot of it is not of any particular value.
Another way of phrasing that argument is that if you look through my snapchat screenshot folder vs the received images from my SO, the snapchat screenshot has a higher density of content worth keeping.
> There are plenty of great moments I've received that I would prefer not to just disappear.
Between my SO and I, for stuff that's more memorable and may want to be saved, we'll use email, but for stuff like "look at this weird sign I saw downtown", we'll use Snapchat. An app is all about its use cases.
That's fair, we just use text message, and keep it in one place. Bouncing between different apps for essentially the same thing isn't something I feel like spending time doing.
Snapchat removes the hesitation about what you are sending. People don't worry about picture quality, etc. It's a temporary message. It really is about the content.
I think on the contrary, it is a more honest conversation. Because it is temporary, people share what is currently happening in their life. It may be boring or of little importance, but they share anyway. Sometimes it is because they want attention, but for others they are just staying connected. I would bet that most of them consume other peoples' content just as much as creating content themselves.
One wonders why you're even bothering to complain. You realize that fashion, entertainment, movies, video gaming, female modeling, male modeling, and so on probably collectively make up more than $1 trillion of the world economy?
This is a refrain on Hacker News since I started coming here for insights since 2008.
That because you, personally, don't understand why you would do such a thing therefore said thing is invalidated.
It's lazy.
Additionally taking that point of view outs you.
Much like how when I was 16-23 and creating things on the internet when there was only 100MM users and people were wondering why anyone would want to spend all that time on the computer.
Or ever make a webpage.
Or put their information online.
Or meet people you've only emailed.
Or use a credit card to buy things.
All in all, the answer is always: there are 7 billion of us out here, the world doesn't revolve around you, grow up.
It's clear from your comment history that you're very confrontational, and cocksure. So I'll keep this brief, and end it here. This is a discussion, and questions were asked. Take your own "advice".
Text message pictures are IME incredibly unreliable and you may be charged for them. And god help you if you accidentally send one internationally; who knows what it might cost?
What? I mean, if YOU are overseas and send a Snapchat, sure. But it's no different from any other data. Sending a MMS picture or video to someone else who is overseas, could be expensive. Snapchat won't incur any fees that all other data wouldn't, such as uploading the picture to Facebook.
The only real value of Snapchat is that now I dont have to scroll past the innane content snapchat is used for on other social networks.
Im not going to say snapchat is or isnt worth $20b. I am going to say that I am sad that so much energy and money is being thrown at such a trivial application.
Im a software engineer, and i like solving real problems. I cant imagine working at snapchat and trying to motivate myself to be excited about its useless app.
You have to understand, though, that most people in the world are not software engineers and interacting with their friends is one of their favorite things to do.
The essence of business is solving problems that are important to other people with solutions that are interesting to you.
I think it's worth more, honestly. Probably $100-200B.
That sandbox is a lot bigger than the sandbox you & I like to inhabit. The set of folks interested in technical programming & startup-related news probably numbers under 100K. I was an admin for a Harry Potter fansite in college that had 100K registered users, close to 1M when guests were counted, and we were far from the largest Harry Potter fansite. The set of folks who like clickbait, celebrity gossip, hanging out with friends, and making funny faces is a couple orders of magnitude larger than that, probably past a billion.
People are very different in their refined passions but alike in their base desires. That means that anything that caters to base desires, by definition, will have a market size much, much bigger than sites that cater to refined passions.
It's almost a good comeback. Yet, Facebook had obvious ways to monetize it's data plus lots of data types to monetize. It was inherent in its design. Also, semi-proven by MySpace. What is comparable for SnapChat? Seems more contrained.
The business model for SnapChat is the same as for TV ads (and for YouTube). Intersperse branded video advertising before the user can get to the content that they're actually seeking. TV ads is a $60-80B business. People in the 18-34 demographic (which in SnapChat's case really means the 13-29 demographic - I don't know anyone over the age of 30 that actually uses SnapChat) already spend 8x as much time on SnapChat as on TV. At some point, that attention imbalance will equilibrate, and SnapChat will be making a lot more than TV networks are.
It's a possibility. They can just jump apps easily in this sector as it's more ephemeral by nature. What's odds of SnapChat staying popular enough for high-profit if they start interrupting conversations with video ads and alternatives exist? I imagine something similar to when SMS limitations were bullshit but WhatApp existed.
That was what I said about Facebook when they came out (I'd been an early user of LiveJournal and AIM, a bunch of my friends were on MySpace, and I saw people migrating en masse between social platforms as they got bored with the previous one). I figured that the biggest risk to them wasn't irrelevance, it was that someone newer & hotter would come along.
Turns out I was right - much of the Instagram and SnapChat usage is coming out of the pool of attention that previously belonged to Facebook - but the cycle time seems to be ~10 years, and getting longer with each generation of social software. If the history of mass culture & mass consumerism repeats itself, eventually the cycle time will be greater than a generation - forms of social interaction for the baby boomers stayed roughly constant for their whole lifetime. At that point it's meaningless to talk about shifts to the next big thing, because we'll all be dead before they happen.
I remember hearing exactly the same about Facebook and even ... Google. Can't find the link anymore but there was a famous article from the NYT (IIRC) saying Google problem was finding a business model. Time will tell for snapchat.
Your point still stands but I think 100k is a vast underestimate. I suspect there's much more than 100k in Silicon Valley/SF alone (though I don't live there so not sure). There's certainly tens of thousands in central London, let along across the world. Paul Graham alone (and he's hardly the only centre of attention in the startup world) has 340k followers on Twitter. I'd assume about 10m, give or take.
Are you honestly suggesting that a company with fewer than 200 employees is worth more than:
* GM
* Ford
* Honda
Combined. That is ridiculous and just highlights how big a bubble is brewing in SV.
We value a couple hundred million fickle users more than hundreds of thousands of actual employees, physical factories, and entire supply chain industries.
This is a misunderstanding of where shareholder value comes from.
The valuation (market cap) of a company is a reflection of the value of the assets that the company owns. That includes IP, trademarks, brand assets (somewhat perversely, this also includes user habits), business relationships & contracts, any resellable physical goods or cash that the company owns, and all future cash flows that will accrue to the company. Basically, the stuff that an employee, supplier, or customer could not take with them if they chose to do business with someone else.
Now, there's also the concept of economic value, which is the value that customers of a company (or industry) are willing to spend on its product. This can be reasonably proxied by the total revenue of the industry - for your GM + Ford + Honda example, that's about $150B each, or $450B (and leaves out the 800 lb. gorilla, Toyota). That's a lot larger than the total $60-80B market for all brand advertising.
But building cars has a long & large value chain. GM + Ford + Honda can't do it all on their own. They each employ roughly 200,000 people, many of whom are relatively highly paid thanks to union agreements. They have literally thousands of suppliers that they buy parts from. These suppliers themselves need to buy parts and supplies from labor-intensive industries like mining. As a result, the company captures comparatively little of the profit from all of this work. Facebook, for example, makes about $6B in net income off $20B in revenue, while GM makes $10B in profit off $150B in revenue. This also implies that further growth will benefit companies like Facebook or SnapChat much more than it would companies like GM: if margins stay the same, Facebook gets to $10B in profits with $30B in revenue, while GM would have to get to $300B in revenue (probably not happening) to get to $20B in profits.
It's a plus, from a shareholder value perspective, that SnapChat only employs 200 or so people, and their largest expense is paying Google for AppEngine bills. It means that whatever value SnapChat creates, the shareholders will capture almost all of it. Indeed, based on how often car commercials appear on TV, it's likely that a good portion of GM & Ford's revenue will become SnapChat's profit, just like how a good portion of SnapChat's revenue becomes Google's profit.
I completely understand that from a shareholder perspective companies like facebook and snapchat are huge wins.
However my argument is that as a society these companies have very little value. I believe that the current wave of tech startups are the equivalent of shareholder junk food. I nice relatively immediate return, and no real long term value.
don't you as a shareholder get much more volatility with 'hot shot' companies that can explode on a whim and are easily replaced by a competitive product due to a very low barrier to entry? I'm actually surprised the inctomis and lycos' of the dot com bubble aren't weighing in heavier on the investor decisions these days.
I don't know what was inctomis, but in the case of lycos it was very easy to switch of search engine, while someone who wants to compete with SnapChat will be facing a chicken and egg problem (nobody will want to join SnapChat because nobody will be there at first), so en barrier to compete to SnapChat is not that low, even if the product isn't technically hard to replicate.
Was valued at 25B in 2000, ended up getting acquired by Yahoo for 235M. In terms of stocks - from $241 down to $1.63
That easy replication of the product is exactly what I'm talking about. Search engine is actually a much more sophisticated setup and even in that space multiple companies went belly up.
What about snapchat is useless? Or is this just typical "damn kids these days" speak? The app is an incredible form of communication, and there is a reason people prefer it to other mediums.
If snapchat shutdown tomorrow would anyone actually care, or would they immediately shift to the next best platform?
Compared to say a public utility, car manufacturer, global shipping company, etc.
There are real problems in the world, and snapchat doesn't solve any of them. There are real companies trying to solve these problems, and snapchat is worth more than most of them.
Our obsession with "incredible forms of communication" is in reality just a VC fueled gold rush capitalizing on the current flavor of the week.
> If snapchat shutdown tomorrow would anyone actually care, or would they immediately shift to the next best platform?
You can say this about a lot of great companies. Toyota shuts down tomorrow, I buy a Honda instead. Sure, I wanted the Toyota, but I'm not going to lose any sleep over it. UPS shuts down tomorrow, I use FedEx. Apple shuts down, I use Android. Starbucks shuts down, I go to Peet's.
Yep. That's why they're actually even worse off. All else equal, the more employees a company employs, the worse of an investment it is, because costs are greater.
Now you're just moving the goalposts. VCs are out to maximize profit. If startups were funded by the government you would have a basis for complaining about how societal benefit is not being maximized.
What problem is HBO solving, other than entertaining people? How is Snapchat any different? At a minimum, it's entertaining. At best it's "connecting people" and so on.
These people are already connected, they can communicate on Twitter, FB, SMS, email, phone, skype, gchat, facetime, whatsapp, line, vine, periscope etc etc.
Snapchat is just the current prom queen. Everyone wants to be her date, but in 10 years she will be working at Dairy Queen.
It's clear from your comments throughout this thread that you're biased against Snapchat. Regardless of whether or not Snapchat's long-term prospects are strong, you're not debating this well.
First you compared Snapchat to a completely different industry (automotive) to imply it has an inflated valuation (as though tangible products and heavy manufacturing somehow make a company more legitimate). When a commenter replied with an excellent rebuttal in favor of Snapchat's market position, you instead made the argument that Snapchat does not contribute long-term value to society.
When the parent commenter criticized this viewpoint by drawing a connection to HBO and countering that not all businesses need to change the world, you claimed that people don't need to be any more connected than they were before Snapchat, since they had things like Facebook, Twitter and texting. Why build different things? Why not just be content with the communication platforms we have now? How about we just don't develop things people clearly desire because, "eh, fuck it, they've got general ways to talk to each other already."
Finally you circled back around to being incredulous that a company with only 200 people could be worth more than entire industries and "supply chains." Of all the market analyses available, like margin comparisons or growth potential, you chose to zero in on the number of literal employees as some sort of indication of impact.
How long are you going to move the goal posts? You're one of the most active commenters in this thread but your rhetoric, particularly the bit involving the automotive industry, reminds me very strongly of the way in which people who are too set in their worldview can't fathom the value of new and different technology.
Judging by the political valence of your "VC gold rush" comment, I assume this is where your bias comes from. That and the automotive comparisons lead me to believe you're deeply uncomfortable with the idea that a small number of relatively wealthy, skilled elite can completely dwarf industries built by the comparatively unskilled masses all the while enjoying cushier jobs, better social status and wild employability (to put it as starkly as I can).
Follow this thinking deeply enough and it could even be expressed as simply as, "It's not fair." But that's leverage for you.
If you want to really debate about the future value of Snapchat, why not add some real nuance to the discussion and talk about its advertising platform's advantages (or disadvantages) compared to Google and Facebook?
It's not useless, it's a nice, basic tool that's clearly a hit with users.
But it can never be that simple, can it? We got to grow! monetize! have another fundraising round! justify it all with increasingly complex features of progressively marginal utility that further dilute the core funcionality that made it so popular in the first place.
Imagine if HN were to succumb to this disease, it would be a travesty.
I don't necessarily think Snapchat is useless but I can't for the life of me understand why they need $1.8B or how they could ever efficiently use it considering how technologically simple the app is.
Some engineers like working on hard engineering problems. Others like working on products used by millions of people, and making that product as good as it can be.
The existence of the one doesn't invalidate the other. There's plenty of room in this industry for both types.
I suspect that connecting 10s of millions of people to each other to share ephemeral photos in real time actually does pose some interesting engineering problems.
just like beauty, utility in this case is in the eye of the beholder. countless millions of people are finding utility in sending self-destructing pictures of themselves to eachother and although it might not seem like a "real" problem, there is inherent complexity and technical challenge in providing a large-scale social service that said millions use daily. disclaimer: i don't use it.
I interviewed at snapchat while they were still on the Venice Boardwalk. It was staffed by people who were laughing at their idiot users and trying to sell me on how many girls they pickup because they work at snapchat.
Those guys are all millionaires now. They don't give a shit about anything but money and extracting everything they can from their users before they fizzle out and die.
It may well be being used as such, it doesn't make myself or the parent commenter any less depressed by it.
In re "is this just 'damn kids these days' speak", no, I suppose I'm one of them. But if a picture's worth my while then don't make it arbitrarily temporary; if it isn't don't send it at all.
interesting that most of the comments who disagree with you actually just take issue at your calling it a "trivial application"
language aside, you're hitting on an important idea that a lot of people are missing:
'trivial' doesn't mean useless, but this specific type of artistic agency and communication are unfortunately the only means of expression most have when there are no economic means of personal expression (i.e. going back to college, affording consistent healthcare, paying rent without going in debt, having disposable income to go out with friends, buying materials/server-space to use as means for artistic or scientific personal expression rather than needing to rely on a pre-programed photo-filter).
there's an honest sadness to the idea Snapchat is funded so heavily when the same amount of money could be used to fund multiple small businesses who might need to integrate tech into their operations and who can create jobs for people who need them
Do you think making movies is "trivial" and not solving a "real problem"?
I don't think making movies is trivial. It has a large effect on culture and really at the end of the day, as humans, all we have that's uniquely ours is culture (for various broad definitions of the term). Think about how much Sci-Fi movies, novels, and similar ideas contributed to our drive to go to the moon - as a society, not just a country.
Snapchat affects culture, and really what's more powerful and impactful than that? It gives people an ability to tell their story in interesting ways. It gives people a platform for expression. You get a brief, unique glimpse into someone’s actual life from anywhere in the world. This ability to affect culture isn’t unique to Snapchat by any means, there are lots of things out there that affect culture in unique, interesting ways but I don’t think their effects can be understated or written off.
I think the crux of the issue is, people have a narrow definition of "solving problems". The "problem" has to be clear cut with a clear outcome otherwise it isn't a "real problem". But I don't agree with this type of thinking.
There's something Steve Jobs said in a talk that’s stuck with me ever since. Here’s the quote:
“The most powerful person in the world is the storyteller. The storyteller sets the vision, values and agenda of an entire generation that is to come and Disney has a monopoly on the storyteller business. You know what? I am tired of that bullshit, I am going to be the next storyteller”.
The rest, as we all know, is history. And really, he has a point. Just look at Facebook’s effect on global culture. It’s incredible in its pervasiveness. We’ve entrusted the group of people building Facebook to drive this effect on culture at a scale we’ve never seen before. It’s a huge responsibility and they have to balance it with business interests which as you can image is very very hard.
But to write off something with such a large, global scale is incredibly short sighted. We underestimate the effects of these things on our lives greatly.
Look, I’m not a Snapchat shill by any means. I don’t even use the product that much. But I try to understand it, and part of understanding the product is understanding the impact. Put aside the nature of the product for a minute, forget that its a photo sharing app, though that is a simplification. Think about just the scale of the application. The scale is absolutely crazy and I’d venture to say that any product with that kind of scale, engagement, and usage patterns WILL have a large impact on culture. As a Software Engineer, that is incredibly exciting to me but at the same time I see it as a very unique responsibility. We need good people building these types of products who understand the full extent of the consequences of what they’re building. The alternative, is not great.
Now whether you think the people at Snapchat have these best interests at heart is a whole different topic of discussion, but I’m tired of people writing off these huge software phenomenon as “just a photo app with no value”. That’s a lazy sentiment and I’m calling you out on it buddy!
Your points all well taken, I consider any talented employee at SnapChat to be doing this world a net disservice due to the wasted opportunity costs of other issues they could be attacking.
"We wanted flying cars, instead we got 140 characters."
It isn't just a "huge photo app with no value", it is a well funded business that encourages trivial ephemeral communication so that is can gain access to your personal information and serve you ads.
Snapchat isn't an accident, it is a well engineered platform built by intelligent people. However it caters to the lowest form of communication that I can think of.
If Snapchat is having an effect on global culture, then god help us. The business itself may have a monetary value, based on its user base. Its product and its effect on communication is toxic, and should be viewed as the junk food of online communication.
While I completely agree with you, your ire should not be reserved specifically for snapchat. Nearly the entirety of the modern "tech" industry is trivial social applications like this. In a sea of Facebooks, Twitters, Instagrams, Pinterests, etc, Snapchat is not all that unique in terms of uselessness to society.
Many software engineers (esp. at a web/comms company) are going to be working on similar frontend and backend problems -- and the fact that these guys are working at SnapChat doesn't marginalize their contribution to the world. They're working on one of the most-utilized, fastest growing communication platforms on earth. If anything, I'd say their "problems" are probably as interesting as any you've listed. They could just as easily end up producing things like React (FB), BigTable (Google), MapReduce (Google), Bootstrap (Twitter), etc.
Respectfully, I find this "other peoples' work is shit and meaningless" attitude off-putting. As someone who does similar R&D work as you (see profile), here's my perspective: Be grateful for getting to work on interesting problems, and don't be so quick to dismiss others just because it doesn't float your boat.
Which had a bigger impact? Almost certainly social media over any kind of liver transplant research. There are 20k liver transplants a year.
You realize that social media has created tens to hundreds of billions of dollars of economic value right? Even Twitter, which has struggled has created billions of dollars of economic value. From a utilitarian perspective that is worth far more.
I'm certain that if I knew someone who needed a liver transplant that I would then personally value liver transplant tech over social media, that's completely beside the point though. My feelings in a given scenario don't make work on liver transplants more important than work on social media. What matters is net impact.
Jumping in late, but no. High quality problems solved make a stable future where things like like transplants are just "solved." You cannot say the same for social networks, which are actually much more reflective of the current culture. We will not look back 50 years from now and say "oh man, thank god Snapchat came along" the way we'll be saying "thank god we pioneered that medical tech which continues to save lives to this day"
There are compounding effects with economic progress as well that are effectively immeasurable due to complexity. The availability heuristic biases people to think that obviously identifiable benefits are more important than pursuits with less identifiable benefits.
Sometimes though, the scale of these things is enough to make programming (and operations if your into that) completely exhilarating.
Things that seem extremely trivial, like chat, or the ability to upload photos, become quite an engineering feet when your measuring the amount of photos uploaded at terabytes per hour or more.
Both high burst scale after Super Bowl ads and long running massively multiplayer games.
I am not saying that building services that operate at a massive scale is easy, but there is a wealth of talent and tools out there to help you achieve it.
The fact that all of snapchats infrastructure is provided as a service makes my point for me.
I think you vastly underestimate Snapchat's scale and vastly overestimate AWS out-of-the-box scaleability.
Someone like Snapchat periodically surprises GCP with millions of QPS, something AWS would deem akin to DDOS. With AWS, you'd need to carefully setup infrastructure that statically accepts such scale. You need to plan, test, deploy resources, measure, etc etc. Snapchat has to do absolutely 0 of that - they deploy code. This is a major difference between Google and AWS - with one you can setup scale, but you pay for it, and with the other you get scale as part of your service, out of the box.
Out of the box I agree with you, GCE is much more capable than AWS.
However in my experience AWS is just as capable and much more flexible once it has been setup. Also AWS Lambda functions give you the ability to "deploy code" and has proved to be massively scalable.
I feel that "carefully setup infrastructure that statically accepts such scale" is not an accurate way to describe top tier deployments on the AWS platform.
Dataproc has per minute billing + very fast startup times (sub 90s for decent-sized clusters). So with Dataproc, you can rethink how you run Hadoop. Rather than starting with a cluster, which you fill up with jobs, you can have "cluster setup" as part of the job path. This is possible because you don't pay a large penalty in startup, nor do you pay a large penalty in per-hour billing granularity. Oh and Google is much more inexpensive (http://fortune.com/2016/01/08/google-amazon-cloud-price-war/).
Snapchat is the medium that most closely represents a real life conversation - between individuals, between friend groups, between performers & fans, etc. That's why it's popular and will continue to be so.
The beauty of Snapchat is that you don't need to think about what you are posting: It's ephemeral, it's kept close to the vest (you choose explicitly who sees it), and above all, it's without reservation. I don't consider the appropriateness of my content because I choose exactly who receives it, just like how in real life you probably speak differently around your friends than you do your co-workers, or your family, without really thinking about it.
Snapchat provides a medium for users to share content without the baggage of social validation that other networks like Twitter and Facebook are beholden to (intentionally and unintentionally). Nobody can see how popular your content is but yourself, and you control the reach down to the individual. No other content network is like this.
What the poster meant with that statement is that you don't need worry or obsess about the long term reaction of all your hundreds or thousands of followers/friends/acquaintances and what they will think the way you do with something like Facebook (really any other network). In my opinion, this is a major problem with those sites. You automatically and subconsciously become your own personal "brand manager" and "self-marketing team", and are subjected the output of everyone else on the network who is doing the same thing. It's greatly magnified version of the old "you only see everyone else's highlight reel" dynamic. A lot of studies are coming out with interesting results on this and related issues.
On Snapchat, the communications are all shortly lost to the sands of time, like most real-world interactions. This has a big effect on how people orient themselves with the app.
I'm not saying it is or isn't worth $XX billion, but it's not something to disregard without any thought.
I just recently got into Snapchat. My fiance and I just snap each other during downtime at work, nothing major. It's a lot of fun but I'm not sure how they could monetize it beyond the sponsored filters they have now.
How are snapchat employees making out here? It seems like share dilution and even more investors getting exit preference has got to be eroding value like crazy.
Perhaps someone with some experience can shed some light here, if you joined snapchat 2 or 3 years ago are you seeing all of your supposed value evaporating away?
This is part of what I'm asking. The valuation is growing, as is the amount of money their taking. That means the company now has to exit for that much more in order for employees to see any return. If I'm an early employee I now have to hope they exit for $X billion for my shares to be worth anything. If they exit for less there's a chance I see nothing after investing years of my life and watching them pass on a $3 billion offer.
My guess is that with such a massive round, at least some employees were allowed to take some money off the table at this valuation. I'm not sure what their policy is on secondary markets, but employees may be cashing in at the current valuation there as well. If that is the case, those that joined near the time of the $3 billion offer are likely very happy.
There are other ways of making employees benefit before a liquidity event, but generally what you describe is how all this works, and has worked since the beginning. That's the risk everyone is taking.
The company doesn't have to exit for billions in order for early employees to make a substantial return. Being employed now is a different scenario, though.
Every single person here seems negative about Snapchat.
I am 30+, use it occasionally, and see more and more of my older friends signing up. Especially those friends far away from the echo chamber. This fundraising feels smart for investors who want a great return and for the company to use to get to an IPO.
If you don't use Snapchat, or haven't used it in a few years, it is probably time you take a second look.
It's useful and fun to a large number of people and definitely has some non-trivial value.
Does it have enough value to justify this kind of money being plowed into it? That's where I'm not convinced. These are big numbers and for them to ever make a return the revenue growth would have to be really really huge. I can't see Snapchat becoming Google or Facebook since its interaction profile is too narrow and brief.
We're basically talking about an ad-engagement and profiling medium here.
Google has huge value as an ad platform because they serve ads at the time of maximum intent -- their ads are targeted to what you are looking for right now and so they're more likely to convert than ads served at random times.
Facebook has huge value as an ad platform because they have so much data to target ads accurately and gather metrics about who engages with them. Many people use Facebook ads not as primary ads to drive conversion but as 'probes' to develop customer profiles, so it's almost like a focus group as a service.
What monstrous value is Snapchat going to provide in this space that will generate returns higher than the S&P 500 on many billions in investment over the next, say, 10 years?
[Many respectable technologists said that they weren't going to stand for this -- partly because it was a debasement of technology, but mostly because they didn't get invited to those sort of funding series]
I have no problem with snapchat the app. I think it is dumb, and don't enjoy using it, but that doesn't mean that it shouldn't exist.
What I do have a problem with is Snapchat being put on a pedestal, and perpetuating the SV cash grab business model. Get a bunch of users with a trendy app, data mine the shit out of them, and serve them ads until the app folds. There is no lasting value, and it is just the kind of rampant speculation that collapsed our industry in the past.
Yeah, that cash grab model sure didn't work out for Facebook, Twitch, YouTube, Instagram, etc. Good thing those finally failed due to the complete lack of value being provided and their associated pesky ad-based business models /s.
That's one of the reasons they are so valuable - data. Data is so valuable to companies - it gives them insight into how consumers behave. Gett Taxi just raised $300M from Volkswagen and it's not because of their tech. It's because they have data on how urban residents move and travel. Google released TensorFlow and gave everyone access to easy to use and super advanced neural nets and they do this because it's not actually their algorithms that give them their competitive edge - it's their data. More data beats a clever algorithm every time.
You've made a negative comment in nearly every thread on this post - do you really hate Snapchat that much? Do you not see how some people might enjoy using it?
I think people are negative about the profit potential of Snapchat ever coming close to justifying the multi-billion dollar valuations. As a fun and sticky social media service I think most can recognize Snapchat is killing it, but as a business it seems sketchy.
I think Snapchat can be profitable at some point but it would have to be a blockbuster in terms of revenue/profit to justify an 11-digit valuation.
There's been a bunch of apps out there that have taken off and completely surprised me. But I can't think of another succes that makes me feel out of touch more than a 20B valuation for what launched as "the app that sends disappearing images". Kudos to the team though. Evan and Co, seem to have made a lot of very smart decisions in growing this business.
Not only a product with minimal apparent value, but one that is incredibly difficult to use. It's been suggested that a poor UX and ugly product was actually what helped it take off [1]. That young users knew their parents wouldn't "get it".
The main thing is that it's what facebook SHOULD be - a window into the lives of my friends and the people I care about. Facebook now just shows me constant shares of auto-playing videos from various click-bait and viral sites. Every single one of these videos flow up to the top of my newsfeed, but NONE of the people sharing them I would consider a "close friends" or anything like that - their newsfeed algorithm has warped their front page.
As someone who didn't get it for a long time, and is now a multiple daily user I can tell you what made the difference for me:
1. Understanding that the whole point is to lower the bar of entry for visual communication because it's low risk
2. The "Stories" aspect lets me get intimate with my friends around their day to day, when I can't be around them.
2.a. Watching others who aren't my friends who are giving good or interesting info is incredible to me. Snapchat actually allows for lifecasting in a way that is not obtrusive or complicated as it only requires a few seconds at a time.
Those things are pretty breakthrough for communications IMO.
I know that I don't "get" venture capital, but is Snapchat even profitable (or close to) yet? If not, and it's going to take nearly 2 billion more to get there, do they really have a product that will ultimately return value?
It's the cynic in me, but by a series F, and needing 2 billion, this feels like the sort of funding where early investors are propping the valuation of Snapchat in order to sell off to someone like Yahoo for a crazy amount of money, where the product will go and eventually die. All in the name of advertising. I guess I just don't get it.
They probably don't need 2 billion but can grow faster by making use of this money instead of going for some aggressive monetization. I don't get why everyone acts like Snapchat is unable to monetize the platform — they just don't want to if they don't need to yet.
> I don't get why everyone acts like Snapchat is unable to monetize the platform — they just don't want to if they don't need to yet.
I'm not convinced that's true. Reportedly, in 2014 they made 3.1 million in revenue and -128 million in net income [0]. I don't think a difference that's two orders of magnitude is a function of "not wanting" to monetize the platform. I'm convinced they're a <100 million/yr in profit product.
"the company has estimated that revenues will be between $250 million and $350 million for 2016, and between $500 million and as much as $1 billion for 2017."
Incorporating your numbers, what I see is a business that is plausibly on a path to grow from $3m to $1b in revenue (~30,000% growth) in 3 years.
If you an investor targeting growth companies and you pass on an opportunity like this, you should be fired. Snapchat isn't General Mills, and it should not be valued using the same approach.
1) Investors in growth companies care about what's next, not what's past. The past numbers are important to lend credibility to projections, but nobody values growth companies based on (presumably much smaller) numbers from the past.
2) Also from TFA: "Snapchat’s revenues in 2015 were $59 million (recall that there was no real monetization effort in the first part of the year, and only the beginnings of it in the latter part of the year)."
I'm not privy to any internals at Snapchat, but based on the other metrics in the article, the projections are not implausible at all. But yeah, it's still not appropriate for people whose idea of risk is owning Procter & Gamble.
The article says they had revenue of $59m in 2015, so A) they're not profitable and B) they probably aren't even thinking too hard about trying to be. For now, growth numbers are enough to get them buckets of cash, so that's most likely what they're focusing on.
Given the context, the $59m revenue isn't that bad. They clearly just started trying to monetize in 2015, and averaged double revenue growth each quarter, finishing with over $120m run rate.
The $250-$350m forecast for 2016 is completely reasonable. Hitting that target still means a 60x valuation (and props to Snapchat for getting that kind of valuation these days), but I don't think it takes a delusional investor to see Snapchat passing $1b in just another year or two, and soon going well beyond that.
That math holds if they are planning to only spend money on hiring those people for 1 year only.
More realistically, the money is probably for tech overhead. Server space, software licensing, money for keeping all their servers working for a while (support, replacement servers/drives) etc.
Not being adversarial: What kind of software licensing is Snapchat paying? Dev tools, ok. Some BI/reporting stuff? I'd imagine everything else would be open source, right?
When companies defer their exits, it becomes reasonable for seed investors to ask for their money back. This happens quite a bit in Private Equity, where investors resell companies every 5-7 years.
Snapchat runs entirely on Google Cloud Platform, and have famously declared that they have 0 Ops people because everything they use is fully-managed and no-ops. This is one of the reasons they are able to deliver features at such a rapid pace - they aren't worried about scale or reliability the way anyone at the scale is on-premise or on AWS/Azure.
Okay. What about their deployment CI/pipeline? I don't think GC offer that? I want to emphasize my philosophy on ops vs dev. I strongly encourage dev learn to do ops and ops should do dev work. So the question is, who is doing everything else outside of product development? Is dev doing all of the traditional ops-only work? Creating a self-service portal is both a dev and an ops job. It may just happen that someone is not 100% dedicated to do ops work. This is not even a debate of dev vs devops role. It would be disingenuous to say there is 0 Ops people if some dev are involved in doing Ops work (setting up DNS even programmatically). So I'd ask for clarification. Let's face it, someone is doing Ops work, but with a different title.
You're trading ops costs to be locked into a platform. Does that matter? Probably not if you're targeting being acquired by Google. If you intend to eventually move to your own equipment, it does matter.
There is no such thing as no ops. Only someone else doing ops, no more than I can have TensorFlow write code instead of developers.
Your fear is not invalid. That said, one can make the argument that speed of innovation trumps everything, and partnering with the best innovator is the most important thing when innovating yourself. This is akin to not wanting to ever date for fear of eventual breakup...
You make a good point on No-Ops vs Ops. I think it's a gradient. I also think that Snapchat is on the far far left (on No-Ops edge) against virtually any other large-scale technology company in the world, Google included (singe Google is Snapchat's Ops largely), largely because of the nature of Google AppEngine.
If you can map your workload and tasks onto Google Cloud Platform and the economics are in your favor, and you trust Google, it's a good thing. I'm sure it would work for many startups, but I'm curious how much of a lock-in it is and how much work it would be to move somewhere else.
> the way anyone at the scale is on-premise or on AWS/Azure
Can you expand on this? How/why would anyone developing a potentially high-traffic app have to worry if they are e.g. leveraging AWS fully? How does that compare to google cloud?
Snapchat runs almost entirely on Google AppEngine. They deploy code and leverage APIs. Their millions of QPS and vast CPU, RAM, etc usage is managed fully by Google Cloud.
You can certainly replicate their scale on AWS/Azure.. or Google Compute Engine for that matter.. but you'd need to do a whole lot of non-trivial work around scalability, durability, etc etc. Snapchat runs light on this front, allowing them to focus on launching features rather than keeping the lights on. No one even remotely close to Snapchat in scale runs as lean as they do, and that luxury is afforded largely by Google AppEngine.
Personally, I think one good way to see why people use the product is to 1) be in a relationship, and 2) regularly send pictures of what you're doing / funny things you've encountered / your face, back and forth with your partner.
Where I feel like there is legitimate criticism of Snapchat is their ability to monetize. Unlike Google, there is no purchasing intent. Unlike Twitter or Facebook, there is little ability to target users beyond age/gender/location (and no amount of computer vision in the short term will change that). Their Discover / Live products (which allow you to see snippets from brands / news channels / publishers) are promising but unlike the core product, I think there is legitimate reason to be doubtful about the appeal of these products because they have nothing to do with chatting with friends.