Snapchat Spurned $3 Billion Acquisition Offer from Facebook

[Gsuz]

Another thing to consider is that Snapchat is mainly used to send nudes and its main selling point is that images and videos are only available temporary. Can't imagine many users want to have their Facebook/Instagram connected with this as they are all about capturing moments for life. So, if they are selling to Facebook and users become aware of this, they might simply switch to a competitors app.

 

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[dknise]

Another thing to consider is that Snapchat is mainly used to send nudes and its main selling point is that images and videos are only available temporary. Can't imagine many users want to have their Facebook/Instagram connected with this as they are all about capturing moments for life. So, if they are selling to Facebook and users become aware of this, they might simply switch to a competitors app.

I disagree, Snapchat is mainly used to send time-based picture messages and is often used as a more engaging alternative to text messaging. I send more snaps than text messages.

 

[Vick]

I send more snaps than text messages.

i don't get it.

So if someone asks what your up too. and your having a cup of coffee. do you send them a pic of you having a cup of coffee?

is that what you mean?

 

[dknise]

i don't get it.

So if someone asks what your up too. and your having a cup of coffee. do you send them a pic of you having a cup of coffee?

is that what you mean?

If someone asks what I'm up to, it's almost always through Snapchat, but ya I'd send them back a pic of my coffee. My buddies and I like to meet up at a local bar on Sundays and Wednesdays at 9, so someone will usually start it off with a quick selfie to the group saying "Sideline @ 9?" To text it and add everyone could take a minute or two, but with Snapchat you can send a funny convincing pic, and tag everyone in 20 seconds.

 

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[buwatcha]

In my personal experience Snapchat has exploded over the last 6 months. I don't use it but my wife just started too about three months ago. And, she gets them all day. I actually read about it over a year ago and thought it sounded like another sort of interesting app.

It's interesting that these things don't generate revenue. They don't even have ads. It's all about user acquisition. It doesn't really matter what the app or site does - if millions of people use it you can sell it for a ton. I guess MJ says that when he says if you affect the lives of millions of people you will get rich.

On a side note I'd take the 3 billion and run. Sure you might get 4 billion but what's the difference at that point, especially considering the very real possiility that it could fizzle out.

 

[Rickson9]

One of the reasons the offer was turned down.

Industry People Are Whispering That Kevin Systrom Blew It Selling Instagram For $1 Billion
In spring 2012, Facebook CEO Mark Zuckerberg spent a long weekend with Instagram CEO Kevin Systrom. After three days of talks, the pair agreed that Facebook would buy Instagram for ~$1 billion.

It was an amazing story. Instagram was only two years old. It had no revenues.

​

Now, 18 months later, industry people are starting to believe that Systrom was wrong to accept that deal.They believe that if Instagram had stayed an independent company, it could be worth between $5 billion and $15 billion today.

This morning, the New York Times's Jenna Wortham reported that venture capital firm Benchmark was "disappointed when Instagram’s founders decided to sell to Facebook for $1 billion last year."

Wortham says this disappointment was a big reason why Benchmark pushed...Snapchat, to reject an all-cash $3 billion offer from Facebook.

http://www.businessinsider.com/indu...ew-it-selling-instagram-for-1-billion-2013-11

 

[PopEmersen]

He can get more than 3 Billion.....I say push it to 5 or 6 then cash the hell out. The social bubble is here.

 

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[Rawr]

Sending a picture of a coffee? I'd defriend that a**hole friend.


I've recently got on the service. Noise doesn't begin to describe the stuff people send, and when it is from pretty girls, it's even worse.

 

[dknise]

Sending a picture of a coffee? I'd defriend that a**hole friend.


I've recently got on the service. Noise doesn't begin to describe the stuff people send, and when it is from pretty girls, it's even worse.

Where's your apartment?? I'll call for help to come break the chains from your social introversion.

 

[Ivan]

Momma always told me, "3 billion birds in the hand is better than 4 billion in the bush"...

 

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[Rayed]

Not worried. I donate my time for after-school and youth group activities. Nobody under 20 uses Facebook. NOBODY.

Vine, Snap-Chat, and instigram are it for that market. I've specifically heard clear alpha-leaders in the teen social circles refer to Facebook as a "for old people" and saying, "you only use it because you're old (I'm 28)."

If you want a bite of that market, you go with one of the new guys. That said, especially if you're young, if anyone floats you a figure in the billions, get out. That bubble can pop, but your billions will still make you comfortable forever and let you do it again.

This is true in the US but I live in France and I guarantee you that facebook remains on top across the board! Teens use twitter, vine, instagram, snapchat, but they use facebook A LOT! Above 20 years old, people are just on facebook and I don't see even twitter catching up

 

[bophisto]

Interesting perspective about France .
I think a lot of Americans just think the internet is universal but there are also tons of social networks out there that cater to local populations .. China etc

These will be interesting as the middle classes grow in these countries .


, I still see a lot of college students using Facebook but perhaps it has gone down .

Another point is that under 18 teens aren't really a prime demographic since they don't have the same buying power as a post college grad for example .

If snapchat was profitable and had growing profits then I could see waiting for a bigger offer .

Also who is going to have the cash besides fb and the desire to buy them?

Their potential buyers are limited .
Who else Besides Facebook would want to buy them or have the cash .?

This does remind me of something I heard once but I forget where I heard it , "when you get really big you grow by acquiring "

Acquiring other companies is the norm for big companies like Facebook , Microsoft ,google etc

The big eat the " small"

Mergers and acquisitions , for the young startups with the right product it can be a huge payday .

Their fastlane dreams realized

 

[Rickson9]

How SnapChat Plans To Make Money
Last week, news broke that a ~2.5 year old company called Snapchat had rejected an all-cash $3 billion takeover offer from Facebook.

Predictably, the cat-calls and howls of indignation began.

Snapchat and its investors were obviously delusional idiots, Twitter pundits agreed. And arrogant! How else could they pass on a crazy offer from a "desperate" Facebook? Snapchat doesn't even have revenue. Even a one billion dollar offer for a company like that was "insane," let alone a three billion-dollar offer. If anyone needed confirmation that we're right back in a "tech bubble," this was it.

Well, as we pointed out last week, this insta-consensus around startling valuations is nothing new in the tech world. People said exactly the same thing when the revenue-less Facebook was first valued at tens of millions of dollars. Then they said it again when the still revenue-less Facebook was valued at hundreds of millions. And then billions. And then tens of billions. And they said the same thing when Twitter was first valued at tens of millions... And Pinterest. And Google. And Amazon. And, basically, every other successful Internet company that has burst on to the scene and grown rapidly over the past 20 years.
http://www.businessinsider.com/how-snapchat-will-make-money-2013-11



From my experience as an investor, with regards to being being quick to judgement or being quick to research, I'm not saying that the consensus is wrong, I'm just saying that the latter has served me better than the former.

Keep in mind that everybody told me that I was being stupid to buy stock after the 2002 tech wreck, and 2008 financial crisis for 40% off and that I was insane to buy Phoenix, AZ property in 2010 for $50 a sq ft.

This is not an endorsement of SnapChat, technology or investing, but my own personal opinion.

 

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[Rickson9]

Just some more interesting information.

How Snapchat Will Make Money Even Though It Deletes The Most Important Asset It Has — Its Data
How do you sell data you've deleted?

So I turned to Jan Rezab, CEO of Social Bakers, one of the larger social media marketing agencies that does business with Facebook and Twitter. His company has 2,000 ad clients globally, pouring millions of dollars into Facebook and Twitter. Those advertisers include Samsung, Nestle and Diageo.

Rezab pointed out something so obvious, it's brilliant. All Snapchat needs to do is sync its application programming interface with Facebook or Twitter and advertisers can use that data to target users inside Snapchat. (An "API" is the thing that allows one app to talk to, or build on top of, another.)

For instance, if an advertiser wanted to reach Snapchat users who are also fans of Manchester United who live in Oregon, it would identify those people on Facebook who were also users of Snapchat. (Facebook has 1 billion users, and therefore a huge portion of Snapchat users also have Facebook accounts.) The advertiser could then send ads into Snapchat targeted only at Snapchatters who said on Facebook they were United fans in Oregon.

Thus Snapchat doesn't actually need its own data in order to slice and dice its audience the way advertisers really want.

Once you know that, Snapchat's fast-growing user base suddenly looks very valuable indeed.

http://www.businessinsider.com/snapchat-data-monetization-through-advertising-2013-11

 

[PopEmersen]

at least 5 billion

 

[RHL]

I still think that if you're that young, you should get out when it's on the table. Invest, begin again, do whatever. 3 Billion is a brand new, fully loaded 911 Turbo S every single day for the next 50 years.

 

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[Rickson9]

I still think that if you're that young, you should get out when it's on the table. Invest, begin again, do whatever. 3 Billion is a brand new, fully loaded 911 Turbo S every single day for the next 50 years.

For better or worse, once Benchmark got involved, it was no longer his sole decision.

 

[Pixpax]

For better or worse, once Benchmark got involved, it was no longer his sole decision.

I think this has a lot to do with PR and headlines rather than an actual deal that was turned down.

It plays really well into future valuations if you have a lot of press saying "15 year old Jimmy turned down $20 billion".

Its not wholly his decision as the VCs are not going to sit back and listen to exactly what he wants.

Check out how the headlines played well for Zuckerberg 5+ years ago for example:

http://www.wired.com/techbiz/startups/news/2007/09/ff_facebook?currentPage=all

 

[nausbot]

The problem with teens is that its so hard to sell to them without them feeling like they're being sold to. When you're 15, you want to be yourself, desperate to both fit in but also desperate for individuality. The last thing that you want is to be some sucker for the "man" who only wants to sell you something. If it's fresh and cool, it's in. When everyone is doing it, they find something else to do.

That's why I think passing on $3B without previously making a dime is a big mistake for snapchat. Because they could be the next myspace. Or digg. Or the first snapchat.

 

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[secretentourage]

Here are my thoughts on it...

http://www.secretentourage.com/entrepreneur/snapchat-vs-facebook-a-3-billion-mistake/

 

[Worldisyours]

or someone with a bigger ambition than money

 

[harerace]

All honesty they are either lying about their numbers , running some type on ponzi scam , or just retarded. The reason I say that is soon after they turned down billions they were raising money again... wtf kinda sense is that.

 

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[harerace]

or someone with a bigger ambition than money

Really? the app is for sexting.. not curing cancer.

 

[camcam]

Apparently google offered him $4bn after he declined Facebooks offer. Mental if you ask me.

 

[avispa]

Remember guys, MJ also sold his website, and it crashed and lost value. Later he re-bought it, and fixed the damages. While the people wasted money on ''fancy water coolers'' he spent time and blood building what he cared for.


And that is the question. Is what you made worth the money? Should you hand the reigns to that prize horse you hand fed as a young mare, so they can make a hamburger?


Is the money you will be paid worth it to you. To give up what you created?


So it's not about the money. Its about the passion. If I personally built something worth three million, I would not sell it. I would monetize it, to make money, but I would not give away what I created.. and watch it burn.

and to the person who built snapchat? The Event wasn't worth selling, because the process meant more.

I say good for him, for turning down a big hit.

 

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[arcola]

instagram just launched instagram direct. they will beat snapchat just like they beat vine

 

[Chin.Up]

instagram just launched instagram direct. they will beat snapchat just like they beat vine

When Instagram released the video feature, everyone thought that it would be over for Vine however I was told that Vine is still doing exceptionally well.

 

[PopEmersen]

The thing about IG vs Vine is the market is big enough for two players and they both have their niche. Vine is really comedy and sex since there isnt any moderation or censorship, IG vids are just an extension of their pics. Basically selfies, food, and normal bragging stuff. IG direct will not destroy Snapchat, the market is big enough for both.

 

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[elliot]

Looks like they should have sold...

 

[smarty]

Looks like they should have sold...

too much trouble now