SnapChat turned down billions from Facebook - wise or crazy?
Facebook apparently made a bid for SnapChat for billions of dollars - and they turned it down. This is a company that is run by a couple of twentysomethings who, until very recently, were running their business in a bungalow.
The app isn't really making any money either. Instagram and Tumblr were in the same boat until they got a paycheck from a takeover. Are SnapChat's owners crazy? It seems they think that there's more money to be had elsewhere.
If you've been living up a tree for the past few years, SnapChat is the brainchild of Evan Spiegel and Bobby Murphy and they developed the social network which allows users to send photos which perish after they've been viewed. Thanks to people noticing that they could send mucky photos with a sell-by-date, it soon became a rousing success.
And now, with money being dangled before it, it seems Spiegel and Murphy want to try and go down the Facebook/Twitter route, and resist the temptation of quick, guaranteed money, to hold out for something more worthwhile. That said, they must be aware that Silicon Valley is filled with the penniless corpses of entrepreneurs who played hard ball and lost.
So what are SnapChat's plans? Well, it seems they think they'll be one of the first social media companies to build a business around money made from something beyond advertising. That inevitably means virtual goods, as seen in a number of games (The Simpsons - Tapped Out is a good example) and things like WeChat. The Japanese messaging app, Line, makes money by allowing users to buy virtual stickers.
One thing SnapChat has, which other social apps don't, is privacy. That could be a lucrative angle. Facebook users have long complained about the lack of privacy and in a report, Facebook had to admit that fatigue is setting in with younger users who said that they were using the service less frequently. With SnapChat processing over 350 million messages a day, they're definitely onto something.
The owners might be holding out for a better deal. Facebook owner Mark Zuckerberg is clearly a huge fan too. He chased SnapChat and it has been reported that Spiegel didn't want to work for Zuckerberg. Facebook, not one for taking a 'no' lying down, started the SnapChat-esque 'Poke', which no-one took a blind bit of notice of. FB's 'Messenger' has also failed to win people over. There's a good chance Zuckerberg will make an improved offer. There are a number of Chinese suitors floating around too.
Maybe SnapChat isn't so dumb after all?