Snapchat Playing it Cool

I recently wrote about how SnapChat may spell the fall ofFacebook. Now I don’t want to pat my own back here, but it seems as though Mark Zuckerberg is reading my blog and taking notes (probably not, but fun still) since Facebook recently announced plans for acquiring SnapChat.

However, since founders Evan Spiegel and Bobby Murphy also seem to be avid subscribers to the Social Gnome, they coldly, shrewdly, and wisely turned down that offer. What happened next? Zuckerberg upped the ante. But Spiegel and Murphy would not have any of it, turning down the 3 billion dollar offer.

23-year-old Spiegel, has yet to comment on the information, but according to the Wall Street his plan is to start bringing in bids from potential buyers first next year. It is hoped that Snapchat will have grown even larger at that time, and thus have become worth more money. Snapchat has today only been around for about two years, and if the net-worth increases along the same tangent it has so far, it would be worth (crude calculations) an estimated 3,75 billion in May and 4,5 in November of 2014.

This however is all conditioned on several things but the two most important factors would be;

1.  Facebook themselves just copying the app and incorporating their “FaceSnap App” into their existing library. We all know they do have the resources, and building such an app is NOT a 3 billion dollar investment. What Snapchap is offering Facebook here is a kick start, where Facebook would not have to invest in building a community nor brand awareness.
2. Fad dying off and users leaving SnapChat. And if this happens SnapChap will not even be worth the time of day. It has happened before with immensely popular sites and applications. The social Internet is moving fast, and so is its users.

However, Facebook are not alone in trying to acquiring Snapchat; several different companies have shown interest. As of right now Snapchat has no sales what so ever, simply relying on its users. No ads, nothing; just investors and evaluations. With such a volatile income base, it shows Iceman guts to pass by an offer that would make the founders economically independent. 

And as of right now, Speigel and Murphy are playing it cool.

Rise of SnapChat - Fall of Facebook?

After a slow start, including a failed phone-app, Facebook's mobile revenue finally got wind in their sails during the early summer months. In the first quarter of this year, mobile revenues rose up to 30 percent of the company’s total revenue, from having been almost non-existent a year earlier. But now the future may still not be really is so bright. The reason for this being a new generation of mobile applications, which are currently overwhelming users.

It started with the simple message apps, where Whatsapp excels with 250 million users, and competition is increasing. From Asia Wechat, Line and KakaoTalk are growing stronger, making names for themselves also in the west.

But the rocket in this context are the image and messaging app Snapchat, which has taken the younger generation by storm. Snapchat has the odd property that the images that are sent, are automatically deleted after 10 seconds. This, on one hand made it extremely popular in a privacy perspective, but on the other got Snapchat singled out as a stronghold for sending sex chats and images.

Snapchats popularity is enormous. According to Mary Meeker, renowned analyst, venture capitalist and net guru, one third of all photos shared online this year passes through Snapchats network. 200 million photos are now shared with Snapchat every day, according to the company. In February, the figure was a mere 60 million.

Meanwhile Snapchat just brought in new capital, valuing ​​the company which started as late as 2011, to 800 million USD. It's more than what Facebook finally paid for Instagram almost a year ago; that affair ended with a price tag of 715 million USD. Mark Zuckerberg's company made an attempt to copy the self-destruct Snapchats pictures with the Poke app, but to no success. Instagram recently also added a function to capture short video clips, this to meet the threat of another newcomer, Twitter-owned Vine.

The fight will (as usual) be decided by who pulls in the biggest bucks. Facebook still have some substantial mobile revenues, while neither Snapchat nor Vine, so far, have any income to speak of.