Is SnapChat Worth $3 billion? Why SnapChat Should Have Taken It

snapchatI am now at an age where I can say: It’s all the rage for the kiddies. Personally, I can’t get into it.

Snapchat is this instant message service that allows you to send a picture or video (up to 10 seconds) to another with captions. When they view the picture or video, it is deleted from the server. You can also do short stories, which are also removed after 24 hours.

Snapchat seems to be a good idea, but the reality is the service is not proprietary. That means I could open up a similar service and take all of their business away (which at present has 26 million users).

Facebook offered $3 billion for the service, which Snapchat has declined. This seems to be the companies’ 2nd attempt to buy the service – according to WSJ. So it is possible that Snapchat is holding out?

Just over a year ago, Instagram was in this same position. They ended up snapping up Facebook’s offer at the $1 billion range. They had to of known Facebook was planning to compete, therefore making Instagram a dying commodity. Their 30 million users were sold at .33 cents a user. Still, one has to wonder if Instagram could have held out for more.

There is also reports that Google offered Snapchat $4 billion for the service, which they also turned down. This would have been better for the company anyway, since they are hosted on Google Cloud servers.

The biggest problem with this chat service is their main feature – they delete everything. If you see a picture, you can’t reference it after. If you read a story, it’s gone after 24 hours.

What Facebook and Google are buying is the user base Snapchat has amassed. Their demographic is 14-21 year olds which are leaving larger social networks already.

But is this user base worth $1 per user?

There is no ad model. The retention period gives you nothing to search on. And while Twitter suffered a lack of ads for the longest time, they had the ability to take one tweet and send it to millions. Snaps don’t go past the original group it was sent to.

Snapchat is an interesting concept that – right now – is infused by a few good investors ($75 million to be exact) . Unless the service can start an ad model or even put a patent or two into the service, I don’t see this sticking around too long. Especially since Facebook wanted it and can’t get it. They might come back with 4-5 billion , but if that falls, you know they’ll working on their own version (if they’re not already).

About J Powers

Podcaster, Blogger, IT Specialist. Been working in IT for over 15 years. Supported Windows 95 upon initial Launch and have worked in desktop, server and Web site support roles. Started Geekazine in 2007 and launched 5 shows from it. Speaker on many topics in Podcasting and technology. Also a musician.

4 thoughts on “Is SnapChat Worth $3 billion? Why SnapChat Should Have Taken It

  1. At first glance the idea of sending photos and videos that get deleted immediately after it has been viewed doesn’t make much sense. But if you think about it, immediately deleting the material makes perfect sense if you are making posts that you don’t want your parents to find since everything is automatically deleted, leaving no evidence. This seems like the perfect “sexting” social network. It seems to me to be a bunch of law suits are just waiting to happen.

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