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Snapchat close to raising $100 million
- dataisfun 13y agoDoes snapchat really need $100M?
- bryanh 13y agoIf I were guessing (and I am): probably not, but later stage investors usually want their ~10-20% of the company in a round. After a string of "no, we don't need that $YYm++", the valuation (the only truly negotiable number in the negotiation) gets high enough that it is insane to continue saying "no".
- coderguy123 13y agothese valuations just don't make any sense.
- caniszczyk 13y agoLOL that is all
- aezell 13y agoPorn pays.
- CoachRufus87 13y agoAnd then the kids will move on to the next thing. Hopefully, for the sake of their investors, that happens after they've been acquired for a billion. Rinse, repeat.
- citricsquid 13y agoDidn't people say the same about instagram and twitter? There are services that have the ability to stick around.
- torbit 13y agoI've read teens are slowly moving away from facebook to Twitter & Instagram. Probably because it has less drama. It is more about narcissism without needing to reply to anybody.
- CoachRufus87 13y agoWe'll never truly know if instagram could've stuck around had it not been acquired. Twitter is an indispensable communications medium that has more than 1 use case (read news, talk to friends, overthrow a government, etc). Thus ads makes sense (and I would even pay a low, yearly fee to keep it around). Snapchat is interesting, but $100 million interesting?
- grinich 13y agoNon-tech people probably say the same thing about GitHub...
- CoachRufus87 13y agoGithub has a proven business model.
- netc 13y agoAnd those will be a different set of kids - next generation.
- NLPsajeeth 13y agoI wonder how many millions will end up at Google since Snapchat is built on Google App Engine. [1] [1] http://gigaom.com/2013/05/07/snapchats-act-of-faith-in-building-on-google-compute-engine/ http://gigaom.com/2013/05/07/snapchats-act-of-faith-in-build...;
- pdog 13y agoFor those wondering why, check out slides 14 and 15 of the 2013 KPCB Internet Trends report: http://www.slideshare.net/kleinerperkins/kpcb-internet-trends-2013/14 http://www.slideshare.net/kleinerperkins/kpcb-internet-trend...
- aresant 13y agoTo your point, PG wrote a complete essay on exactly why GROWTH matters so much to valuations - http://www.paulgraham.com/growth.html http://www.paulgraham.com/growth.html
- w1ntermute 13y agoUh, that doesn't explain how they're making money, or plan to. More users = more photos transmitted = more bandwidth = more money burned, and not earned.
- JonFish85 13y agoI imagine it's actually fairly simple for them to integrate ads: you'll have to watch a ~10 second ad before you can see your message. Edited to add: Not to mention that they have a captive audience--you'll have to watch the ad, which I have to think is prime ad space that they can charge for.
- jusben1369 13y agoI don't think that model will ever work. Most SnapChats are trivial random stuff. Cute but you're not going to sit through 10 seconds of Citibank's credit card pitch to see your buddy with a small carrot sticking out his nose. Secondly, SnapChat's are typically under 5 seconds. So it's like watching 2 hour long commercial for a 1 hour show.
- danielrakh 13y agoOn the contrary, 5 seconds for an Ad is the sweet spot before people get pissed off. Look at YouTube videos. They require you to watch about 10 seconds before you get the "skip ad" option and it seems to be working great for them.
- bbrunner 13y agoGreat for them. Snapchat is the only service in recent memory that I've actually overheard high schoolers use as a verb. If you can define a new way to share something that gets its own language, you've got something pretty interesting.
- JonFish85 13y agoThe early investors in Zynga have some extra cash to invest?
- joonix 13y agoWhat does Snapchat need $100M for? The idiocy continues.
- joelandren 13y agoTrying to build out the next generation mobile platform? People never raise money for their current product.
- joonix 13y agoWhat does that even mean? What is "the next generation mobile platform?" I'm not even sure what you mean by "mobile platform." Snapchat is a mechanism for sending photos to friends. Privately. People don't want to send messages on it. They don't want a Snapchat "news feed"(doesn't make sense since the whole point is privacy). Why do they need to become a mobile platform? The founders can charge $0.99 for an annual app subscription and sit back and have a great income. Instead $100M will evaporate trying to become another FB/Twitter, which doesn't even make sense.
- Esifer 13y agoExcept, not many would pay for that and will move to alternative.
- joelandren 13y agoAgain, everything you mention is based on the current state. No successful entrepreneur raises money (or runs there company for that matter) planning on the status quo not changing.
- tolmasky 13y agoSo when is Facebook going to buy snapchat?
- fossuser 13y agoRumor is they already tried to buy them and after the snapchat CEO rejected them they built Facebook poke (which is a prettier snapchat clone). Details about potential purchase price were never leaked. Snapchat CEO welcoming Facebook: http://www.theverge.com/2012/12/21/3793648/snapchat-ceo-on-poke-welcome-facebook-seriously http://www.theverge.com/2012/12/21/3793648/snapchat-ceo-on-p... http://news.softpedia.com/news/Facebook-s-Poke-App-Is-a-Snapchat-Clone-Built-in-Just-12-Days-316970.shtml http://news.softpedia.com/news/Facebook-s-Poke-App-Is-a-Snap... http://techcrunch.com/2012/12/21/facebook-poke-app/ http://techcrunch.com/2012/12/21/facebook-poke-app/
- michaelxia 13y agohavent seen this cinderella story before....
- argonaut 13y agoIt is important to note that in the startup community it is generally a good tactic to raise money when you don't need it, because that gives you enormous leverage in the negotiation. If, on the other hand, you're in a negotiation where the other side knows you need the money, you are going to get much worse terms.
- yesplorer 13y agoThis holds true when you are building a product where you'll potentially need money to scale but you know that though you are growing rapidly, your current infrastructure be enough for a while. There, you can raise money against the future. But this is snapchat. Don't expect them to become another Facebook, don't expect them to become another twitter. Because they've already defined their use case, which is simple and straight forward so why $100m?
- mcintyre1994 13y agoI've never seen that sort of ratio discussed here, is it normal to be raising at 20% of your valuation?
- argonaut 13y agoYes. That is a very standard ratio.
- jusben1369 13y agoMy favorite part is they appear to be snubbing the Valley and the traditional VC's. That's brave and admirable and healthier for the entire ecosystem.
- crapshoot101 13y agoWhat I'd be curious about is how much of this round (if any) is secondary / going to cash out some early employees / founders / early investors.
- dxhdr 13y agoIt's all going toward Snapchat R&D and sales, of course. Staying on the cutting edge of technology and maintaining your paying customers is tough in today's market.
- lotso 13y agoInteresting to see everyone speculate on how terrible of an investment this is when most users couldn't wrap their head around the concept of Snapchat ~7 months ago. Here's why the need $100 million: They are building the future of chat and they already have incredible engagement and growth month over month.
- dxhdr 13y agoHa ha ha thank you Bernanke, this is amusing. Dot com 2.0 has arrived! When is the IPO?
- adastra 13y agoI tutored teenagers in physics and math for a while to make ends meet. And they love snapchat. They are also basically ready to be done with facebook. There are two reasons they prefer snapchat to facebook and texting, respectively, both of which basically come down to privacy: 1) Their parents are on facebook 2) They know that what they say today might look stupid tomorrow, and facebook (and the phone companies) save everything, forever. Basically, they have figured out that what they say when they are 13 will look ridiculous when they are 17. And what they say when they are 17 will be really cringe-worthy when they are in college. They also know that facebook's track record on privacy is awful, so even if they went through the trouble to create different types of friend lists, with different access settings, etc., facebook could just change everything tomorrow. I could easily see snapchat expanding to build an entire social network built around the "only see for 10 seconds and its gone" feature, and droves of teenagers moving onto it. If they do, facebook could be in serious trouble.
- CoachRufus87 13y agoHow could an entire social network be built around the "only see for 10 seconds and its gone" feature? I'm genuinely curious.
- loganfrederick 13y agoConceivably they could build out the address book/friends list features to create a persistent profile, and then all the other media content is temporary.
- dfrey 13y agoHow to make $100 million disappear in 10 seconds.