5 ms·

Monetizing a social user base is a great strategy for making millions of dollars. But Snapchat is clearly aiming at billions, or they wouldn't have turned down

by beat 13y ago

Monetizing a social user base is a great strategy for making millions of dollars. But Snapchat is clearly aiming at billions, or they wouldn't have turned down the multi-billion dollar offers they've already received. Facebook has little to fear from social apps with millions in revenue... so why were they willing to pay so much for a zero-revenue company? And why are VCs ponying up tens of millions in funding for a zero-revenue product? The potential revenue from these dinky little solutions suggested here won't even break even for the VC. No, they have something much bigger and better up their sleeves. Leaving a few million on the table now in the interest of potential billions later is a very good trade. Personally, I think the world is ready for a footprint-free social app - not just photos, but threaded conversation and what not. Like Facebook, only without anything for employers to troll and exes to stalk. I think they could literally beat Facebook. That's worth a lot of waiting and risk.

hullo 13y ago
Well, they're not talking about leaving a million on the table, they're talking about leaving a million and a half on the table every single day ("if only they'd use our product!"). The figure they come up with is a half a billion dollars, which is a much larger number than you're giving credit to here.
- nostromo 13y ago
  As a comparison, that's half of Twitter's current annual revenue.
  - beat 13y ago
    And Twitter is unprofitable.
    - mcintyre1994 13y ago
      Apparently Snapchat's costs are incredibly low though. At the very least, their employee count is 2 digits, not 4.
      - beat 13y ago
        That won't last once they're monetizing. They'll have to staff up a great deal.
- beat 13y ago
  That's assuming not-wildly-optimistic assumptions within a self-serving analysis. Dial that back to $100M rather than half a billion, and it's no longer a tremendously appealing option. Facebook's per-user revenue for US users was $4.19 as of last October (with far smaller amounts for non-US users). And that's with years of experience, rich targeting based on multi-year social data mining, and the ability to embed several ad impressions per pageview. Is Snapchat likely to hit that high mark? Not in the short term, for sure.
  - gabemart 13y ago
    > Facebook's per-user revenue for US users was $4.19 as of last October Revenue per user over what time period?
    - jrpt 13y ago
      That's over one quarter. The data is from their 10-Q: http://files.shareholder.com/downloads/AMDA-NJ5DZ/2956973952x0xS1326801-13-31/1326801/filing.pdf http://files.shareholder.com/downloads/AMDA-NJ5DZ/2956973952... $832MM revenue from US & Canada, with 199 million users = $4.18
colechristensen 13y ago
The collective belief that the limited-life feature of snapchat is worth billions of dollars represents what I think is a massive dilution. Snapchat does nothing email doesn't, and email is free. I don't own and don't want to own any device which can guarantee any message has a limited life, that's all artificial.
- pjc50 13y ago
  The guarantee isn't crucial, it doesn't have to be watertight; the fact that it sets up an expectation of privacy and non-sharing changes the social context. Enough to become the sexting app of choice. And that's hugely valuable.
  - toomuchtodo 13y ago
    Because when I'm sexting, what I want is to have to endure someone's horrible ad campaign.
    - samstave 13y ago
      Hey... How you doin.... Drink Pepsi.
- rjd 13y ago
  "Snapchat does nothing email doesn't" is about as useful or poignant as saying "A tractor does nothing a donkey doesn't"
  - colechristensen 13y ago
    Then you clearly don't understand much about donkeys, tractors, or email... or you would rather post flippant remarks than actually add value to the conversation.
    - rjd 13y ago
      I assume you don't use Snapchat then, because it should be fairly self evident. For one thing, snap chat is audio visual, email is not. The second is snap chat is designed to work in manner to capture the moment without interfering with it, email on the other hand has a very interrupting flow. So you end up with one product that captures the emotional state of a moment, and the other which doesn't. This weekend for example I received a snap chat taken a friend bombing a motorway exit on roller blades. The fact it self destructs adds to this as well, because its not the content that matters so much as the vibe of the message. When I got that message I was stunned and wanted to see it again, I had the impluse to contact my friend immediately and respond. I would never get that from an email. I probably get in excess of 100:1 snapchats to emails from friends for those reasons. I also get maybe 20:1 vs Facebook messages now as well now.
higherpurpose 13y ago
> No, they have something much bigger and better up their sleeves. Better security and real privacy (messages that are private from the company itself) would be nice.
bsder 13y ago
> Facebook has little to fear from social apps with millions in revenue... so why were they willing to pay so much for a zero-revenue company? Because Facebook's userbase has saturated and is now leaking off. To apps like Snapchat.

by beat 13y ago

hullo 13y ago

Well, they're not talking about leaving a million on the table, they're talking about leaving a million and a half on the table every single day ("if only they'd use our product!"). The figure they come up with is a half a billion dollars, which is a much larger number than you're giving credit to here.

nostromo 13y ago
As a comparison, that's half of Twitter's current annual revenue.
- beat 13y ago
  And Twitter is unprofitable.
  - mcintyre1994 13y ago
    Apparently Snapchat's costs are incredibly low though. At the very least, their employee count is 2 digits, not 4.
    - beat 13y ago
      That won't last once they're monetizing. They'll have to staff up a great deal.
beat 13y ago
That's assuming not-wildly-optimistic assumptions within a self-serving analysis. Dial that back to $100M rather than half a billion, and it's no longer a tremendously appealing option. Facebook's per-user revenue for US users was $4.19 as of last October (with far smaller amounts for non-US users). And that's with years of experience, rich targeting based on multi-year social data mining, and the ability to embed several ad impressions per pageview. Is Snapchat likely to hit that high mark? Not in the short term, for sure.
- gabemart 13y ago
  > Facebook's per-user revenue for US users was $4.19 as of last October Revenue per user over what time period?
  - jrpt 13y ago
    That's over one quarter. The data is from their 10-Q: http://files.shareholder.com/downloads/AMDA-NJ5DZ/2956973952x0xS1326801-13-31/1326801/filing.pdf http://files.shareholder.com/downloads/AMDA-NJ5DZ/2956973952... $832MM revenue from US & Canada, with 199 million users = $4.18

colechristensen 13y ago

The collective belief that the limited-life feature of snapchat is worth billions of dollars represents what I think is a massive dilution. Snapchat does nothing email doesn't, and email is free. I don't own and don't want to own any device which can guarantee any message has a limited life, that's all artificial.

pjc50 13y ago
The guarantee isn't crucial, it doesn't have to be watertight; the fact that it sets up an expectation of privacy and non-sharing changes the social context. Enough to become the sexting app of choice. And that's hugely valuable.
- toomuchtodo 13y ago
  Because when I'm sexting, what I want is to have to endure someone's horrible ad campaign.
  - samstave 13y ago
    Hey... How you doin.... Drink Pepsi.
rjd 13y ago
"Snapchat does nothing email doesn't" is about as useful or poignant as saying "A tractor does nothing a donkey doesn't"
- colechristensen 13y ago
  Then you clearly don't understand much about donkeys, tractors, or email... or you would rather post flippant remarks than actually add value to the conversation.
  - rjd 13y ago
    I assume you don't use Snapchat then, because it should be fairly self evident. For one thing, snap chat is audio visual, email is not. The second is snap chat is designed to work in manner to capture the moment without interfering with it, email on the other hand has a very interrupting flow. So you end up with one product that captures the emotional state of a moment, and the other which doesn't. This weekend for example I received a snap chat taken a friend bombing a motorway exit on roller blades. The fact it self destructs adds to this as well, because its not the content that matters so much as the vibe of the message. When I got that message I was stunned and wanted to see it again, I had the impluse to contact my friend immediately and respond. I would never get that from an email. I probably get in excess of 100:1 snapchats to emails from friends for those reasons. I also get maybe 20:1 vs Facebook messages now as well now.

higherpurpose 13y ago

> No, they have something much bigger and better up their sleeves. Better security and real privacy (messages that are private from the company itself) would be nice.

bsder 13y ago

> Facebook has little to fear from social apps with millions in revenue... so why were they willing to pay so much for a zero-revenue company? Because Facebook's userbase has saturated and is now leaking off. To apps like Snapchat.