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What a huge valuation! I get that Snapchat has a huge amount of users, but can that really be turned into cash? Snapchat doesn't know much about users (personal

by hunt 12y ago

What a huge valuation! I get that Snapchat has a huge amount of users, but can that really be turned into cash? Snapchat doesn't know much about users (personal interests, personal details etc) so I can't see advertisers being too interested with "targeted" advertising being so current.

trhway 12y ago
can they get to IPO at even higher valuation? can they get revenue to support that or even higher valuation? both - probably not, and it isn't really important as long as they can get a next, bigger, round of financing at even higher valuation. IPO of 2000 is the C-round of 201x - ie. the time to cash and let the next ones to hold the bug. And it is good as it shows that there is a lot of liquidity out there and it attracts the liquidity into hi-tech thus paying our salaries.
canadaj 12y ago
I have always wondered how the number of users turns into a dollar amount, especially when what you said is true about the lack of personal details. Maybe the valuation is based on the number of ransom-able pics in their database. :)
eudox 12y ago
They may not little about their users now, but this valuation could well be based on the (reasonable) expectation that they will know more in the future.
deleted 12y ago
[deleted]
nilkn 12y ago
This is the question that's asked every time Snapchat's valuation comes up, and as far as I know nobody has ever given a truly satisfactory answer that isn't extremely speculative.
deleted 12y ago
[deleted]
jmgrosen 12y ago
The main semi-targeted advertising Snapchat is experimenting with right now is based on location: http://www.theverge.com/2014/7/15/5901359/snapchats-new-geofilters-change-based-on-where-you-are http://www.theverge.com/2014/7/15/5901359/snapchats-new-geof..., and location information is pretty huge when it comes to advertising. That article states that such filters are currently unpaid, but I think that could change easily. EDIT: Additionally, their rumored "news network" (http://www.theverge.com/2014/8/20/6049007/snapchat-discovery-news-network-probably-coming-soon http://www.theverge.com/2014/8/20/6049007/snapchat-discovery... b/c the original article is paywalled) is said to have advertising as well. No mention on how/if it's going to be targeted, but I wouldn't be surprised if they come up with something interesting.
trhway 12y ago
> Snapchat doesn't know much about users (personal interests, personal details etc) what? and what all these photos tell about the users if not their interests and personal details?! :)
- smtddr 12y ago
  You can't reliably process thousands of image files for key objects in the same way you can process text messages for keywords.
  - trhway 12y ago
    that is just new generation of business - like Google installed CPU farms Snapchat needs to do the same, only with GPU farms. Tangentially, it is interesting that Google is lagging with GPU - they are previous generation and just don't see the place for it in their business which is text based. New generation obviously going to be image based. FB is in between - they still have chance, yet start to lag behind.
johnrob 12y ago
Can facebook turn a bunch of garbage impressions into cash? Yes. Can twitter turn a bunch of garbage impressions into cash? Yes. Can snapchat turn a bunch of garbage impressions into cash?
- state 12y ago
  No
  - hisabness 12y ago
    can you clarify what you mean by in the red? presumably a lot of their expenses are related to R&D and marketing, which once cut would probably leave a profitable company.
    - edgyswingset 12y ago
      I mean that they (still) aren't making any money. The reports of Q1 profits this year are with a criticized, adjusted scale. When measuring with GAAP, as companies have been traditionally measured, they still posted a loss. Indeed, much of their expenses are for trying to grow as fast as possible, and cutting those could leave the potential for profit - but the entire premise of companies like this is that the potential earnings are unknown (but presumably high), thus they need to throw everything they have at it until they can find the kind of monetization they're looking for. I don't see it happening.
- edgyswingset 12y ago
  Twitter is still deep in the red, so I'm gonna go with No on that one.
- grimtrigger 12y ago
  Facebook has an incredibly deep knowledge of millions of users. I wouldn't consider Facebook in the same group as Twitter/Snapchat.
zaqokm 12y ago
> so I can't see advertisers being too interested with "targeted" advertising being so current Gary Vaynerchuck had an interesting point in one of his many many interviews. Basically SnapChat is instant focus, you cannot see an ad and file it away for later, you must act on it before it disappears. That functionality may be important to some advertisers. Me I joined SnapChat and have never received one naked selfie so I never use the app. I guess that use for it created a lot of the user base. I do not know how much I would value the app because of that and how scalable their user base is, and their tech is easily replicated.

by hunt 12y ago

trhway 12y ago

can they get to IPO at even higher valuation? can they get revenue to support that or even higher valuation? both - probably not, and it isn't really important as long as they can get a next, bigger, round of financing at even higher valuation. IPO of 2000 is the C-round of 201x - ie. the time to cash and let the next ones to hold the bug. And it is good as it shows that there is a lot of liquidity out there and it attracts the liquidity into hi-tech thus paying our salaries.

canadaj 12y ago

I have always wondered how the number of users turns into a dollar amount, especially when what you said is true about the lack of personal details. Maybe the valuation is based on the number of ransom-able pics in their database. :)

eudox 12y ago

They may not little about their users now, but this valuation could well be based on the (reasonable) expectation that they will know more in the future.

deleted 12y ago

[deleted]

nilkn 12y ago

This is the question that's asked every time Snapchat's valuation comes up, and as far as I know nobody has ever given a truly satisfactory answer that isn't extremely speculative.

deleted 12y ago

[deleted]

jmgrosen 12y ago

The main semi-targeted advertising Snapchat is experimenting with right now is based on location: http://www.theverge.com/2014/7/15/5901359/snapchats-new-geofilters-change-based-on-where-you-are http://www.theverge.com/2014/7/15/5901359/snapchats-new-geof..., and location information is pretty huge when it comes to advertising. That article states that such filters are currently unpaid, but I think that could change easily. EDIT: Additionally, their rumored "news network" (http://www.theverge.com/2014/8/20/6049007/snapchat-discovery-news-network-probably-coming-soon http://www.theverge.com/2014/8/20/6049007/snapchat-discovery... b/c the original article is paywalled) is said to have advertising as well. No mention on how/if it's going to be targeted, but I wouldn't be surprised if they come up with something interesting.

trhway 12y ago

> Snapchat doesn't know much about users (personal interests, personal details etc) what? and what all these photos tell about the users if not their interests and personal details?! :)

smtddr 12y ago
You can't reliably process thousands of image files for key objects in the same way you can process text messages for keywords.
- trhway 12y ago
  that is just new generation of business - like Google installed CPU farms Snapchat needs to do the same, only with GPU farms. Tangentially, it is interesting that Google is lagging with GPU - they are previous generation and just don't see the place for it in their business which is text based. New generation obviously going to be image based. FB is in between - they still have chance, yet start to lag behind.

johnrob 12y ago

Can facebook turn a bunch of garbage impressions into cash? Yes. Can twitter turn a bunch of garbage impressions into cash? Yes. Can snapchat turn a bunch of garbage impressions into cash?

state 12y ago
No
- hisabness 12y ago
  can you clarify what you mean by in the red? presumably a lot of their expenses are related to R&D and marketing, which once cut would probably leave a profitable company.
  - edgyswingset 12y ago
    I mean that they (still) aren't making any money. The reports of Q1 profits this year are with a criticized, adjusted scale. When measuring with GAAP, as companies have been traditionally measured, they still posted a loss. Indeed, much of their expenses are for trying to grow as fast as possible, and cutting those could leave the potential for profit - but the entire premise of companies like this is that the potential earnings are unknown (but presumably high), thus they need to throw everything they have at it until they can find the kind of monetization they're looking for. I don't see it happening.
edgyswingset 12y ago
Twitter is still deep in the red, so I'm gonna go with No on that one.
grimtrigger 12y ago
Facebook has an incredibly deep knowledge of millions of users. I wouldn't consider Facebook in the same group as Twitter/Snapchat.

zaqokm 12y ago

> so I can't see advertisers being too interested with "targeted" advertising being so current Gary Vaynerchuck had an interesting point in one of his many many interviews. Basically SnapChat is instant focus, you cannot see an ad and file it away for later, you must act on it before it disappears. That functionality may be important to some advertisers. Me I joined SnapChat and have never received one naked selfie so I never use the app. I guess that use for it created a lot of the user base. I do not know how much I would value the app because of that and how scalable their user base is, and their tech is easily replicated.