Sunday, November 17, 2013

Social: SnapChat Spurned Facebook and Even Google for $4 Billion

Source:  New Yorker.

So, Snapchat turned down Facebook who offered them $3 billion for the chat network.  And it's not any ordinary one but one that is whole-heartedly embraced by the youth.  And supposedly, even Google offered $4 billion and they were turned down.

The New Yorker post explains some of the reasons why.  However, it doesn't explain how the company and its private investors plan on making back their initial investment.  Perhaps, it looks to monetize future chats somehow.  Make the app and its services paid only.

But the whole point is that SC not only believe the offers were too low, it believes it has something of valuable beyond a few measly billions. On top of that, even a few of its investors might be fine with the decision.  One investor in Snapchat who was also an investor in Instagram, did not seem to mind.  In fact, they were up happy Instagram gave in so quickly and for only $1 billion.

My sense is that Facebook will continue to look for social apps to buy.  Like Snapchat.  However, with reports of the youth looking elsewhere for their social fixes like Snapchat, Whatsapp, or Line, these social companies may be sensing blood.

And why settle for a few billion when they could conceivably be the next Facebook worth closer to $100 billion.  Even Twitter with a smaller active user base albeit with a much more useful service than Facebook has a market cap of about $24 billion.  So $3 or $4 billion sounds like nothing.

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