Feeds

'A measly 3 Instagrams? NO!' Sexy selfie Snapchat spurns Facebook's $3bn

SSaaS whippersnapper has BIG eyes

Choosing a cloud hosting partner with confidence

The CEO of sexting-friendly messaging service Snapchat has reportedly turned down buyout offers worth at least $3bn because he expects his company will soon be worth much more.

According to a report in the Wall Street Journal, 23-year old Snapchat cofounder and chief exec Evan Spiegel barely considered a recent $3bn offer from Facebook, and he waved away $4bn from Chinese e-commerce giant Tencent Holdings, too.

That's because, the WSJ's sources claim, Spiegel is betting that by next year, Snapchat's message volume and user base will have grown enough that the company – which earns no revenue – will be even more valuable.

Never mind that Snapchat was valued at just $800m as recently as June, or that Facebook's all-cash offer would have been more than three times as large as the nearly $1bn it shelled out for photo-swapping service Instagram in 2012. Spiegel is reportedly holding out for the big bucks.

Not that his strategy is without precedent. Mini-messaging service Twitter has yet to turn a profit, yet its recent IPO left it with a market capitalization of around $23bn.

And Snapchat has been growing, if the company's own figures are to be believed. In September, Spiegel told the audience at the Techcrunch Disrupt conference that Snapchat users are sharing 350 million photos per day, up from 200 million in June.

Snapchat's main attraction, compared to competing services like Facebook-owned Instagram, is that it allows users to send photos on a temporary basis. The sender can set a time limit of up to 30 seconds, after which the photo will be deleted from the receiver's device.

That makes it ideal for trading naughty selfies that you don't want seen by eyes other than the intended recipient's (although Spiegel likes to say Snapchat is about "sharing moments").

It also means Snapchat's user base skews toward young adults, a valuable demographic for marketers. That's one reason why Institutional Venture Partners said it tossed some cash Snapchat's way in the company's most recent funding round. Another reason was because, according to IVP, Snapchat benefits from network effects, meaning its service becomes more valuable the more people sign up for it.

Just how the company plans to extract that value in the form of profits, however, is not known. But at least one person involved with the company knows where the money is. According to the WSJ, Spiegel has told potential investors that if Snapchat seeks further investment in 2014, he would like to sell a block of his own stock. ®

Top 5 reasons to deploy VMware with Tegile

More from The Register

next story
Facebook pays INFINITELY MORE UK corp tax than in 2012
Thanks for the £3k, Zuck. Doh! you're IN CREDIT. Guess not
Facebook, Apple: LADIES! Why not FREEZE your EGGS? It's on the company!
No biological clockwatching when you work in Silicon Valley
Happiness economics is bollocks. Oh, UK.gov just adopted it? Er ...
Opportunity doesn't knock; it costs us instead
Sysadmin with EBOLA? Gartner's issued advice to debug your biz
Start hoarding cleaning supplies, analyst firm says, and assume your team will scatter
YARR! Pirates walk the plank: DMCA magnets sink in Google results
Spaffing copyrighted stuff over the web? No search ranking for you
Microsoft EU warns: If you have ties to the US, Feds can get your data
European corps can't afford to get complacent while American Big Biz battles Uncle Sam
Don't bother telling people if you lose their data, say Euro bods
You read that right – with the proviso that it's encrypted
prev story

Whitepapers

Cloud and hybrid-cloud data protection for VMware
Learn how quick and easy it is to configure backups and perform restores for VMware environments.
A strategic approach to identity relationship management
ForgeRock commissioned Forrester to evaluate companies’ IAM practices and requirements when it comes to customer-facing scenarios versus employee-facing ones.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Three 1TB solid state scorchers up for grabs
Big SSDs can be expensive but think big and think free because you could be the lucky winner of one of three 1TB Samsung SSD 840 EVO drives that we’re giving away worth over £300 apiece.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.