Last week, it was reported that Facebook had made an attempt to acquire the temporary image sharing mobile app, and hotshot start-up of the moment, Snapchat.
The offer? $3bn.
Three. Billion. Dollars.
And Snapchat said no.
Apparently Google made an offer as well, this time? $4 billion.
Again, Snapchat said no.
To put that into real-world context, that’s a little bit more than the GDP of Swaziland.
Or 0.02% of the entire debt of the United States.
You’re getting a grasp on the number now, right? It’s not small.
Why has the founder of Snapchat rejected $3bn in cash for it from Facebook? Is he mental? Mate, take all of the money and be smug for life.
— mikey (@MagnificentDuke) November 14, 2013
Everyone is asking the wrong question about the Snapchat valuation. It’s not how much it’s worth. It’s how much it’s worth to FB/Google.
— Hillel Fuld (@HilzFuld) November 18, 2013
The man has a point.
Before you snort however (and you may have, several times over since the story first broke (and who would blame you? It is an inconceivable amount of money)), it’s worth putting that against a backdrop of other, similar Valley offers of this kind.
— Back in 2006, Yahoo offered $1bn for Facebook.
Facebook said no and went on to be worth 100 times that amount.
— In 2010, Google offered $6bn for Groupon.
Groupon said no and is now worth much less than that.
So this kind of thing can go either way. It should also be noted that at the time of both of these offers, neither start-up had turned a profit. Just like Snapchat. In fact, just like Snapchat, Instagram had still not turned a profit when Facebook acquired it last year.
So why is Snapchat worth so much to these two Internet titans?
Let’s look at the facts:
- Instagram: 55m daily image shares.
- Facebook: 350m daily image shares.
- Snapchat: 400m daily image shares.
That’s not a typo, as of just this morning Snapchat is beating Facebook in terms of daily image shares. Oh, and there’s something else to be aware of:
Facebook’s alleged 3 billion dollar offer for Snapchat kinda reveals where teens are spending their time. IM apps.
— Matt Holt (@MattSocial) November 14, 2013
There it is: TEENS.
With Yahoo’s acquisition of Tumblr and Facebook’s (soon to be more concerning than it currently is) decreasing usage numbers with teens, it’s clear where the attraction is.
The generation growing up right now are unlike any before it. They have never known a world without Internet and, more importantly, they see Facebook in the way adults see LinkedIn.
Snapchat is fun, it’s simple to use, and what the content users create and share is gone in seconds, literally.
Will the service eventually be bought? It remains to be see, but as long as Snapchat has the eyes of the most wanted online audience on the planet, those billion dollar offers will keep on coming.