The tech-world is full of unbelievers who always viewed anything new and out-of-the-box
idea with lots of sarcasm and scowl. Same happened with Snapchat- the Los-Angeles based
start-up that cuts across all the age-groups and types of users. With the ‘disappearing’ nature of
Snapchat photos, many raised their eyebrows on figuring out first – what is Snapchat actually?
And when they were able to decipher the puzzle called what is Snapchat, the critiques smirked
that with such fragile ‘product’ to offer, Snapchat is not going to last in the long run. But three
years down the line and earning daily 700 million photo-sharing, there is no sign for Snapchat to
slow down. And when in the earlier part of October this year, Evan Spiegel discussed the plan of
building Snapchat a large and autonomous conglomerate, the message sent across clear. But now
the question is – how Snapchat picture app is going to raise funds?
Snapchat-Facebook – the battle of David Vs Goliath
The rivalry of Snapchat-Facebook is getting more acute day by day. But the scenario was
completely different even one year back when Facebook- the ‘big daddy’ of social networking
sites offered $3 billion all-cash acquisition proposal to Snapchat, only to get rejected by the
latter. It started off a stream of cat-calls and howls of contempt towards Snapchat on how dare
a start-up that had no revenue of it’s own can snub a desperate offer from Facebook. But they
forgot the long history of tech world is full of such examples. Take for an instance, Google,
Amazon or Pineterest, and the list goes long. The wrath of tech-pundits was driven by how
Snapchat could be valued $ 3 billion at so early stage of its existence? But very conveniently
they forgot that even newbie, revenue-less Facebook was once valued at tens of millions and
later at hundreds of millions.
The bottom line is no one should question of Snapchat being valued at $ 3 billion, as it has its
predecessors in the same path.
Twin sure-shot ways of Snapchat picture app to make money
1) The advertisers rejoice about the fact that the core users of Snapchat are teenagers
worldwide who are the future consumers of their brands. Also it helps that Snapchat does
various experimentation by mixing photo or video ads per 20-30 photo sharing, so the
advertising opportunity of Snapchat holds high potential for the advertisers.
2) Also selling virtual goodies like emoticons, stickers etc. among users are another
promising avenue for Snapchat to rake in moolah.
Even mathematics proves Snapchat’s worth of $ 3 billion
According to the theory of Bill Gurley- the star tech analyst of Wall street in 90s , every internet
company at some point of time during their existence will trade at their normal earnings multiple
30X earnings ( for modern times’ sake, it must be 20X-25X) and time and again this theory
clicked. Also Snapchat has the talent to take on the major social networking sites at par in the
future. So it’s highly possible that in future Snapchat shall pull revenue around $500 million.