

Snapchat close to raising $100 million - mikegreenspan
http://gigaom.com/2013/06/07/snapchat-close-to-raising-as-much-as-100-million-at-a-jaw-dropping-valuation/

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pdog
For those wondering why, check out slides 14 and 15 of the 2013 KPCB Internet
Trends report:

[http://www.slideshare.net/kleinerperkins/kpcb-internet-
trend...](http://www.slideshare.net/kleinerperkins/kpcb-internet-
trends-2013/14)

~~~
w1ntermute
Uh, that doesn't explain how they're making money, or plan to. More users =
more photos transmitted = more bandwidth = more money burned, and not earned.

~~~
JonFish85
I imagine it's actually fairly simple for them to integrate ads: you'll have
to watch a ~10 second ad before you can see your message.

Edited to add: Not to mention that they have a captive audience--you'll _have_
to watch the ad, which I have to think is prime ad space that they can charge
for.

~~~
jusben1369
I don't think that model will ever work. Most SnapChats are trivial random
stuff. Cute but you're not going to sit through 10 seconds of Citibank's
credit card pitch to see your buddy with a small carrot sticking out his nose.
Secondly, SnapChat's are typically under 5 seconds. So it's like watching 2
hour long commercial for a 1 hour show.

~~~
danielrakh
On the contrary, 5 seconds for an Ad is the sweet spot before people get
pissed off. Look at YouTube videos. They require you to watch about 10 seconds
before you get the "skip ad" option and it seems to be working great for them.

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joonix
What does Snapchat need $100M for? The idiocy continues.

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joelandren
Trying to build out the next generation mobile platform? People never raise
money for their current product.

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joonix
What does that even mean? What is "the next generation mobile platform?" I'm
not even sure what you mean by "mobile platform." Snapchat is a mechanism for
sending photos to friends. Privately. People don't want to send messages on
it. They don't want a Snapchat "news feed"(doesn't make sense since the whole
point is privacy).

Why do they need to become a mobile platform? The founders can charge $0.99
for an annual app subscription and sit back and have a great income. Instead
$100M will evaporate trying to become another FB/Twitter, which doesn't even
make sense.

~~~
joelandren
Again, everything you mention is based on the current state. No successful
entrepreneur raises money (or runs there company for that matter) planning on
the status quo not changing.

~~~
joonix
Why is Snapchat better positioned to convert $100M into the next "mobile
platform" than any other entity?

~~~
grinich
Number of users.

Diversity of product use.

Lack of existing brand stigma.

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NLPsajeeth
I wonder how many millions will end up at Google since Snapchat is built on
Google App Engine. [1]

[1] [http://gigaom.com/2013/05/07/snapchats-act-of-faith-in-
build...](http://gigaom.com/2013/05/07/snapchats-act-of-faith-in-building-on-
google-compute-engine&#x2F);

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CoachRufus87
And then the kids will move on to the next thing. Hopefully, for the sake of
their investors, that happens after they've been acquired for a billion.
Rinse, repeat.

~~~
citricsquid
Didn't people say the same about instagram and twitter? There _are_ services
that have the ability to stick around.

~~~
CoachRufus87
We'll never truly know if instagram could've stuck around had it not been
acquired.

Twitter is an indispensable communications medium that has more than 1 use
case (read news, talk to friends, overthrow a government, etc). Thus ads makes
sense (and I would even pay a low, yearly fee to keep it around).

Snapchat is interesting, but $100 million interesting?

~~~
grinich
Non-tech people probably say the same thing about GitHub...

~~~
CoachRufus87
Github has a proven business model.

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dataisfun
Does snapchat really _need_ $100M?

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bryanh
If I were guessing (and I am): probably not, but later stage investors usually
want their ~10-20% of the company in a round. After a string of "no, we don't
need that $YYm++", the valuation (the only truly negotiable number in the
negotiation) gets high enough that it is insane to continue saying "no".

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adastra
I tutored teenagers in physics and math for a while to make ends meet. And
they _love_ snapchat. They are also basically ready to be done with facebook.

There are two reasons they prefer snapchat to facebook and texting,
respectively, both of which basically come down to privacy:

1) Their parents are on facebook

2) They know that what they say today might look stupid tomorrow, and facebook
(and the phone companies) save everything, forever.

Basically, they have figured out that what they say when they are 13 will look
ridiculous when they are 17. And what they say when they are 17 will be really
cringe-worthy when they are in college. They also know that facebook's track
record on privacy is awful, so even if they went through the trouble to create
different types of friend lists, with different access settings, etc.,
facebook could just change everything tomorrow.

I could easily see snapchat expanding to build an entire social network built
around the "only see for 10 seconds and its gone" feature, and droves of
teenagers moving onto it. If they do, facebook could be in serious trouble.

~~~
CoachRufus87
How could an entire social network be built around the "only see for 10
seconds and its gone" feature? I'm genuinely curious.

~~~
loganfrederick
Conceivably they could build out the address book/friends list features to
create a persistent profile, and then all the other media content is
temporary.

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argonaut
It is important to note that in the startup community it is generally a good
tactic to raise money _when you don 't need it_, because that gives you
enormous leverage in the negotiation. If, on the other hand, you're in a
negotiation where the other side knows you need the money, you are going to
get much worse terms.

~~~
yesplorer
This holds true when you are building a product where you'll potentially need
money to scale but you know that though you are growing rapidly, your current
infrastructure be enough for a while. There, you can raise money against the
future.

But this is snapchat. Don't expect them to become another Facebook, don't
expect them to become another twitter. Because they've already defined their
use case, which is simple and straight forward so why $100m?

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bbrunner
Great for them. Snapchat is the only service in recent memory that I've
actually overheard high schoolers use as a verb. If you can define a new way
to share something that gets its own language, you've got something pretty
interesting.

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coderguy123
these valuations just don't make any sense.

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crapshoot101
What I'd be curious about is how much of this round (if any) is secondary /
going to cash out some early employees / founders / early investors.

~~~
dxhdr
It's all going toward Snapchat R&D and sales, of course. Staying on the
cutting edge of technology and maintaining your paying customers is tough in
today's market.

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mcintyre1994
I've never seen that sort of ratio discussed here, is it normal to be raising
at 20% of your valuation?

~~~
argonaut
Yes. That is a very standard ratio.

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JonFish85
The early investors in Zynga have some extra cash to invest?

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jusben1369
My favorite part is they appear to be snubbing the Valley and the traditional
VC's. That's brave and admirable and healthier for the entire ecosystem.

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tolmasky
So when is Facebook going to buy snapchat?

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fossuser
Rumor is they already tried to buy them and after the snapchat CEO rejected
them they built Facebook poke (which is a prettier snapchat clone). Details
about potential purchase price were never leaked.

Snapchat CEO welcoming Facebook:
[http://www.theverge.com/2012/12/21/3793648/snapchat-ceo-
on-p...](http://www.theverge.com/2012/12/21/3793648/snapchat-ceo-on-poke-
welcome-facebook-seriously)

[http://news.softpedia.com/news/Facebook-s-Poke-App-Is-a-
Snap...](http://news.softpedia.com/news/Facebook-s-Poke-App-Is-a-Snapchat-
Clone-Built-in-Just-12-Days-316970.shtml)

[http://techcrunch.com/2012/12/21/facebook-poke-
app&#x2F](http://techcrunch.com/2012/12/21/facebook-poke-app&#x2F);

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dxhdr
Ha ha ha thank you Bernanke, this is amusing. Dot com 2.0 has arrived! When is
the IPO?

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lotso
Interesting to see everyone speculate on how terrible of an investment this is
when most users couldn't wrap their head around the concept of Snapchat ~7
months ago.

Here's why the need $100 million: They are building the future of chat and
they already have incredible engagement and growth month over month.

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dfrey
How to make $100 million disappear in 10 seconds.

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aezell
Porn pays.

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michaelxia
havent seen this cinderella story before....

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caniszczyk
LOL that is all

