
Snapchat has reportedly filed confidentially for its massive IPO - coloneltcb
https://techcrunch.com/2016/11/15/snapchat-has-reportedly-filed-confidentially-for-its-massive-ipo/
======
taytus
I'm a professional photographer with about 16K + Instagram followers.

I used snapchat to stream behind the scenes photos and videos and retouching
tutorials, but that was a black box.

Yes, I had comments open and I interacted with my friends and fans, but I
couldn't tag anyone, or hashtags, discoverability is a serious issues in that
platform.

I started using Instagram stories and now I have the same views per snaps that
I had on snapchat plus now I can tag brands/models/makeup artists/ etc.

Instagram is going to EAT snapchat, specially for content creators
discoverability is everything.

~~~
rgbrenner
It definitely sounds like Instagram is a better fit for that. But is that
really Snapchat's core use case?

There's definitely some overlap in uses, but instagram isn't a complete
replacement for Snapchat. And the areas where instagram doesn't cover
snapchat, it seems like are snapchat's primary uses.

~~~
TallGuyShort
Maybe you could describe the core use case? I was nodding my head all through
that comment because I feel like I _should_ like Snapchat, seems like everyone
else does, but after each of several attempts I just uninstalled it because I
would open it and wonder what I should be doing on it. I just didn't find
myself experiencing things that were worth pulling out my phone for but not
worth keeping permanently. And I just couldn't find accounts who posted
anything worthwhile on there often enough.

~~~
nothrabannosir
It's great for a light, whimsical touch. Throw stuff at the wall and see what
sticks. Photos of yourself making a fool of yourself, everywhere, all the
time. Stupid puns, stupid jokes, stupid selfies, stupid stuff which is really
the best stuff, if you ask me :). No ultra well thought out filtered perfect
square omg look at the color chroma jesus on my toast kind of photos. That'd
be a waste of time. Just passing thoughts, fleeting moments. It's so great for
a light touch to keeping up with far away friends and family. You don't need a
reason to send a snap of just your face doing O.O. And it reminds you of each
other. But you wouldn't do that over e-mail or Facebook :P.

~~~
toomuchtodo
Do people really have that much time to create and view junk? Random photos of
whatever? I'm unsure how this is better than SMS/MMS/iMessage, or how it has
more value. Twitter with pics and video in private groups?

~~~
argonaut
Have you been in a new relationship recently? Anecdotally it's pretty common
for a couple to send pictures to one another of their faces through Snapchat -
just nice to see each other and see what each other is doing. This is a
classic Snapchat use case.

~~~
SmellyGeekBoy
My wife and I do this all the time and we've been together 16 years...

------
chollida1
Really interested in learning if Snap is more Facebook or Twitter.

This could be a big litmus test for the tech IPO.

2 things I'm very interested in:

1) If the rumors are correct that they are looking to raise 4 Billion at a
roughly $40 Billion valuation.

If you assume that their absolute pie in the sky max valuation ever is similar
to what facebook is now, roughly 340 Billion, then that's not alot of upside
for investors for a company that probably isn't yet profitable.

2) I've heard that the founders have locked up voting control. I'm always half
watching companies like this to find out just how far they can push wall
street before wall street says no more. Mark Zuckerberg and the Google
founders have done a great job of managing their companies while maintaining
voter control.

I want to see a tech company where the founders own voting control but manage
the company like Twitter, this is not a positive reference.

If Snap get's their rumored IPO price but can't grow revenue then they could
be the poster child for SEC minority shareholder reform, but then again
President Trump has said he wants to remove regulation in the markets so.....

Twitter had a very dedicated and professional audience, journalists,
investors, etc who used their product and they couldn't live up to
expectations.

Snap now has to better than twitter and they'll have to do it by taking
advertising dollars from Google and Facebook. That's a tough fight to get
into.

~~~
photogrammetry
>1) If the rumors are correct that they are looking to raise 4 Billion at a
roughly $40 Billion valuation.

Was under the impression Snapchat was given a $3-5 billion valuation.

I find it hard to accept that Snapchat is worth the same as Tesla and SpaceX
combined.

In other words, is [a 400-employee company whose core product works only on
cell phones to show annoying ads to teenagers as they send each other photos,
and whose annual income is barely $100m] worth the same as [a 15,000-employee
company that produces autonomous electric vehicles, with a net income of a few
billion/year] and [a 5,000-employee aerospace company that builds self-landing
rockets, with income of a few billion/year] combined? I don't bloody think so,
especially given what an asshole Evan Spiegel has been in public lately.

If anything, this is a sign that we're in a soon-to-pop bubble. If Snapchat
ever goes public, it deserves to die the same slow death on the stock market
as Twitter did earlier this year, or a violent pets.com style death.

~~~
bfstein
A company is worth the percentage it captures of the value it creates. You
alluded to it in your comment--Snap has a much lower headcount and an order of
magnitude less operating costs, so if anything it kind of makes sense that
they'd be valued at a relative premium.

Also, you may not like Snapchat, but to say it deserves to die when it both a)
employs real people and b) clearly serves a market need is such a terrible
thing to wish for.

~~~
photogrammetry
I like Snapchat; it's a great service. However, if they keep introducing more
ads while demanding ridiculous valuations, my generation will stop using it.

It would be great for Snapchat and Twitter to be turned into nonprofits like
Wikipedia.

------
johngrefe
So people are super hyped about the Snapchat Spectacles. I get the excitement,
they are Google Glass at a proletariat price, so owning them doesn't make you
a GlassHole. Snapchat is one of the most popular LA Unicorns. Everyone is
waiting for them to go public.

So how did they release their big hardware add on? Limited time vending
machines. They are spinning it as cool, but with XMas, their supposed
capitalization and user base, it's a pretty big warning that these are not
released through a consumer channel. They are probably experiencing major
headwinds keeping them out of commercialization, or a major cash crisis.

I'm want to side with the cash crisis. I'd love to be proven wrong, but I
don't think their balance sheet is going to be very strong, if the
fundamentals were there, Amazon and Best Buy would be distributing the
product. Sure, tell me its a marketing strategy for exclusivity, I agree, it's
great. It should have been done over the summer, moving into store shelves
last week for Xmas sales.

~~~
deepnotderp
My personal hypothesis on this is that they're eating a loss at the price
range right now and are trying to figure out if people are interested in the
spectacles and at what price.

~~~
usrusr
If anything they are creating a whole lot of media buzz, likely to be
perfectly timed ahead of their IPO. The message isn't "we have head mounted
cameras, head mounted cameras will dominate the world", the message is "we are
more than just another entry in the endless stream of icq successors, continue
to expect the unexpected".

This might turn out to be more valuable to founders and VCs than the total
hardware cost of the first few batches of camera sunglasses. For that
function, the final spectacles price could be purely a balancing act between
looking financially responsible to future investors and not deterring
consumers to much, with no relation to hardware cost at all.

~~~
johngrefe
That, is totally great. It doesn't get me excited as a market investor.
Twitter has been living off their hype and not their balance sheet, and
eventually it degrades and erodes a business until it practically isn't one.
My experience is of course entirely anecdotal since I'm so heavily involved in
hardware startups now. As an ancillary to bolster hype, I agree, it's great.

------
slackoverflower
Many people here are underestimating Snapchat. It is the only app where I
enjoy the ads. They are not intrusively at all, most of the time they show up
at the end of a story or between 2 user's stories. They are all video ads
which is the best form of getting attention (atleast for me) and interacting
with the ad is as simple as swiping up on the video. If it is an app install
ad: Swipe up and it brings up the App Store download view. If it's a shopping
ad: swipe up and its bring a web view of the advertiser's ecommerce site. It
is great! Facebook is boring and repetitive, Snapchat is lively and fun to
use. I see it going extremely far but it will be tough to reach Facebook-
scale.

------
brilliantcode
> $250 million and $350 million this year, according to those documents.

That's pretty impressive but is it a sustainable source of income?

Seems like this socio-consumer space is extremely volatile. Facebook & Twitter
was the last platform I interacted with....3 years ago. Haven't even used
instgram, vine, now snap chat. The fact that billions of dollars were spent
buying out instagram, whatsapp, I wonder how facebook is aiming to make back
all that cash expenditure. Linkedin barely gets a pass because it's
enterprisey and Microsoft validated by buying it out.

Take my view with a grain of salt as I consider these social networking type
of websites our generation's "cigarette" -everyone is doing it and nobody
wants to stop and examine it's impact on the quality of your life.

I guess when everybody is around me is so concerned with the avatar version of
themselves online and how they think they are perceived, therein emerges a
divergence of values and attitude towards such mediums and the type of
personalities it generates that leaks into real life (which I steer away
from).

------
Tepix
Could someone explain

a) Why they need so much money? Don't tell me it's to produce some spectacles

b) Why they are worth so much? I get that they have an interesting user base
(young people), but they are having a hard time making money, aren't they?

That $19b WhatsApp purchase hasn't exactly earned a lot of money yet, has it?
It's still a very long bet, especially with Facebook being forbidden to
collect the data now in some countries.

~~~
sfaf
a) To build an ad business capable of handling $100m of ads. You need massive
investments in sales, infrastructure, tools, etc. to build a business like
that

b) They have one of the fastest growing user bases in the social space, their
users spends an astounding amount of time on the app (estimated at 30 minutes
per day), and their user base is the most targeted demographic for
demographics. Also they have literally barely turned on the advertising
machine and their initial forays have already hit a revenue run rate of
$300M+.

So essentially they have a shitload of eyeballs, the eyeballs are growing
massively, their eyeballs spend a lot of time on their app, and advertisers
love those eyeballs. Their business valuation is based on massive potential,
not current revenues, but their advertising efforts already show huge promise.
There is almost no startup with anything close to their engagement, growth,
and monetization potential and the last company that looked like them was
Facebook. Hence, the HYPE.

~~~
monkmartinez
To your point b... so it's all about bubbles? A race for eyeballs before they
disappear to the next "new, cool" thing?

Because advertising isn't working for the people that sell "things." If social
networks are supposed to create spending/buying in retail (both online and
meatspace) they are not doing a very good job. Google: Retail sales 2016.

~~~
avn2109
Fair point re: connection to the actual economy. But remember - the point of
advertising is mostly not to _increase_ sales overall, it's to _steal_ sales
from your competition in a zero sum game.

------
kevando
Maybe I'm alone here, but I love the way Evan and Snapchat, er Snap,
communicate as a company. They are incredibly tight lipped, but also very
honest and blunt. They've talked about this IPO for years, and made no secret
about becoming a camera company.

~~~
pimlottc
On the other hand, I find it extremely annoying how Team Snapchat routinely
sends elaborately animated pre-prepared snaps that are impossible to make in
the official app. Eat your own dogfood, guys!

~~~
pritianka
I agree with you on this one. It feels unfair!

------
samfisher83
I realized that facebook had made it when old people started using it, and I
don't mean silicon valley old, but like for real old. Snapchat hasn't hit that
threshold yet. It could be the next myspace of facebook, but at 40 billion
there is a plenty of upside.

------
nihonde
I don't follow the numbers on Snap, but my personal experience is that Snow is
eating their share in Asia. You can build a big business without Asia, but it
won't be enough to keep The Street happy. This IPO feels like a liquidation
for investors who see the end of the road ahead for Snap.

------
beedogs
Anyone who gets in on this IPO is going to know what pain feels like. How can
a company that doesn't make any money go public in good faith?

------
pplperson
Maybe someone can enlighten me. I read awhile back (when the rumors just
started) that a company can not engage in advertising/marketing in the pre-IPO
period. If that's the case I assume the timing of Spectacles release is a way
around that?

~~~
carlosdp
They cannot make large product announcements or changes in the "quiet period"
between when the IPO is publically filed and when it goes live. This is a
rumor of a private filing, not the public filing, so yes Spectacles are well
in the clear. You can make large announcements right up till the day the IPO
is published on the SEC website.

This is because you are not supposed to solicit people to buy your shares
before it goes public.

------
ankurdhama
It is amazing that the best business model of current era is - Build something
that allows people to feed their ego (ahem social activity ahem) and sell ads,
simple :)

------
millettjon
Just an anecdote but my kids (2 10 year olds in Chile) use Instagram and
Snapchat about the same. They use Whatsapp and Musically several times more
frequently.

------
shaunrussell
Anecdotal, but as a casual snapchat user I've noticed a significant 50%+ drop
in activity by my friends + peers since Instagram launched stories. I use to
sign in and have 20+ stories to watch, this morning it is 4.

I feel like Snapchat sees the writing on the wall, and this is their chance
for everyone to cash out.

------
Apocryphon
To anyone on HN (or elsewhere) who doesn't get Snapchat, revisit Justin Kan's
explanation:
[https://news.ycombinator.com/item?id=10859860](https://news.ycombinator.com/item?id=10859860)

~~~
patorjk
Looks like the blog post linked in that thread now gives a 404.

~~~
__derek__
Here's the correct URL: [https://justinkan.com/why-i-love-
snapchat-23d31ea87d3c](https://justinkan.com/why-i-love-snapchat-23d31ea87d3c)

------
moron4hire
I do not understand the value of Snapchat as a social network _at all_ , and I
use it on a daily basis.

There's no way to reshare anything, which means the only way you can find
people is through other channels external to Snapchat. And they make it really
hard to add someone that isn't in your immediate vicinity with their logo
ready to snap. This seems ludicrous to me. How can a social networking app not
try to capture all of the activity surrounding it? How can a social networking
app not do everything it can to encourage people to build their network?

------
WheelsAtLarge
Can some one tell me why they use "confidentially"? When they have been
talking about this for months and everyone in the tech/social business knows
about it.

I guess it's confidential since they didn't blast fireworks and cannons.

Anyhow, I say that they will soon(if not now) be known as the cool social
network while Facebook will live as the old but reliable techie social network
, similar to the Apple/Microsoft delineation.

~~~
lesdeuxmagots
Its a type of filing. Confidentially means that we cannot go so EDGAR and look
up the filing right now, and they will not need to disclose the documents
publicly until very close to the actual IPO. This is a relatively new type of
filing that was introduced in the JOBS act, designed to encourage emerging
businesses to go public. You can read about the specifics here:

[https://www.sec.gov/divisions/corpfin/guidance/cfjumpstartfa...](https://www.sec.gov/divisions/corpfin/guidance/cfjumpstartfaq.htm)

Normally, if the company does not qualify for confidential filing, we would be
able to go and see the draft S-1 on EDGAR 6 - 9 months in advance of the
actual IPO.

~~~
WheelsAtLarge
Thanks, very informative.

------
richardlblair
A lot of good points in this thread.

I do want to point out that the investment market is hot. That likely plays
into their decision. Why wait when you know you can get a great valuation now,
and there is a chance the market could cool.

------
foota
I use snapchat a lot to communicate and follow friends. I think their
difficulty in monetization will be from not being able to target ads as
effectively as Facebook or Google can.

------
SN76477
I do not think closed systems have much of a future. They may be hot now, they
are not going to last.

------
tehwebguy
If you have a chance to buy Spectacles go for it. They are super cool.

Finally a way to snap while I'm grilling fried rice! Seriously, this solves a
problem for me: [https://youtu.be/0fdVJLB-TM0](https://youtu.be/0fdVJLB-TM0)

------
irishcule
When are people expecting this IPO to happen? Early 2017?

------
ghostbunnies
It's not so _confidential_ anymore, is it?

------
manishsharan
Yet another platform to tickle our narcissism and voyeurism. The fact that
this kind of innovation is so lucrative make me despair.

And also, get off my lawn !!

~~~
Apocryphon
At least you can't create news filter bubbles or troll with Snapchat.

~~~
st3v3r
Maybe that's why it's so popular. Most people are fed up with trolling.

------
ohstopitu
A lot of people seem to question Snapchat's vision and profitability (even in
this thread) especially with such a high evaluation. I thought I'd take a stab
at it (all speculation based by current trends).

So Snapchat needs to be broken down into 3 key components:

1\. Users/Growth

2\. Business

3\. Tech

So let's look into each...

1\. Users/Growth:

Snapchat is growing rapidly (~150 million active users[0]) and seems to know
how to generate hype using various tactics (like the Spectacles for
example...instead of just selling it, they appear at specific places at
specific times, similar to timed filters and stories). Furthermore, they don't
seem to mind experimenting - I had recently seen rumors floating around of
Snapchat getting into the drone game too - based on some of their recently
open positions). They seems to have gotten a tight grasp at the younger-ish
market (14 - 30ish?) and either they'll continue to be hip and keep attracting
that age group or they'll grow with their current userbase. Eitherway, the
userbase is (very) loyal and hooked (~30 mins/day of usage [1]).

2\. Business

Based on 1, we know Snapchat is growing and it's got a loyal base, which means
they are a great place to advertise. As of right now, it appears that only the
"big" players have the access to advertise their content effectively - movie
filters, stories etc. (and Snapchat seems to be making a lot of revenue from
just this alone - ~ $350 million [0]). But from this subset, it can be seen
that Snapchat is an effective medium for the current demographic (they are
young, generally willing to spend and do or will grow up to have expendable
income to spend).

Smaller players (those who can't afford filters and stories) generally pay
Snapchat celebrities to advertise to their large(-ish) user base but given
Snapchat's intentions (for IPO), that could change pretty soon.

To add to the above, Snapchat seems to be poised to move into the physical-
virtual (augmented) ads space too, with geo filters. (Given their recent
release of Spectacles, I'd say it'd be trivial to have something along the
lines of Google Beacons/iBeacons - providing hyper local filters, discounts
and so on. Furthermore, this can easily expand/integrate into a marketplace,
providing even more revenue.

3\. Tech

If you have noticed, they have gotten their users to use AR (filters, geo-
filters, Spectacles) without the "geekiness" involved that others currently
involve. (yes, Hololens is still a lot geeky, pricer and a extra device than a
iPhone) They appear have stumbled onto great ideas, but I have a feeling that
it's highly calculated (I could be wrong) and they seem to have an idea /
vision of what their future is or where they want to head.

Current Competition (Subjective):

Facebook seems to be intent on trying to capture the Snapchat market - most
recently with Instagram Stories. In my opinion, Instagram Stories is not
exactly similar but close enough. I feel like it'd not take off as much as
Snapchat (but it does not have to) as much (I'd probably eat my words later),
because it's easier to track users (I know this is what marketers are looking
for, but from a user's perspective - It does not feel natural, feel a bit more
judged and overall just like a nice facebook for photos. It's great if you
want to grow a userbase and so on but you can do so on Snapchat too.

My take:

I feel that Snapchat for companies/marketers/users who are looking for more,
require a change of perspective. Similar to how it took everyone to get used
to the Internet, Social Media etc., it will take a while to get used to
Snapchat. Furthermore, there is a lack of tooling around Snapchat which has
made matters worse. That said, those who can grasp this and figure it
out...they are in for a treat.

Obviously, what I've written above is my take on Snapchat (both as a user and
as a someone who loves technology). It's completely arm-chaired CEO talk but
I'm interested in what people have to say/think about it.

[0] [https://techcrunch.com/2016/11/15/snapchat-has-reportedly-
fi...](https://techcrunch.com/2016/11/15/snapchat-has-reportedly-filed-
confidentially-for-its-massive-ipo/)

[1] [http://www.businessinsider.com/how-much-time-people-spend-
on...](http://www.businessinsider.com/how-much-time-people-spend-on-
snapchat-2016-3)

