
Snapchat Seeks to Raise as Much as $4B in IPO - flinner
http://www.bloomberg.com/news/articles/2016-10-26/snapchat-seeks-to-raise-as-much-as-4-billion-in-ipo
======
serg_chernata
When a company like Uber is raising insane amounts of money I think to myself
- "ok, they're working on vehicle automation and other ambitious projects, it
makes sense".

When a company like snapchat is looking for 4B in addition to existing funding
I am left completely dumbfounded.

Can someone please explain why they would need this much cash?

~~~
AndrewKemendo
The engineering community is sleeping on Snapchat, but shouldn't be.

My life is AR. I'm the CEO for an AR company, I speak write and live and
breathe all things AR.

Snapchat is poised to be the most important AR company around for several
reasons. 1. They have a MASSIVE userbase that is comfortable with sharing
their lives 2. That userbase has already shown an interest in AR - and yes
whether you like it or not their filters are on the AR spectrum - the filters
system maps, tracks (SLAM) and modifies in real time.

Their Spectacles release has the potential to build the largest real world
image dataset on the planet - something needed (for reasons I won't go into)
for AR everywhere. Think on the order of 1.8 Billion images per month with
depth data from the stereo cameras (30FPS * 10 sec snap * estimated 20 snaps
per day * estimate 100k spectacles users in first month).

Most people have no clue what is going on in the AR world, and I can tell you
Snapchat is going to be formidable. If they can invest in a VRD, then they
could win the whole AR market, but they need to raise more than 4BN to do that
probably.

~~~
boomzilla
And how will they make money? Selling ads in the AR world?

~~~
capkutay
How do facebook and Google make money? Selling ads in social network and
search land.

Having an enormous, religiously active user base has proven time and time
again to be a huge cash cow.

~~~
ambicapter
That was Twitter's playbook and I thought Twitter wasn't doing so well
recently...I'm not saying massive amounts of users isn't valuable, but you
still need to play it right.

~~~
user5994461
Twitter is massively profitable. It makes billions in advertising.

(for every $1 twitter make, it spends $2, so their accounting is deep in the
negative. But if they fire half the people (who are useless anyway) and stop
spending money like madmen, they'll be positive, VERY POSITIVE. thanks to
advertising revenues.)

~~~
joering2
Well I'm sure those are the reasons why Google pass on :)

~~~
user5994461
They can't buy first and fire people afterwards. The cleansing would have dire
effect on the alphabet parent company.

~~~
dir
no need. Twitter announced it was firing ~20% of it's userbase.

Guess Google can swoop in and buy it now :)

~~~
user5994461
Or they can repeat the process till they have 20% left ;)

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cblock811
I have yet to speak with anyone who thinks Snapchat's valuation is realistic
and that their business model will sustain them. When I see this I just think
of Twitter all over again.

I would love to hear arguments supporting Snapchat though.

~~~
devilsavocado
This is my takeaway from Kleiner Perkins Caufield & Byers 2016 internet trends
presentation. [http://www.kpcb.com/internet-
trends](http://www.kpcb.com/internet-trends) Some I agree with, some I think
is hyperbole.

Snapchat's Ads are effective. More effective than anything else on the
internet or other apps. They are authentic, entertaining, in-context and
brief. They follow the 3Vs: Vertical (Made for Mobiles) / Video (Great Way to
Tell Story) / Viewing (Always Full Screen).

Snapchat's average monthly use per visitor is way above other social networks
for the younger generation. And it is growing incredibly fast.

Advertisers are able to integrate deeply into the app in various unique and
interesting ways.

Snap chat is the leader a new wave of advertising, in the way Facebook did a
few years ago, and google before that.

~~~
jasonwilk
You should add a 4th V which is very important to why advertisers are liking
SnapChat, which is Volume. SnapChat ads naturally have sound on and users
expect it to be that way; another element to its similarities to television
advertising.

~~~
sjg007
Yep. First time I saw it, I thought, this is a major alternative to TV.
Twitter had the tv hashtag space locked up but now you can do live snapchat
along side live programming.

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niftich
I'm surprised (rather, disappointed) that the article doesn't make any
comparisons to Facebook's IPO. For today's 14-to-25-year-olds, Snapchat is the
new Facebook, in terms of user engagement, market penetration, mindshare -- so
it stands to reason in terms of valuation it would be too.

There are some important differences, of course. Facebook owns multiple
properties that mount competition to Snap Inc: Instagram, Messenger, Whatsapp,
the original Facebook; Snapchat subsumes all these usecases in a single app
that you'd be hard-pressed not to find on a teen's phone today. And it does so
by making it optional to curate a permanent, indexable, discoverable,
idealized public identity.

To many, that's strictly better than anything Facebook has put out -- a
company that nonetheless commanded a high valuation, performed an IPO (albeit
rocky), and now posts a strong profit.

~~~
anon543210
I disagree in the similarities of Facebook. Snapchat is like twitter but
worse. Because it's anonymous and not associated with real names, they don't
have an actual relationship graph, unlike twitter they don't have an interest
graph. All they really have is your location. Everything is ephemeral so it's
going to be even harder to figure out what type of advertising they should
actually target. Also we don't know where people spend most of their time in
private messages or stories and the only thing they really are focusing on
monetizing is stories. Also like Twitter their advertising system can be
subverted. Brands and advertisers will go directly to influencers to peddle
their products vs going through snapchat. Also at the time Facebook was yet to
introduce advertising on their mobile product. I believe Snapchat will have a
much harder road to monetization than Facebook had.

~~~
jocro
> and the only thing they really are focusing on monetizing is stories

Lenses are big business.

~~~
anon543210
I'll believe it when I see it

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taytus
I'm a professional photographer and even when I had a medium audience on
Snapchat (1000-3000 views/snap), I switched to Instagram stories. For content
creators Snapchat is not good at all. The discoverability problem they have is
a serious issue for me.

~~~
philfrasty
How do your Insta stories compare in terms of views and view-through-rate? (I
am in the same situation as a content creator on YouTube using Insta/Snap on
the side)

~~~
taytus
Not a lot of people use it yet. I have about 16k followers on IG and an
average of 500 views/story. I feel that once IG (if ever) start adding more
filters, people will use it more heavily.

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komali2
I tried to get back into snapchat last week. "Surely they've made the Android
app usable by now."

Why is the android app so trash? Why is the UI so convoluted? I _want_ to like
and use snapchat because clearly everybody is "getting" something that I'm
not, but I genuinely cannot figure out the UI or take more than a few pics
without the thing crashing.

~~~
iamdave
Asking genuinely here, but what exactly is 'convoluted' about it for you
individually?

~~~
Pengwin
Here are a few things that I experience on android.

-When snapchat is foregrounded my phone wont go to sleep.

-Sometimes the camera will just go black, hang, and crash the entire app. I don't know why, im guessing it could be filters.

-Taking a snap with a filter applied sometimes just takes the photo without the filter.

-The memories section is useless, and seems to only exist to keep pictures out of my freely accessible storage.

-Adding things to the images like text or smilies is okay for a single item, multiple things on an image becomes very cumbersome with you resizing things you didnt want to resize.

-the main inbox screen is very cumbersome, tap views a snap, sometimes it lags, and i tap again, only for it to show me a snap for less than a second and disappear. Double tap replys if you just viewed a snap, If you don't double tap perfectly it may think you want to swipe right to chat.

-Inbox keeps getting slower, I get instant push notifications and tap one to go to my inbox, only to wait 2-3 seconds for the inbox to update, sometimes on top of that it hasn't even received the data and i hate to wait for that too.

-Chat and text messages are stupid, You will lose messages because you swipe back to your feed the exact time someone sends you a new message, and kaput the text is gone forever, sometimes messages stay and sometimes they don't and i cant figure out why. I used video chat once and it was a horrible and laggy experience, one which i've never tried again.

-Stories are starting to add ads, which i understand, but the comic event where "the ads load faster than the real content" happens.

-If a story hasn't downloaded the next snap, the app just stops responding until it is downloaded and ready. Most of the time it will register any tap in that frozen state and will skip the snap when the picture/video is finally loaded.

-a few controls like text/drawing color are 1-2 millimeters wide on some phones and makes selecting them infuriating.

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babesh
There's a sales technique where the first person to state a value causes other
people to pick values around it. So Snapchat struck first and says that they
are worth 40 billion. Minions listen to that and think that 35 billion would
be a bargain.

~~~
harryh
It doesn't really matter what millions think Snapchat's valuation should be.
The vast majority of shares bought at IPO will be from a relatively small
number of institutional buyers capable of sophisticated financial analysis.

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sssparkkk
I see talk of Spectacles being Snapchat's next big thing. However, 90% of the
time the popular Snapchat users are filming themselves. Not what they're
seeing. So what good would Spectacles be for them?

~~~
hornbaker
Themselves in the mirror, duh.

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fowlerpower
I can't wait to buy. This one is going to be a good one even if most of the
juice has been squeezed by the time it IPOs.

I think people are really hungry for some tech stocks with the kind of brand
SnapChat has to invest in. There will be naysayers, Facebook had those but boy
did people make a lot of money.

------
thomasthomas
dont forget about sponsored filters. should be a boon for sc. organic
marketing. would bet this revenue surpasses sponsored stories. comparisons to
fb and twitter are a little off. SC is more of a messaging service than social
media

 _Evan Spiegel isn’t building the next Facebook or Twitter. To some that may
be obvious, but it’s important to understand. That’s because Spiegel is driven
by the idea that people are looking for alternatives to their curated Facebook
and Instagram personas. It’s not a social site, it’s a communication app with
a large dose of entertainment on the side._

if youre complaining about discoverabilty you just dont get it and thats OK

[1] [http://www.recode.net/2016/5/9/11594144/evan-spiegel-
snapcha...](http://www.recode.net/2016/5/9/11594144/evan-spiegel-snapchat)

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TaylorGood
FWIW, have only opened Snapchat once since IG Stories debut.. 28 and consider
myself tech savvy.

That being said, the only defense it seems Snapchat has is their
"instantaneously direct messaging" i.e. being able to send to one person at a
time. When or if IG does this, well...

~~~
jdc0589
IG has this. I got a direct message from someone last week.

~~~
flanbiscuit
It's not the same way that Snap does it though, but I could be wrong because I
haven't gotten a dm in a while. From what I remember, IG's diret messages look
like one long chat between you and the person. Snapchat has 2 separate direct
messaging paths, one is your basic chat log and the other one is sending snaps
to a single person, which is what I think @TaylorGood was referring to

~~~
TaylorGood
Right - with instagram it sticks. That's an update away from being 100% Snap-
like.

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intrasight
I see a bag of hurt on the horizon here. Even with their nascent AR stuff,
there's just not enough magic sauce to justify that valuation.

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tomashertus
I'm passive and light user of Snapchat, because I'm following around just 40
people and sporadically use it for messaging. I was really enjoying the
Snapchat stories, much more than the messaging. I actually think that the
whole messaging experience on Snapchat is pretty poor.

Anyway the point is, that I used to have around 30 stories a day to watch
before Instagram introduced their stories. Currently I'm around 10 a day and
most people who are on Insta and Snapchat prefer Instagram.

Is that just me, or you see the same decline in usage of Snapchat stories?

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oneplane
It's 1999 all over again. Welcome to the .com bubble 2.0.

~~~
artursapek
Can't wait to buy Snapchat puts

~~~
mrep
25-35 billion dollar valuation, and Facebook started at a 100 billion and is
now at 373 billion.

Is there revenue/profit going to blow up? I have no idea but the thought that
it could become the next Facebook will probably cause the IPO to pop.

I would probably wait for some more concrete data before you invest a lot of
money on it as I can see it being equally likely that it will become the next
Facebook or the next Twitter.

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ProAm
Didn't a company offer to buy them for 4B a few years back?

~~~
CN7R
Facebook, for $3 bn; Google, for $4 bn. Both offers were declined.

~~~
samfisher83
They will raise 4 bil putting their valuation at 25-35 billion.

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shogun21
Just speaking personally, but I thought the hype around Snapchat was on the
decline. The app seemed to get slower with every update and people within my
social circles weren't using it as much as a few years ago.

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babesh
Their backers and they stand to make money by hyping it up. They are working
their channels to get puff pieces written. Not one article I have read is
critical of them. Shows you the power of their backers. Doesn't mean you
should invest but I bet their backers are powerful enough to make that stock
pop the first day.

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dbg31415
So more ads?! That's what funding means, right?

Man, I just wanted to send dick pics...

~~~
neals
Make an ad of yours! You can really target that audience with an ad!

