
Yahoo Close to Investing in Snapchat at $10B Value - coreymgilmore
http://www.bloomberg.com/news/2014-10-03/yahoo-said-close-to-investing-in-snapchat-at-10b-value.html
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giarc
Snapchat must be huge in the teen/young adult demographic to justify this
valuation as I don't see many adults using this app anymore. Although this is
a fairly localized/anecdotal opinion of the app, perhaps in other regions,
Snapchat is big among many demographic categories.

~~~
NewHermes
I am a 23 year old at a large state school and I can tell you that snapchat is
definitely the most popular social media app on campus.

It has completely replaced texting for a lot of my peers and in my opinion is
best way to flirt electronically. Twitter and instagram are tied for second,
with Facebook coming in last.

For what its worth, meeting someone who isn't on snapchat is unheard of, but I
haven't added anyone on facebook since the fall term began.

Yik Yak is also on the rise but it's anonymous nature limits connections, and
in turn growth.

~~~
wahsd
I feel like Facebook is flaming out. Do you get that sense too?

~~~
cobookman
Yes. I used to think that facebook would still keep getting life events/friend
checkups. But my friends have slowly been moving that to snapchat.

Just get married, snapchat that wedding ring (then post to facebook later a
status update).

I still use facebook for events/groups. But I can see someone stealing that
away from them.

~~~
NewHermes
I think Facebook is becoming a virtual contact list and birthday reminder,
with status updates and pictures acting like mini holiday cards for events
that are noteworthy but not significant enough to actually send out a card
for(getting into grad school/new job).

Pretty much everyone is on Facebook under their real name, and it is the only
social media platform where that is the case. The management consultant in me
has a feeling that data is going to be worth a lot of money.

Google might know a lot about my interests but Facebook has my real name, real
school, real job, as well as my interests.

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mililani
Reading things like this kinda depresses me. I guess I just don't understand
what makes things popular on the web. I mean, I would have never thought
things like Twitter, Instagram, all of the various messaging apps would ever
get this much traction. I think it's bizarre.

~~~
mmxiii
The mistake here is that you are conflating your subjective preference with
reality. You are implicitly evaluating something against your own context, but
to understand why twitter,etc are successful, you need to ask questions about
what OTHER people value, and why they do it.

~~~
gaius
You say that, but it is the same as the dotcom days, everyone thought it was a
"new economy", yadda yadda. Right now, ALL these investments are highly
speculative. Any of these companies could do a MySpace overnight.

~~~
ulfw
Very much agreed. But think about it - even Myspace was only sold for a little
over half a billion. We are orders of magnitude higher now. Holy bubble!

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moe
And snapchat plans to make money how?

Plus, at least in europe kik and viber seem a lot more popular than snapchat.
And it would take them about an afternoon to add a "self destruct" checkbox to
their image and video dialogs...

I can understand yahoo desperately wanting to get a foot down "with the cool
kids". But 10 billion, seriously?

~~~
jqueryin
Shared revenue of sponsored story promotions/snaps would be one way. Think of
this:

Create a marketplace around big businesses getting viral content producers to
push their products subtly (Truman Show anyone?). Snapchat, acting as the
intermediary and service provider, can collect a percentage of the promotional
gig in return for facilitating the transaction and acting as an escrow service
or middleman. It's not so different from television ads now, just a broader
market with lots more content producers that have large fanbases across
demographics TV just doesn't have.

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trhway
>Users send more than 700 million disappearing “snaps” a day and more than 500
million stories viewed daily

well, in Internet dollars - $100/user of FB and the likes - 70M users is $7B
scale. 500M exposures point to the same ballpark - the ballpark where it
doesn't really matter whether it is $5B or $10B valuation. Even 10 fold growth
would bring Yahoo only $200M - peanuts, and obviously Yahoo makes that
investment not for money, it is just a cover fee for entry into the club.

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comatose_kid
It's not clear how much Yahoo is investing at that valuation, but I hope that
the stated reason of re-creating an Alibaba type investment is not the primary
driver. Despite the success of Alibaba, a single data point is not a trend
(even a spectacular one like Alibaba), and I'm not sure that Yahoo's core
competency is/should be picking winners.

~~~
minimax
Other reports have said it's in the ballpark of $20M.

[http://online.wsj.com/articles/yahoo-nears-investment-in-
sna...](http://online.wsj.com/articles/yahoo-nears-investment-in-
snapchat-1412361684)

~~~
ojbyrne
Which is peanuts to Yahoo. This basically seems like they're trying to emulate
Google Ventures without the full commitment of creating an organization like
that. Seems smart.

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azinman2
Amazing for a company that is primarily about a user base they can't charge
for, or data mine for advertising.

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Cuuugi
Between Tinder and now Snapchat, it makes me think Yahoo is building a p0rn
empire.

~~~
pkfrank
Has Yahoo invested in Tinder? Can't find mention of it anywhere.

~~~
dublinben
They probably meant to write Tumblr, which Yahoo does own.

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patrickmay
The investment will, however, disappear after being deposited.

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curiously
How do you monetize a large user base without credit cards? How would they get
teens to get their parents to pay for the ability to send nude pics to their
friends?

Meanwhile, millions of small businesses paying $10 a month for secure document
shredding with years of increasing profit remains large ignored by the media,
nobody bats an eye. Nobody puts an insane valuation on it because it's not
cool. So business is no longer about positive net cash flows but spending it.
Whoever spends money in the coolest way is the winner as long as you got
investors who suddenly forgot what happened the last time we were in the new
and hip economy.

~~~
spigoon

      How do you monetize a large user base without credit cards?
    

Ask Facebook. With Snapchat's curated "Our Story" stream it would be easy for
them to superimpose a brand's logo on top of snaps that would get viewed by an
audience that fits a particular demographic. I'd wager that companies see
value in that.

~~~
gaius
Yeah it would be like subliminal messaging, like they used to do in cinemas.
Remind me why they stopped?

~~~
mmcwilliams
They didn't stop. The industry term of art these days is "embedded
advertising" and it's used in television and movies far more than you would
think. Hear a character mention a current brand name seemingly off-hand? Yeah,
not an accident.

~~~
gaius
Sure, that's product placement, and it is _very_ hard to do well. Remember the
Cisco placement in CSI, or Omega in Casino Royale? Utterly cringeworthy.

Subliminal messaging is flashing something up too quickly to consciously
register, but still leaving an impression.

~~~
mmcwilliams
It's actually beyond product placement. It's about getting something in the
story line that triggers brand awareness. This doesn't even mean showing or
mentioning the product directly. I know several screenwriters who have their
work subjected to this kind of editing. It is utterly subliminal and not at
all similar to the popular culture version of "subliminal messaging" that you
refer to.

~~~
gaius
On the subject of James Bond there's another scene in the same film where he's
using a Sony Ericcson phone. Really, the suavest man in the world rocks a Sony
phone? It's embarrassing to watch.

