Problem to me is they seem more like Twitter than Facebook in that their only real monetization path is ads, but their ads don't seem that valuable.
If I'm selling watches, I want to pay Google to advertise to people who just searched for watches. If I'm selling retirement planning, I want to pay Facebook to advertise to middle aged people who like personal finance topics. But who wants to buy Snapchat ads? Some people who want to do brand awareness marketing on a trendy platform but not much else. So I think just because they can get lots of users does not guarantee success.
I don't use Snapchat nor am I a marketing whiz, so I could be wrong.
The problem is that most marketers/advertisers can't meaningfully quantify the value of their brand spend. There's a joke in the advertising space: half of my marketing spend is useful and half isn't. I just don't know which half.
If Snap can only offer brand image/awareness type advertising they are not worth what they think they are.
More abstractly, Twitter is very information-seeking / interest-oriented, which seems very ideal for advertising.
Just put together a few stock photos, add some copy, pull a free landing page template and you're good to go.
I'm not a heavy Snapchat user, but it seems to me that small businesses will struggle to create creatives for Snapchat ads. Nearly anyone can write, but very few are actually comfortable with a camera. Most small businesses also don't have editing chops or even the sheer creativity to put together a compelling Snapchat ad.
Much of Snapchat's value seems to be in driving top of the funnel awareness, but I'm not sure most businesses have the capacity or even the need for this.
They do the one thing really well, but it's going to go out of style at some point as these things tend to - and I'm not sure I believe they have enough other projects going on to overcome that.
I could be wrong, for sure.
I sort of get your point, but this exact same thing has been said about Facebook, Instagram & Twitter. To counter my own point, there's also MySpace, Path, YikYak and Google+. However, I imagine that Snapchat has surpassed the "terminal velocity" in user growth/size to a point where I don't think its going anywhere anytime soon.
Twitter accounts are cheap and the platform only has value as long as advertisements can run unchallenged by a large number of users.
This is valuable, and why Facebook creates retrospectives for its users (in the last year you posted X times... here's where you were 2 years ago... etc). Snapchat lacks this due to the very ephemeral nature of the service.
If you were to try to compete with Snapchat on the basis of having history, you would fail.
I'm not sure x hours is enough of a pain point (if it is at all) to get people to move.
My point is that the same friend network effects that Facebook/IG emjoy are also enjoyed by Snapchat.
Until they don't. At some point, the companies making actual stuff that people use will realize that, despite the made-up "metrics," there's not much value in surveillance-based advertising. It's hardly better than the pile of paper you transfer from your mailbox to your recycle bin every day.
If you think Snapchat has the same macroeconomic value to the world as Intel, Cisco, or McDonald's... Then you've lost the ability to evaluate a technology business.
I'm not sure whether to accuse this of being shill or to systematically prove how flaky the argument is. The fact is that it doesn't save photos is as much lack of a feature as it is character. The users of this app know how to take a screenshot... It's the ICQ of a different 3 years worth of teenagers that will get stomped by the next messaging app that is different from the one other people used for the past 3 years.
Snapchat is valuable because of demographics. Unfortunately those demographics grow up quickly, and the ones that replace them will rebelliously reject what preceded them just like teenagers have done for the last 50 years.
The fact that they are worth $18bn now is nothing but a prime example of the times. Mind you I know the company I'm in. VCs invest based on their bet and the reason that valuation sticks is more marketing than it is reality.
Snapchat just isn't that valuable to the world.
Snapchat is already 6 years old and my mum joined it last week to keep up with all her friends and family.
That's the thing with the bear case, you're right 95% of the time because most businesses fail but you never have to justify or be accountable for the 5% of times you're wrong.
HN history is littered with pessimism about tech companies - Facebook isn't worth $30 billion, Facebook isn't worth $50 billion, Facebook isn't worth $100B, Uber isn't worth $10 billion.. Snapchat isn't worth .. repeat. rinse.
They are only worth their Market Cap in the sense that investors literally bought-in that much because of a hypothetical upside based on scale. What happened when they tried to sell the company? The realization sets in that the company just isn't worth that much money, nor can anyone foresee how it could be in the near future.
It is a self-sustaining situation with these companies. Nobody wants to write off that big of a loss, so the valuation is sustained.
Many others are sustained on the inflated belief that the market for Ad views is adjusted for the prevelance of fraud. How many times has it been shown that click, view and user bots are used in staggering numbers. The companies making all the money have little incentive to correct this. But of course Ads clearly work in many situations. I'm just saying these bloated valuations based on ad revenue have not been adjusted for the fraud reckoning. Google struck gold because the underlying utility of the search engine is so unquestionably powerful and ubiquitously necessary to the idea of the internet that it guarantees a truly awe-inspiring user base. The value proposition of getting that service for free makes viewing Ads a second thought - it is a reasonable deal for the user.
What do people need from Snapchat that will keep them there? Sharing pictures and text messages is rapidly, and I mean rapidly, approaching a commodity service on par with landline telephones.
Anyways, the blanket optimists are subject to the same odds. If you believe everything is going to succeed, inevitably you will be correct. Everyone has confirmation bias.