I hadn't heard of SnapChat until this acquisition story broke. I guess I'm out of touch or something?
Anyway, no revenue and no real hope of revenue = $0. VC can blow smoke up your ass until they collapse, blue in the face, but it's not a winning proposition.
edit: but yea, I think $3 billion is a little high...
Personally, it does not surprise that FB is willing to pay 3B. FB is struggling with the younger crowd as of late, it's a great strategic move in my opinion.
I think these sort of app related multi-billion acquisitions with little or no revenue are a complete farce and do more harm than good - especially when it comes down to a product with NO revenue. It's basically disregarding capitalist business principles for shallow popularity.
Supply-demand. If there's a suitor willing to drop $3bb on Snapchat, then that's the market clearing price is it not?
Given that Snapchat didn't accept, perhaps it's worth a tiny bit more.
People think gold has this intrinsic value, but does not either. It's "natural" value is also soley based upon the demand that is put upon it. The fact that people find it beautiful, and that is a great conductor of electricity, are things that are desired about it. And so the more people that discover the uses of gold, the more demand grows.
If there were no googles, or apples, or yahoos, or any of these huge companies with really deep pockets, then there would be no one to offer $3billion for a company like snapchat, and there would be no way it could ever obtain a "worth" of 3 billion. Because, again - anything is only worth what someone is willing to pay (or do) to obtain it. Even your job.
a) currently no revenue, I imagine it is harder to monetize Snapchat than Facebook et al. But it is not my area of expertise so I can give them the benefit of the doubt that they can monetize it.
b) They are one lawsuit away from blowing up. I can see a future where they get hit with a child porn lawsuit or something similar. I assume they have good lawyers but it is still a rather significant risk.
I think it was a mistake not to take one of those billion dollar deals but I have been wrong before. If they can monetize their service and avoid lawsuits it could become huge.
I can't imagine these services being worth as much as facebook, and I don't know what they're thinking turning that amount down. They have no revenue.