Snapchat Executives Criticized for Turning Down $3 Billion Offer from Facebook
Snapchat Logo
If you aren’t familiar with the latest “talk of the town” mobile messaging platform of Snapchat, then let me fill you in on all the deets.
Snapchat, a photo messaging application developed by a group of Stanford students is ruffling lots of feathers in Silicon Valley by turning down a reported all-cash $3 Billion offer from Facebook last week, according to the Wall Street Journal.
Snapchat provides users with the option of sending photos and videos with text and drawings to a select group of recipients. Users select the time limit for how long the recipients can view the content (Snaps range from 1-10 seconds) after which the Snaps self-destruct from the user, the recipient, and the Snapchat server. The app has become most popular for users between the ages of 13-23 and is available on both Android and iOS versions.
Snap Example
The main controversy surrounding the latest news from the tech mogul is—should 23-year-old Snapchat co-founder/CEO Evan Spiegal and his team taken the money and ran? It wasn’t too long ago that fellow Standford students Kevin Systrom and Mike Krieger did take Facebook’s offer of $1Billion for their creation of Instagram. Adding to the argument pot is the fact that Snapchat has not earned any revenue since it launched in September 2011.
Today, the Snapchat community encompasses more than 100 million users and 350 million snaps sent daily. It should be no surprise to find that a majority of the Facebook community is branching over to Snapchat because of the increased popularity and perceived privacy of the app.
In my personal observation and interviews with Snapchatters they all indicate the same thing:
“Facebook is getting old. We want our conversations to remain private and hidden from our parents and networks. Snapchat allows that freedom without potential FBI questions of “Why am I friends with so-and-so on Facebook? Who are the rest of these people tagged in that photo, etc.”
Nosy Mom
Despite the controversy and criticism surrounding Snapchat’s recent decision to turn down Facebook’s offer, I believe they did the right thing. Facebook has the capital and the resources to potentially “bully” smaller tech companies to bend over and lay down. However, if Snapchat’s Executive Team play their cards right, there is no doubt with the recent worldwide explosion of Snapchat and social media usage, it will surpass the $3-4 Billion net worth. The reason I believe this is because someone on Spiegal’s Executive team has counseled him on the financial potential of the company and why waiting for the right opportunity to sell is important. It’s not everyday a 23-year-old is offered $3 billion cash, unless Facebook believed that through their vision they could triple that amount. According to the WSJ article, Spiegal said he will not consider any acquisition offers until early next year. I hope he is right, if not maybe Google may be interested in making an offer.
YOUR OPINION MATTERS!
Do you think the Snapchat team made the right choice in turning down the offer?
What do you propose their financial forecasts predict?
What would you have done in their situation?
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