Facebook may be losing teens, because they don’t want to post personal status updates on a site that broadcasts everything to their parents, grandparents, teachers, and future college admissions officers.
The messaging app Snapchat, meanwhile, is rapidly gaining teens, because it allows them to send photos and messages that self-destruct after a few seconds. It’s not a huge surprise, then, that Facebook tried to buy Snapchat. The surprise is that, according to the Wall Street Journal, it offered $3 billion—and Snapchat turned it down. From the WSJ:
Evan Spiegel, Snapchat’s 23-year-old co-founder and CEO, will not likely consider an acquisition or an investment at least until early next year, the people briefed on the matter said. They said Spiegel is hoping Snapchat’s numbers—of users and messages—will grow enough by then to justify an even larger valuation, the people said.
Snapchat, it behooves me to point out, makes no money. I don’t mean that it is spending more money than it takes in, like Twitter. It literally does not have any revenue.
That in itself doesn’t mean it lacks value. Plenty of huge tech companies, from Google to Facebook to Twitter, have started out by simply offering a popular service, then figured out how to make billions later on. Instagram was not making revenue when Facebook acquired it for $1 billion a year and a half ago. Now it is. The thing about Snapchat is that it’s hard to see how it could ever make billions of dollars, given the ephemerality of its messages and its young target demographic. My former colleague Farhad Manjoo put the question to his Twitter followers, asking, “Someone tell me even a halfway plausible way Snapchat can make any money.” Here are a few of the more imaginative responses:
- In-app funny hat purchases
- OKCupid-style quizzes before each snap
- Sponsored sexts?
- Start a private preschool in NYC
And of course, the obvious:
OK, so let’s admit that “advertising” is plausible. And let’s stipulate that while we’re all laughing at Spiegel today, there’s at least some possibility that he’ll be the one smirking last, Zuckerberg-style, when Snapchat becomes the world’s next social-media giant. But man, it sure seems like the chances are far greater that he’ll someday sit down for an interview with Esquire or Businessweek and reflect ruefully on just how and why, in his exuberant youth, he passed up the sweetest deal any 23-year-old startup founder is likely ever to see.
Also in Slate, Matt Yglesias applauds Snapchat’s chutzpah for turning down Facebook’s offer.