I wrote this a few weeks back. Jury is still out. Very curious what will happen.
Will SnapChat be Billion or Bust?
The current darling of the social tech world is SnapChat. If you’re not familiar, SnapChat was started in September of 2011 in the living room of Evan Spiegel.
It has quickly surpassed Facebook in the number of photos shared per day (over 350 Million), and is on pace for a second round of funding that would value the company at over $3.5 Billion.
All of this for a company that has photos which disappear in one to ten seconds.
Is that anymore of a metaphor for some of today’s big tech movers? You have a company worth $3 billion dollars in under two years, all for something that disappears in the blink of an eye?
Why do I ask?
Well, I’m often curious when starting a company what to focus on; profit or potential? Do you fight for customer acquisition and users, or focus on adding value and creating a revenue model?
Therein lies the dilemma and gold rush mentality.
There will always be the outliers of the SnapChats and Instagrams, but herein lies the difference.
Instagram sold to a bigger platform (Facebook) which can use its weight and might to attempt to monetize the usage.
SnapChat, at least to this point, has decided to go it alone.
For every Broadcast.com (Mark Cuban sold it to Yahoo for Billions in 1999), you have a PointCast (which turned down $450 Million and went under shortly after).
For every YouTube (which sold to Google for over $1 Billion and then let Google monetize it), you have Revver, which launched and puttered out.
For every Twitter you have a CellShout, and the list goes on and on.
And even more locally, for every Vine (the 6 second videos for Twitter) there is a Viddy (the local start up that that petered out).
Getting my point?
Snapchat is at a crossroad. Will they have a Billion dollar exit that justifies their investment rounds? Will they create an actual business and revenue model that becomes self-sustaining?
Or, will they end up on the Technology Trash heap when something new, fresh, exciting, or timely comes along and snuffs them out?
I don’t know the answer, and quite frankly I’m hoping for the former and not the latter.
If SnapChat were able to have a successful exit, and the Silicon Beach area was seeded with executives from the company flush with cash, you could change the trajectory of the tech industry in Greater Los Angeles.
That is something I call the “Business Lifecycle” and will cover that in the next column.
Till then, fingers crossed for Evan Spiegel, Bobby Murphy and the entire SnapChat team.