SnapChat Turns Down $3 Billion Offer From Facebook 188
Dr Herbert West writes about a reported $3 billion offer from Facebook that Snapchat CEO Evan Spiegel turned down. "Snapchat, a rapidly growing messaging service, recently spurned an all-cash acquisition offer from Facebook for close to $3 billion or more, according to people briefed on the matter. The offer, and rebuff, came as Snapchat is being wooed by other investors and potential acquirers. Chinese e-commerce giant Tencent Holdings had offered to lead an investment that would value two-year-old Snapchat at $4 billion. 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."
And the bubble grows larger (Score:5, Insightful)
~nt~
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Never heard of SnapChat before.
But for some reason, I find myself now wondering whether "ChatFish" is still available for trademark use, and what I would do with it if I had it.
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Nevermind [angel.co].
My children are using it (Score:4, Insightful)
Never heard of SnapChat before
I've heard of it because my children are using it
It's basking in it's 15-minute worth of glory
If that guy isn't selling now, I don't think he will have a lot of time left before someone deflate that 3Billion price tag
Re:My children are using it (Score:5, Insightful)
I've heard of it because my children are using it It's basking in it's 15-minute worth of glory
I've heard of it, but never used it. I know that it's an app that lets you send images ("snaps") to others that appear on their phone for a number of seconds before allegedly disappearing irretrievably. (*) That's it. It sounds like a "tens of millions of dollars if it *really* takes off" business, not a $3bn one.
Yes, I appreciate that with these things, it's as much the established user base that's more important, but I don't see how this can have the all-encompassing network effect that will lock users in to the same extent as with Facebook itself. It's not like your social life is going to end if you stop using it (or have I missed something?) and it's a one trick pony that's vulnerable to becoming boring- and abandoned- by the notoriously fickle teenage demographic who are its primary users. What's stopping anyone else from doing something similar or better?
So, yeah. It's definitely not worth $3bn, and this is definitely "bubble" territory. The guy no doubt thinks he'll get more from other people- personally, if I was in his position, I'd take the money and run even if there was a possibility of $4bn... the possibility of the bubble bursting before you see that and the company losing 90% of its value is a real possibility.
Especially if the obvious hole in the deletion mechanism becomes more widely known and more widely exploited and/or a story breaks that the images *aren't* being deleted from Snapchat's servers after downloading as they claim and/or someone else has access to them, e.g. the NSA. While 14-year-olds sending underage nude pics of themselves to their girl/boyfriend won't be bothered about the legality, they might be more put off by the fact that they're out there permanently or being viewed by some middle-aged guy in a government agency. (The "old enough to be their Dad" bit being applicable here, not the government).
(*) Because we all know that once you've uploaded something to another user's device that's out of your control, there's no prospect of them getting round the auto-deletion, except where there is, and I heard of workarounds some time back.
Re:My children are using it (Score:5, Informative)
One obvious workaround that I can think of: Screen capture. On my phone (Droid Bionic), pressing the Volume Down + Power button for a few seconds takes a photo of the screen no matter what app I'm in. Most other phones have a similar capability (though the actual method for this may vary). So if someone sent me a SnapChat photo, I could save a screenshot of it on my phone. While the original would "expire" and be unavailable, my screenshot version would remain for me to keep looking at or send to other people.
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Until iOS7 broke that. I don't know if Android SnapChat can detect it, but I know iOS prior to 7 it detected it as well (because for some reason you had to put your finger on the screen so the app detected THAT). Of course in iOS7
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They also let you set the timer on the photo, so you could give someone a nice generous 10 seconds, or you could say they get to see it for 2. Some phones require a second or so of holding the buttons to get a screenshot, so if the image is only there for 2 seconds, you had better be really fa
Re: My children are using it (Score:3)
Re: My children are using it (Score:2)
SnapChat Roulette (Score:5, Funny)
Images you can't forget but can't see after 30 seconds.
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But contain pictures of people connected with the phone owner, GPS info, possible objects of interest to the person taking or receiving the pictures, possibilities of marketing campaigns with the best SnapChat evolving product X, etc... There's a lot you can do with it if you look beneath the surface. A small SnapChat app update lets them data mine everything in your phone.
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Actually, it doesn't grow larger. If they had accepted the offer, then yes. Now it's just waiting and hopefully we'll see this specific bubble snap soon enough.
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Indeed, three BILLION dollars and he turned it down?? How fucking greedy can a human (and I use that term loosely) get? Jesus, I'd have taken the three billion, sent 2/3rds to help those poor fuckers in the Philippines and still had enough cash for me and everyone I know to live in luxury the rest of our lives.
I hope the stupid kid goes broke.
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It's ok. Evan Spiegel is 23 years old. He's got his whole life ahead of him. He'll bound to learn from this one way or the other. (And failure, should it happen, is good, right?)
Kudos for not selling out to Facebook! That took a lot of balls to walk away, leaving all that money on the table. The world is probably a better place for it. I still wish Skype hadn't been sold to Microsoft.
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Re:And the bubble grows larger (Score:5, Insightful)
all we have about this is really just snapchat arranged rumours(non sec, non financial laws liable) about it - from a company that sooner or later needs a buyout because the company getting bought out IS THE BUSINESS PLAN. so either him or people who own shares in it arranged this leak - or even more likely they fabricated it. I can't see why facebook would really offer 3 billion for it(they have most of the snapchat users already too, so there's that as well).
now they can go around looking for investors - implying that they have a 3 billion valuation - without actually saying that they're worth 3 billion(which might get them into hot water, lying when trying to secure securities usually tends to be a crime..). they already laid it out that they're probably looking for some investment early next year, so they're already negotiating, for more likely something like another 70-100 million - which with a reasonable look at the company would be all the company is worth(0 revenue), so they're going to be using this to sell let's say 10% of the company for 100 million(which is a bargain if the company really was valued at 3 billion).
with their current business model it's just a question who is the sucker that gets to keep the money burning zero profiting service.
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Snapchat sounds kind of like the antithesis of facebook. Facebook wants to keep a permanent record of everything you ever do, whereas this is more about quickly sending information and then redacting it (redacting because you can't erase it from the person's brain without the use of an amnesia ray.)
Re:And the bubble grows larger (Score:5, Insightful)
Who says they don't? The client deletes the photos. What the server does with them is a trade secret.
Facebook may well have thought $3B an excellent deal to expand their social graph database with all the photos you DON'T post to Facebook because they are too private...
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And they'll get a rude awakening when they realize it's mostly jailbait photos. You do know what kids are using it for, right?
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Precisely. Snapchat is everything Facebook doesn't want. It's in Facebook's interest to buy it up and shelve it.
No Kidding (Score:2)
I'm also pretty sure you could buy a number of companies with actual tangible assets and much more interesting IP for a
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They're buying the users, not the application. My guess is those users fit a demographic that Facebook is lacking in.
How's that tech bubble working out for you? (Score:5, Insightful)
Zynga, Instagram, Twitter, Snapchat, Skype, and the list keeps on growing.
Investors know the price of everything and the value of nothing.
Re:How's that tech bubble working out for you? (Score:4, Insightful)
Zynga, Instagram, Twitter, Snapchat, Skype, and the list keeps on growing.
I think you forgot Facebook :)
Investors know the price of everything and the value of nothing.
Big investors that got preferential price (and early access to all relevant information) made out just fine. The mere mortal investors might lose money, but that's a feature, not a bug.
They're trying to be the next Groupon! (Score:5, Insightful)
Google reportedly offered Groupon $6B and was turned down; the company's probably worth about $6 by now.
Facebook offered SnapChat $3B? As long as it's in cash, not Facebook stock, there's only one right thing to do, which is to take the money and run. (Or take the money and stick around, if that's the deal, but take the money. Do not play Go, Do not pass up $3B.
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https://www.google.com/finance?q=NASDAQ%3AGRPN&ei=0KyEUrHVCMGUsgfcSA
But please don't let facts get in the way of your anti-capitalist parade.
When you're offered an obscene amount of money for your property, you don't just blurt out a Yes or No. You consult with lawyers, accountants, CFAs/CFPs, etc. before making a decision.
Re:They're trying to be the next Groupon! (Score:4, Insightful)
Right, because market cap is be-all and end-all metric of company's worth, especially when considering acquisition.
Obligatory movie quote (Score:3)
This reminds of a line in the movie, "Entrapment".
In this case, the line would be: What can you buy with $6.68 Billion that you can't buy with $6 Billion. It was dumb for Groupon not to sell out. Just as it was dumb for the Snapchat guys not to sell out.
When you're in billion dollar territory, you've made it. You can spend the rest of your life trying to grow a $3 Billion company into a $10 Billion company, but the odds and history are greatly stacked against you. You can invest and grow that money into the
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No kidding. I don't know exactly where my "just call it good" threshold is, but I'd guess it's much closer to $100 million than even a billion. At those numbers, more or less gets pretty irrelevant pretty fast. At $3 billion, I'd rather just sign the paper and be set for eternity than leave uncertainty and doubt hanging over me for another second while quibbling about an extra billion, more or less.
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But please don't let facts get in the way of your anti-capitalist parade.
He didn't say anything anti-capitalist. And I'm a capitalist, so I think I'd have noticed.
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Groupon is worth US$6.86 billion right now. In hindsight, turning Google's offer down was a wise move.
That $6.86 billion is after investors pumped $700 million into it in the IPO, so more of a neutral move than a wise one.
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How much are your eyes worth?
Is it really a bubble and are these people really undervalued? All of these services boast hundreds of millions of active uses each month. That's a lot of potential eyes. For an advertising opportunity how much are those eyes actually worth? 1c each? 10c each? How many companies would line up to advertise to such a wide user base?
Some of these companies have no income now, but they have a HUGE user base. If it can be monetised with advertising there'd be massive earning potentia
Re:How's that tech bubble working out for you? (Score:4, Interesting)
From what I can see, Snapchat has no revenue. They don't get anything, zero, ziltch - unless image EXIF data is worth something. No ads, no software sales (it's free!). Unless they've been saving on their servers every single pic/video sent from people's phones to later use for extortion I'd say they are pretty worthless besides a user base that's already installed on Facebook.
The user base would likely go into free fall if Facebook took them over anyway, because we absolutely know those guys would archive every single piece of information.
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And many of them go belly up soon after. All it takes is a slight popular shift and the whole thing falls apart - just look at MySpace. Snapchat I think made a big mistake holding out for another buyer, because I don't think any other company would offer the synergy that their service would have with Facebook.
Who're they going to sell to now? Yahoo? Google? Maybe Twitter... I think they missed their golden pay cheque.
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I remember this exact logic right before we had the huge dot-com crash in the early 2000s. If it's not making revenue now it is dangerous to assume just throwing ads on it will somehow make it turn a profit rather than turn users off the product.
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Jaron Lanier: “Funding a civilization through advertising is like trying to get nutrition by connecting a tube from one’s anus to one’s mouth.”
ads (Score:3, Insightful)
the minute they monetize Snapchat with ads kids will stop using it
fuck, give it to me! (Score:3)
I know that if I was offered 3 billion dollars for some fade chat program, I'd take it! Even if it was from arch-evil FaceBook. Of course, maybe they think they can get more. And more to the point, that 3 bil is not going just to one person, it's being spread out over the shareholders and vulture capitalists, as well as the founders (if they are still around). But still!
Re:fuck, give it to me! (Score:4, Insightful)
Vulture capitalists would never turn down 3 billion dollars. They may be vultures, but they know very well when to cash out.
Re:fuck, give it to me! (Score:5, Interesting)
Vulture capitalists would never turn down 3 billion dollars. They may be vultures, but they know very well when to cash out.
You never accept the first offer. There's negotiation. It doesn't matter what the offer is for, or the conditions, etc. When you're selling, you don't take the first offer. Ever. Because once an offer's made, that's a signal that it's feeding time. Sharks do not hunt alone.
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Pigs get fed, hogs get slaughtered. $3 Billion Dollars is a lot of money, is holding out for $4 Billion worth the risk of getting nothing?
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I dunno. There are limits to that kind of approach.
We are talking about $3 billion. With a fucking capital B. How much is Snapchat at now in total investment with the shareholders? If all parties are in for maybe $20 million, that $3 billion starts to look like one hell of a successful exit plan.
I would take the first offer in a split second if it was at a couple hundred times the initial investment. Take it, move on, innovate someplace else.
Unless you had some sort of ideological reason not to. Only thing
Re: fuck, give it to me! (Score:2)
3 billion was the second offer, the first was 1.
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Re:fuck, give it to me! (Score:4, Insightful)
This sounds a lot like the advice Groupon got.
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I don't know. If the first offer to me was $3 Billion, I'd be hard pressed to stop dancing around the room shouting "YES!!!!!" Keeping a straight face would be really difficult and asking for more would be impossible.
Heck, if I was the owner of SnapChat and you offered me $500 million, I'd sell out. I'm not greedy.
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I'll give you $3B for your car.
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They would if they have reason to believe a better offer would be forthcoming or that the company is worth significantly more than the offered price.
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I doubt you become the 5th employee without an equity grant...so my guess is that none of those people would be hurting for a job after a $3b sale.
Comment removed (Score:5, Insightful)
Re:They're ALL on crack. (Score:5, Interesting)
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Maybe the NSA offered Facebook even more to acquire all of these embarrassing videos and other personal information? :p Or maybe the info is worth that to Facebook themselves. I would have thought they had enough already though..
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> When someone offers you $3B for a company with no revenues and a product that could be duplicated in a week, take the money and RUN.
You could duplicate the website in a week and nobody would care (just like I could make a social website "just like facebook" and nobody would care).
Facebook is not interested in snapchat, it's interested in _the marketshare of snapchat_. A good way to get that would be to get the strings behind snapchat and make sure they're the ones who pull on them. That's worth billion
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Facebooks acquisitions are going to be based on market share or the threat that a company presents to facebook's product. I think Snapchat satisfies both of these requirements. It has a decently large market share that can be exploited. Additionally, the very model of snapchat is entirely contradictory to what facebook sells (tons of information about you). By buying up Snapchat they prevent another organization from possibly using it agains them in an effort to break facebook's social media grasp.
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I believe we all lost any perspective of the value of money back in the '80s and have never regained our senses.
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You can collect two years worth of sexts in a week?
The blackmail value against the future leaders of America easily exceeds $3b.
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They are not buying just the app. They are buying their brand and user base.
FTFY (Score:5, Insightful)
Snapchat, a rapidly growing messaging service, recently spurned an all-cash acquisition offer from Facebook for close to $3 billion or more, according to people with a vested interest in the company's valuation.
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yeah unless there's an official, sec legit, pr piece about it.. then it is just pumping. pumping pumping pumping.
I'd suspect they would sell it for a billion dollars, were you to have the money in hand.
it's shit simple product..
Re:FTFY (Score:5, Funny)
Unfortunately, they made the written offer via Snapchat, so it disappeared after 10 seconds.
at long last.. (Score:5, Funny)
.. an honest company that says "sorry, we're aren't worth so much"
Valuation is completely skewed.. (Score:3, Insightful)
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MS and EA are just cash machines, not very exciting.
Re:Valuation is completely skewed.. (Score:5, Insightful)
Simple.
With rapidly declining advertising revenues in the traditional distribution channels due to a fundamental shift in the way people are consuming entertainment, there is a massive glut of advertising budgets and an absolute panic in the marketing douchebag asshole fucktard executives world.
Twitter provides massive amounts of data for marketers to masturbate over and determine just what is in our little pea brains at the moment and what we might buy. Value to marketing? HIGH.
Redhat makes operating systems. Value to marketing? LOW.
FB is the poster child for not just marketing data, but the destination for the attention deficit order generation to get their communication fix, consume entertainment, and progressively more and more, obtain news about what goes on in the world. Do I understand it? Not one fucking bit. Shoot me first. Is it valuable to marketing? Apparently extremely valuable. Every business out there is fumbling around with consultants and 3rd party vendors to get a FB presence up and running.
MS makes operating systems, office collaboration software, database systems, a beginning attempt at a phone system, and a complete failure in the entertainment market. Value to marketers? Moderate, and only in the form of crapware.
Zynga is valuable for the same reason as FB.
EA? I dunno about those assholes. Ever since most of those companies went full retard with DLC, DRM, and general stupidity I don't play video games from them anymore. I'm into the indie stuff out there. Surprising quality from most stuff Humble Bundle sells.
Re:Valuation is completely skewed.. (Score:4, Insightful)
Somehow Twitter is worth more than Redhat, FB is worth more than MS, and Zynga is worth more than EA?
Errr... apparently Twitter IS worth more than Red Hat, but Zynga's market cap is less than half that of EA and Facebook's is less than half that of Microsoft.
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Somehow Twitter is worth more than Redhat
How many users does Redhat have. How many users does Twitter have? In the case of Redhat, how many of those users actually spend money on the product? Which one of these companies has a communication medium embraced by most teenagers, media, TV shows, is deemed important enough to include most celebrities and politicians?
FB is worth more than MS
Which one is the company with growth potential, that somehow knows everything about almost everybody, and which company has shown a complete inability to innovate in any market over the la
The year 2000 called (Score:5, Insightful)
they want their bubble back as your offer sucked.
WTF has happened to the world. how the fuck can a chat service be worth 3 billion. You could equip every being in Africa with a generator, gas and the tools to create a new life with that much money,
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You could equip every being in Africa with a generator, gas and the tools to create a new life with that much money,
Well no, you couldn't, but it would be a heck of a start. :)
The people in Africa largely need clean drinking water before they need anything else. And an education, and stable governments, and a bunch of other things. :)
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hey now give the guy a break he has standard oil stock and new stocks in the generator sector and was trying to do his own pump on this pump story... I heard you like pumping so he put in moar pumping action...
Too high (Score:2)
stupid (Score:2)
The average guy will never earn that kind of money (with a legal job that is). Next year, he missed it and crashed and burned ?
Pointcast Redux (Score:3)
Those who fail to learn from the mistakes of their predecessors are destined to repeat them.
http://en.wikipedia.org/wiki/PointCast_(dotcom) [wikipedia.org]
Reminds of the time when Yahoo turned down $47.5B (Score:5, Insightful)
Reminds of the time when Yahoo turned down $47.5B from Microsoft in 2008. They have regretted it since.
Look to Facebook and how come they were willing .. (Score:3)
The saddest thing (Score:2)
What saddens me is not that they refused because they want to stay in control of their own company and product, but because they're holding out for a higher offer.
Apparently that's the only reason you'd need to run a company: get noticed for a buyout.
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<sarcasm>Oh, the horror of it! Inventors and entrepreneurs getting rewarded for what they do best, namely come up with new stuff and start companies around that! It must be stopped! If they aren't prepared to spend the next few decades slowly going crazy with day-to-day operations of some boring large corporation, they shouldn't found companies at all!</sarcasm>
Maybe they feared due dilligence (Score:2)
If it really is true that Facebook offered them this much money (this is by no means certain, it could just be an attempt to inflate valuation) and they actually turned it down, it could well be that they feared that a due dillegence may cause Facebook to turn away, something which would hurt their floatation if they decided to do an IPO.
If your company isn't worth nearly as much as you like to present to the outside world, you don't really want close scrutiny.
value of Snapchat (Score:2)
If Snapchat has any value at all (given how poor their software seems to be), it's that they are not part of Facebook or Google.
Of course, what this is really about is that Facebook is afraid that people will start communicating using some other platform, so they are trying to buy up and kill any potential competitor.
The 1990's have returned (Score:3)
A nearly worthless no-revenue software company gets a $3 billion offer? Sounds like the 1990's again.
I need to have a look at dumping all my tech stocks, hopefully _before_ the crash this time.
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But they've bumped the version number to 2.0!
Perspective (Score:5, Interesting)
Snapchat images may not erased (Score:2)
Snapchat == Digg? (Score:2)
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There is making a profit, then there is greed, and sometimes greed blinds you and makes you do stupid things.
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Maybe, but how much is enough? For me, the number is far below $3 Billion. :)
There is making a profit, then there is greed, and sometimes greed blinds you and makes you do stupid things.
Yeah, but we're not talking about taking money from starving children, we're talking about how much one overvalued company wants to pay for another. If I was selling and I thought I could get more then there'd never be an 'enough'. The more you have the more awesome you might be able to do, the more new startups you could fund, the more you might put into worthy causes. Facebook have no better use for money than I do...
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lets see. so the value of revenue is 100x worth more than in conventional business if the "users have smartphones", no wait make that infinitely since they have no revenue to speak of - at all.
how does that fucking make any sense anymore? everyone is walking around with a technically snapchat capable phone. fuck, all walmarts customers are smartphone users so why isn't walmart valuation 1000x what it is now?
he would sell it for 3 billion because the revenue vs. 3 billion valuation just doesn't hold up in an
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I can't help recalling that a measly *1* billion would buy you the world's most popular open source database just 7 or so years ago...
Re:So this must be the commercial advertisement (Score:5, Interesting)
You know how when someone commits murder for money and gets away with it you don't just say, "You just envy the murderer because you wouldn't have been able to pull it off"?
Well, same moral scenario here.
Some people - and I know it's hard for some others to believe - genuinely won't do something they believe to be morally reprehensible, no matter how much they might materially profit from it.
For example, I was introduced to bitcoins about three years ago, and it was suggested to me that I start generating some. I replied by saying that I saw no reason why I should be entitled to money just from getting in at the start of a Ponzi scheme. I did generate one or two out of curiosity anyway, but deleted them. I guess I have lost out on hundreds of thousands of dollars there, but do I envy bitcoin multimillionaires? Of course not. They're operating by their rules, and I'm operating by mine. My value system is (obviously) more important to me than theirs.
Am I saying I could have achieved what every billionaire has achieved, were it not for my self-righteousness? Of course not. I don't have the engineering talent of Hewlett and Packard, or Linus Torvalds. Do I envy these guys? Again, no. H&P were naturally brilliant, and Torvalds was excellent but also in exactly the right place at the right time. There's nothing I could have done to be them. The world's not fair and I accept that. These people just... are. They were/are in leadership positions, and it makes sense why.
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Also, you have to consider what good things you could do with the money.
The hundreds of thousands of dollars you airily dismiss could have done a lot of good.
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The ends do not justify the means.
In particular, "Dirty money is okay because I can do good with it," is morally bankrupt.
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I'm not trying to quote "a phrase", lovely. I'm stating that in general they do not, and in this particular case they do not.
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Exactly. It's not like this guy is doing God's work. It was a class assignment that happened to take off. Sell the damn thing to facebook, let them destroy it, and use the money anyway you want. Blackjack and hookers or starving Ethiopians, what ever.
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What if they took the money and donated it all to a charity?
This isn't murder for hire, and it's disingenuous to pretend there's a black and white moral issue involved here (or even in murder for hire... what if someone had taken out a contract on Hitler?)
Also I think you were crazy for deleting your bitcoin(s). By your definition, any entrepreneurial endeavor is a pyramid scheme simply because the people who get in first stand to benefit the most.