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How Snapchat Could March Startups Right Off the Cliff, Lemming-Style

Unknown Lamer posted about 5 months ago | from the take-their-money-while-you-still-can dept.

Businesses 143

Nerval's Lobster writes "Two investors are Tweeting that Instagram, had it stayed an independent company, could be worth between $5 billion and $15 billion today. That's led to talk of whether Snapchat was right to (reportedly) shoot down Facebook's bid of $3 billion for its business, considering its growth and sizable user base. Snapchat's founders evidently think they can score a better deal within the next few quarters. If they manage to sell their startup a year from now for twice as much, they'll be lauded as extraordinarily smart businessmen—perhaps smarter than the folks at Instagram who sold for a 'measly' $1 billion (and all this despite Snapchat making no revenue). But for other startups in the space, the Snapchat and Instragram stories won't do them much good. Propelled by dreams of ever-increasing millions (perhaps billions!) startup founders could end up turning down perfectly good acquisition offers in favor of continuing to bootstrap — and find their businesses eroding and imploding, as the market for their particular app or service either fades away or (more likely) ends up crowded out by competing software. The startup market is a shark-tank, and most of those who don't get out of the water as soon as possible are eaten, dreams of grandeur or no."

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143 comments

Oh, dear. (4, Insightful)

Ralph Spoilsport (673134) | about 5 months ago | (#45459205)

Business is complex. Making the right decision to sell at the right time to parasitically extract money from the vector capitalists is fraught with peril.

Headlines from Captain Obvious.

Re:Oh, dear. (5, Insightful)

Moheeheeko (1682914) | about 5 months ago | (#45459219)

"One minute you're up half a million in soybeans and the next, boom, your kids don't go to college and they've repossessed your Bentley." - Louis Winthorpe III

Re:Oh, dear. (0)

Anonymous Coward | about 5 months ago | (#45461083)

Those were the days—SNL cast members were comedians and made decent movies.

Re:Oh, dear. (5, Insightful)

dkleinsc (563838) | about 5 months ago | (#45459281)

Up to a point, yes. But I'd also factor this in: If I'm a startup founder and am ever in a position to hold $50 million, I could take that, invest it relatively sanely in the stock market, and be living extremely comfortably for the rest of my life. There's such a thing as "enough", and there's no particular reason to press your luck when you already have it.

Re:Oh, dear. (4, Insightful)

mythosaz (572040) | about 5 months ago | (#45459307)

I have a friend that was offered 1M to walk from a business in 1990.

The only thing the 1M offer convinced him was that it was clearly worth more than 1M, so he held on, and today has nothing.

Wisdom now is to take your 1M and get some percentage of the future action, so when you're terribly wrong, and it's worth 1B instead, you don't have to kill yourself.

Re:Oh, dear. (5, Insightful)

paiute (550198) | about 5 months ago | (#45459327)

The lesson in most cases is to take the million, walk, then buy back your old company for pennies on the dollar in a couple of years.

Re:Oh, dear. (1)

FatdogHaiku (978357) | about 5 months ago | (#45459649)

The lesson in most cases is to take the million, walk, then buy back your old company for pennies on the dollar in a couple of years.

That needs to be modded up but I got no points today...

Re:Oh, dear. (0)

Anonymous Coward | about 5 months ago | (#45460201)

Hey, I've done that!

After I sold my companies, I walk ... (1, Interesting)

Taco Cowboy (5327) | about 5 months ago | (#45461535)

... and never look back

Why would I buy back my old companies even if I can buy them back pennies on the dollar ?

When I sold my companies, I did not only sell the companies. I sold them what I had created, I sold them the years I have invested in those companies, the ideas that I've put in them, the niche market that they've created

And if the buyers fucked up the companies that they bought from me, they are already damaged goods - and unlike Michael Dell, I will not buy back the damaged goods, not even for pennies on the dollar

Same thing with the companies that I have helped created - be it with seed money, with mentoring, or with the connections that I have - when it came time for me to sell off the shares, that's it

I rather put my time in creating something new, or invest in startups that make sense

Re:Oh, dear. (4, Insightful)

Sarten-X (1102295) | about 5 months ago | (#45459421)

For perspective, $1 million is like having a $30K salary for 30 years* that you don't have to actually work for, while you can continue to work on other projects or more fun jobs. With a "regular" job that pays the bills, $1 million is a pretty luxurious two-week vacation every year for fifty years. With a healthy retirement plan already in place, $1 million is a decent second home on a lake somewhere, with a savings fund to cover the upkeep. As a point on a résumé, $1 million is a pretty bold statement that you have enough dedication and business sense to get an idea off the ground, and enough creativity to bring good ideas to a prospective employer.

I'll take the million, thanks.

* 20 years after taxes, if you won't spend the few thousand dollars to get a good accountant to avoid those.

"enough" is not the end goal for these guys... (4, Insightful)

schlachter (862210) | about 5 months ago | (#45459701)

They are not looking for "enough" money to sip drinks at the beach. They are looking to ride the crazy train and steer it along for as long as they can...and selling out to a company at any amount takes them out of the driver seat. And if the shit really hits the fan and things take a dive, they'll still be able to off load their once $3B company for a couple hundred million which is certainly "enough" in failure mode.

Re:Oh, dear. (4, Insightful)

able1234au (995975) | about 5 months ago | (#45459821)

$1 million at 3% is like having $30,000 for ever

Re:Oh, dear. (1)

Anonymous Coward | about 5 months ago | (#45460773)

And if you've got $1 million, you should be getting better than 3% on your return.

Re:Oh, dear. (2)

bloodhawk (813939) | about 5 months ago | (#45459313)

yes that is the part I don't understand. If they were holding out because they would only be making a small premium on there investment I could understand. But they would be making a massive amount of money leaving them all very rich, why the hell would you hold out for more in such a fickle market as social media where in a few short months they could end up begging to be given a fraction of the original offer. Sure they might get more, but such insane greed makes no sense when they might also get nothing.

Re:Oh, dear. (2, Funny)

Anonymous Coward | about 5 months ago | (#45459477)

You are right; SnatchChat (damn autocorrect), I mean SnapCunt (damn autocorrect), SNAPCHAT - there, got it right - will be a MySpace in a few years. Sell at the top. Not at the bottom.

Re:Oh, dear. (1)

gl4ss (559668) | about 5 months ago | (#45461403)

well they would take the money.. knowing that their business has zero revenue.

BUT they would encourage tweeting about how their product(the company itself) is worth x billion dollars of course.

and instagram being worth 10 billion ? holy fucking cow no fucking way - or did I miss how instagram was making 500mil+ profit per year? they weren't making that and they wouldn't be making that so how the fuck would it be worth 10 billion dollars?

if you're being offered more than 10 times what the company profit per year + assets are then it might be worth taking it.. if you're really offered it.

Re:Oh, dear. (2, Insightful)

Anonymous Coward | about 5 months ago | (#45459377)

There's such a thing as "enough", and there's no particular reason to press your luck when you already have it.

This.

The only viable business plan is to get acquired. In the long run, all businesses go back to zero. Even stalwarts of the Dow - good blue chip names like the American Cotton Oil Company, Pacific Mail Steamship, Studebaker, Bethlehem Steel, Sears Roebuck & Company, and Eastman Kodak, are no longer with us in recognizable form.

If for some reason it's personally more important to you to be a founder/CEO than it is to actually make money, you still have an obligation to your shareholders to sell the damn company, take the money, and go found another one.

Re:Oh, dear. (0)

Anonymous Coward | about 5 months ago | (#45459745)

There's such a thing as "enough", and there's no particular reason to press your luck when you already have it.

This.

The only viable business plan is to get acquired. In the long run, all businesses go back to zero. Even stalwarts of the Dow - good blue chip names like the American Cotton Oil Company, Pacific Mail Steamship, Studebaker, Bethlehem Steel, Sears Roebuck & Company, and Eastman Kodak, are no longer with us in recognizable form.

Standard Oil and Carnegie Steel are also no longer with us in recognizable form, but Rockefeller and Carnegie certain made more money by not selling there companies.

If for some reason it's personally more important to you to be a founder/CEO than it is to actually make money, you still have an obligation to your shareholders to sell the damn company, take the money, and go found another one.

If the company has not gone public, there aren't a lot of shareholders. They also have little recourse if the founder and controlling party disagrees with them.

Re:Oh, dear. (1)

Anonymous Coward | about 5 months ago | (#45459835)

Standard Oil and Carnegie Steel are also no longer with us in recognizable form, but Rockefeller and Carnegie certain made more money by not selling there companies.

True, but my larger point still stands: even if you build an actual sustainable business, every company has a lifecycle. Railroads gave way to automobiles, but it took 50 years. (Oil will eventually give way to something, but it'll probably take another 50 years on top of the 100 years its already had).

In tech, the lifecycles of companies are ridiculously compressed. For every IBM (which reinvents itself every 30 years - calculators, mainframes, PCs, consulting) Apple (which reinvented itself once about 15 years ago - transitioning from PCs to multimedia-consumption devices), Adobe, Microsoft, and Oracle (all three of whom are getting pretty damn long in the tooth), there are countless names who rise, dominate their respective industries for a couple of years, and then sink into oblivion. HP, Sun, SGI, Sybase, Borland, SCO, WordPerfect/Corel, UUNet/Worldcom, etc. Their founders and boards ride them up, and ride them all the way back down to zero again.

If the company has not gone public, there aren't a lot of shareholders. They also have little recourse if the founder and controlling party disagrees with them.

True, which is part of the risk of working at a startup. (It's a much nicer problem to have than the usual risk: that the startup flames out before anyone makes a dime, for instance...) That said, I doubt any VC who invested at any stage in Snapchat would be disappointed with a $3B exit.

Re: Oh, dear. (1)

Mabhatter (126906) | about 5 months ago | (#45459927)

I'd say that has more to do. Only the shareholders in this case are the founders.. Who traditionally get screwed out of the actual PAYOUT of that $1billion.

The other question I'd ask is why does Facebook WANT your company? They just bought Instagram. Why isn't that doing good for them? Either they have horribly tore up their last big purchase, or they just don't know what they are doing and buying "trophies" not business partners... This ain't the 1990's.

Re:Oh, dear. (5, Informative)

Jah-Wren Ryel (80510) | about 5 months ago | (#45459475)

There's such a thing as "enough", and there's no particular reason to press your luck when you already have it.

The snapchat founders have been able to monetize their situation such that they've already got at least 10 million in the bank. [cnet.com] That's enough "FU money" to press their luck and ride this thing all the way to the end, glory or otherwise.

Re:Oh, dear. (1)

Anonymous Coward | about 5 months ago | (#45460851)

Okay, yeah, that changes everything. Smart kids.

Re:Oh, dear. (0)

Anonymous Coward | about 5 months ago | (#45459833)

Two points:
1) Entrepreneurs are not risk averse...the whole VC/startup process weeds out the risk averse early on.
2) Successful entrepreneurs, by the time they're deciding to sell, have likely been told their shit smells like roses and they can do no wrong for a good year.

It shouldn't be surprising that so many of them get delusions of grandeur when deciding whether to cash out or let it ride.

Re:Oh, dear. (0)

Anonymous Coward | about 5 months ago | (#45459843)

invest it relatively sanely in the stock market

Really?

Because you could spend 5m of it building a giant vault, throw the other 45m into that vault, never gain a ha'pence of interest, and live like a fucking king for the rest of your life.

I don't think people quite understand how little it takes to live ridiculously well, especially once you factor out the major drains (car payment, mortgage/rent) that you can annihilate with raw cash up front.

Re:Oh, dear. (1)

demonlapin (527802) | about 5 months ago | (#45460947)

Um, no, you can't. Let's just make the math simple and say that you will live 50 years on 50 million dollars. That kind of money is - today - just barely the point at which you can afford to begin to live like a king. It doesn't get you private jets, or more than three houses with staff, or yachts. It gets you an upper-middle-class lifestyle that more or less lasts forever, sure. But even though someone's going to mow your grass, you're going to have to write their checks yourself.

Re:Oh, dear. (3, Insightful)

asmkm22 (1902712) | about 5 months ago | (#45459845)

People like that generally aren't driven by the desire for "good enough." What makes sense to you seems trivial to them.

Re:Oh, dear. (4, Informative)

rudy_wayne (414635) | about 5 months ago | (#45459387)

Instagram, had it stayed an independent company, *COULD*could be worth between $5 billion and $15 billion today.

The important word here is "could". The truth is, Instagram pulled off an amazing scam and they were smart to just go for it.

-- Instagram takes $50 million from investors and gives them 50% ownership of the company
-- 3 days later, Instagram, which has 13 employees and zero revenue, agrees to be bought by Facebook for $1 Billion
-- Investors see their investment go from $50 Million to $500 Million overnight
-- The founder of Instagram gets half a billion in the process.
-- PROFIT!!

What's not to love?

In other words: (1)

Anonymous Coward | about 5 months ago | (#45459419)

Two investors are Tweeting that Instagram, had it stayed an independent company, could be worth between $5 billion and $15 billion today.

Is complete horseshit. It's as valid as saying "If Columbus actually hit Asia, he'd own it."

Predictions of the future or what-ifs are pointless and moronic.

What is a Vector Capitalist? (0)

Anonymous Coward | about 5 months ago | (#45459659)

parasitically extract money from the vector capitalists

Is that a Capitalist who wants to know which way the money is going as well as how much? (As opposed to a scalar capitalist)?

And what does the parasite that preys on one look like?

Re:Oh, dear. (0)

Anonymous Coward | about 5 months ago | (#45460161)

Is a "Vector Capitalist" someone who spends money at a specific angle?

Re:Oh, dear. (0)

Anonymous Coward | about 5 months ago | (#45460529)

This isn't a commodity, it's a one of kind business. Therefore there is only the decision to accept or decline an offer or negotiate terms. The rest is a pie-in-the-sky supposition about the nature of business. Instagram and Snapshat are only 'worth' what others are willing and able to pay at a given point in time.

I'm sure there are many who would love to promote the illusion that money may have been left on the table or that Snapchat's management can improve its position, but it's just a figment of mass hysteria until a real buyer is on the other end of said table.

Le Pop! (3, Interesting)

bob_super (3391281) | about 5 months ago | (#45459235)

Remind which which date we have agreed on for that bubble to pop?

Re:Le Pop! (1)

istartedi (132515) | about 5 months ago | (#45459519)

Remind which which date we have agreed on for that bubble to pop?

Since bubbles are only evident in hindsight, I'd say six months before "real soon now".

Re:Le Pop! (4, Insightful)

bob_super (3391281) | about 5 months ago | (#45459569)

Nah, that one is evident. $3B for a competitor with no revenue, after $1B for a competitor with little revenue?

Lemming-Style... (4, Funny)

Hsien-Ko (1090623) | about 5 months ago | (#45459241)

You mean like programmed by a bunch of Scots and saturated ports of other platforms taking the world by storm eventually being bought up by a larger entity to rot on with half-assed iterations through third-party developers?

Re:Lemming-Style... (0)

Anonymous Coward | about 5 months ago | (#45461519)

Um, I thought the iterations (Tribes, All New World) were DMA internal. It was the -ports- that were third party, for example the SMS version was done by Probe.

frat bro's (5, Insightful)

globaljustin (574257) | about 5 months ago | (#45459245)

Snapchat was made by frat bro's who royally screwed the guy who did all the real work. [gawker.com]

A *real* tech thought it up and made it, then his rich friends stole his idea...

An idea for a way for people to send drunk videos to each other w/o consequences, which the frat-bro's took to the logical place they would, which is to drunken college girls...

**that's Snapchat**

Facebook.com offered $3Billion b/c facebook.com is *hemoragging* young users & it will do anything to buy other system's users (ex: Instagram) for them to vampire the life force from for advertising profit

that's it: facebook.com wants to buy Snapchat's users

all the noise about 'IPO valuation' is absolutely standard issue tech-bubble startup stuff that **we all know** how the cycle goes!

snapchat is only good as long as drunken hotties use it to send consequence free drunk selfie videos

Re:frat bro's (2)

kamapuaa (555446) | about 5 months ago | (#45459557)

It's not rich frat bros using their money to push out the real developer, that's not what's being argued. The two central developers presented and developed the program for a class at Stanford University. The third guy (from the same frat) is arguing that he had a hand in further development, and that he came up with the old name of the business that's no longer in use. Whether that entitles him to a third of the business is a legal matter that relies on what contracts were signed or agreements were made, but that's hardly the narrative you're pushing.

'idea for an app that deletes messges' (1)

globaljustin (574257) | about 5 months ago | (#45459635)

it's all on the link I provided...

the guy invented the app

the two frat-bro's class project doesn't mean shit...for my MS in Information & Communication Science I made proposals and projects for all kinds of app concepts...doesn't mean I can sue anyone

in court these things become pretty black and white...at least when there are text messages that say it literally word for word ;)

Re:'idea for an app that deletes messges' (0)

Anonymous Coward | about 5 months ago | (#45459853)

How is it that he developed the app, if it was publicly presented by somebody else?

The link you provide doesn't substantiate what you're saying. There's no mention of him developing the program. Just, one mail saying there were two developers, the other claiming three. There's a great number of scenarios which would explain why, or how much compensation he is owed, we are not privy to the private history or the legal machinations. However he clearly didn't come up with the idea for the company, and you seem to have some kind of personal vendetta against them. Painting a bunch of Stanford graduates as lunkhead frat bros...this is Stanford, after all. Maybe you're not familiar, but generally considered one of the five best universities in the world...

'publicly presented' = nothing (2)

globaljustin (574257) | about 5 months ago | (#45460555)

How is it that he developed the app, if it was publicly presented by somebody else?

hey, AC...it's actually really, really easy for one person to develop something and another 'publicly present' it ;)

it happens every day in the tech industry

the link shows alot more than what you listed...it shows the other two acknowledging the truth that the one guy had the idea for the messages disappearing...

you ignore that, which is the crux of the whole thing...b/c the disappearing messages is **the only reason anyone uses Snapchaat**

people use Snapchat b/c it disappears...everyone acknowledges on paper it was the one person's idea...end of story

as far as 'publicly presenting'...that and two bits and you have a quarter....'publicly presenting' is **exactly** the bullshit hype language that people use to justify huge stakes in things they did not make or contribute to intellectually

Re:frat bro's (0)

Anonymous Coward | about 5 months ago | (#45459823)

So, just like facebook then

Re:frat bro's (0)

Anonymous Coward | about 5 months ago | (#45460507)

Facebook is a ripoff of a couple sites that were popular at the time, people complain about innovation and young folks and just about every idea is, or was stolen from another company, or several companies. Very few can create anything original anymore, and if they do the are to busy patting themselves on the back, instead of keeping up with what else can be added.

The original article on slashdot is laughable, because the author claims the creators are holding out, and if they do they can double up when they sell making them "geniuses"

Holding out on a uprising company that can still gain more popularity/users, is the way business is done, that doesn't make someone a genius for staying with it, then selling it off. Unless something comes out about the NSA exploiting the site they should hang on as long as possible.

stolen vs borrow (2)

globaljustin (574257) | about 5 months ago | (#45460637)

just about every idea is, or was stolen from another company, or several companies

I wanted to address this b/c there is an important distinction to make...however I don't have any argument against your greater point

Regarding ideas & the stealing thereof...you are right in a sense, but I make a distinction between *borrowing* & *stealing*

B.B. King did a commercial for some dumb credit card (AmEx? can't find it on youtube) back in the early 2000's and he said something to the effect of, "My advice to young musicians today is, if you love music, find what you like and listen to as much as you can of it, then learn to play an instrument, and then if you want to write your own songs, go ahead and borrow a little"

All the greatest creative types can list (usually with affection) their list of influences

Same goes for internet sites.

facebook.com was (and still is) *better* than any alternative from an everyday user perspective...there's no honor in their title, but they get it nonetheless

I don't begrudge Zuck & Co for borrowing ideas from other sites at the time. Hell **WE ALL KNEW IF SOMEONE DID IT RIGHT IT WOULD BE HUGE** Credit them for having the coding chops to make a functional system and the discipline to *keep ads away*...they did that part right.

Zuckerberg & friends had wealthy parents to support them in the weird interim between starting the site > getting users > monetization. The way Zuck punked the Winklevoss'ses's is kinda funny but morally, ethically, and legally wrong, but they had their settlement.

No, today, what makes Zuckerberg and facebook.com awful isnt a stolen idea like Snapchat was stolen from its creator. Instead, Zuckerberg is evil b/c he has perpetuated the business philosophy that tech must profit from users **by taking their privacy for profit** and **bottlenecking features**

Facebook.com's IPO says explicitly that any legislation or policy that gives users control over their data is a threat to business profits. That's it in black and white.

Zuckerberg is the new Gates.

Snapchat was stolen.

SnapChat founders are idiots. (5, Insightful)

RightSaidFred99 (874576) | about 5 months ago | (#45459259)

If Facebook offered them that much money, they are complete nimrods to turn it down.

Maybe they didn't think that the alternative is Facebook (and maybe others) dropping a cool $1B on a similar app of their own that better integrates with existing social platforms. Wonder how much their company will be worth then?

Idiocy. Greed and idiocy. Will be hilarious if they can't even sell for $0.5B in 6 months.

Re:SnapChat founders are idiots. (1)

khallow (566160) | about 5 months ago | (#45459361)

Apparently, it was an all-cash offer too. I thought it might be a Facebook stock offering that could be worth far, far less by the time they would be allowed to sell the stock. Well, it'll be interesting to see what happens down the road.

Re:SnapChat founders are idiots. (1)

geekoid (135745) | about 5 months ago | (#45459807)

Facebook got a huge amount of data for their users, and NON USERS of facebook.
They got demographics, usage states, increased traffic.
This was a good move for facebook.

Re:SnapChat founders are idiots. (3, Insightful)

Seumas (6865) | about 5 months ago | (#45460239)

Instagram and Snapchat are two examples of how there is no such thing as a stupid internet idea. Or, rather, there are plenty of stupid internet ideas, but they'll make billions anyway.

Re:SnapChat founders are idiots. (0)

Anonymous Coward | about 5 months ago | (#45460875)

You mean you'll have schadenfreude for these guys if they walk away with a measly $100M apiece in six months? I guess I'm a nicer guy than you, since I'd feel bad those poor souls who'll be able to make more off of interest in a year than my entire lifetime income.

Overvalued? (2)

lymond01 (314120) | about 5 months ago | (#45459293)

I'd like to see the numbers on ad revenue/data selling revenue for these services. I have a hard time believing that instagram, with its miniature, completely ignorable ads, would ever truly be worth $5 billion. This is what is terrible about "value" these days -- it is turbulent. Houses are bouncing back -- our house gained $100K in one year. Do I think it's worth that much? Not at all...but a lot of people do, so there it goes for no other reason than many people think it should be worth more. Price of wood, stucco, tile hasn't gone up 50% that I know of...

I suppose it's not advertisement so much as selling the information from the userbase to other clients. Those are the dollar amounts I'd like to see -- not so much what ads are directly bringing in, but what other companies are buying access to. "Hmm...Instagram user ou812 has a linked Facebook account under David Lee Roth with lots of pictures of banjos, cows, and hair replacement techniques. We can sell his info to [insert companies here] for $X."

Or something.

3 Billion? Morons. (0)

Anonymous Coward | about 5 months ago | (#45459295)

Stupidgram is worth 5 to 15 billion in the la la land of fake stock market funny money. They would never have survived a scale-up without investors that would have forced toxic monitization schemes (Thus killing the product/brand) The creators made a steal when they sold out for a billion to facebook. Remember how everyone thought zucker made a huge mistake?

The snapchat guys are missing out on a whole lot of free money. Thats 3 billion real sellout dollars in their pockets vs 15 billion fake stock bubble valuation dollars. All of it, regardless, is going to go away when they're replaced by the next big thing.

Re:3 Billion? Morons. (0)

Anonymous Coward | about 5 months ago | (#45459489)

The problem is with stock itself. What goes up must come down, and the gains investors have now will be paid for by people losing their shirts later on. Money doesn't appear from nowhere, so that stock that gives someone $100,000 now, will be taking $100,000 from another investor's pocket eventually.

At least BitCoin is obvious when it comes to being a system that pays the first in out of real value from the most recent.

Years #1 morons. (2, Funny)

Anonymous Coward | about 5 months ago | (#45459319)

Snapchat founders are the years stupidest people. By a wide margin.

3 billion. for a stupid chat program... 3 billion!

You turned down 3 billion. Your program makes nothing. 3 billion for nothing.

Thats the ultimate great deal. And you said no...

Now line up so we can slap you. 3 billion times.

Why is SnapChat even a thing? (3, Insightful)

GoodNewsJimDotCom (2244874) | about 5 months ago | (#45459321)

Snapchat should have sold. The entire idea should die to hackers making a buck when Snapchat becomes big. Can't someone make a hack to permanently store the data? Outside of a little encryption breaking, it shouldn't be that hard to do. And I'm sure there are ways to dodge encryption breaking even if you'd have to go a hardware button where when you press it, the video memory gets saved.

Re:Why is SnapChat even a thing? (1)

GoodNewsJimDotCom (2244874) | about 5 months ago | (#45459347)

Okay, the hardware idea is bad for a major vector. I was just had another thought,"Aren't decompilers pretty common now? If you decompile an ap, you'd have access to all their encryption functions right there. All you'd need to do is isolate where it is painted on a screen, write a function called to save that data. Voila, you have a snapchat client that can save all the data. I bet people have aps that do this right now because it sounds so simple to do.

Re:Why is SnapChat even a thing? (2)

Algae_94 (2017070) | about 5 months ago | (#45459407)

You're making this too difficult. There are numerous apps to store SnapChat messages in the Play store. I imagine the same is true for other platforms. All you need to do is a screen grab. Don't bother with encryption functions, etc. Your client has all that to show you the original message. Just take a screen grab before it disappears.

Is there some crazy patent that SnapChat has? Why again couldn't Facebook or anyone else build "self-destructing" messages for well less than $3 billion?

Re:Why is SnapChat even a thing? (0)

Anonymous Coward | about 5 months ago | (#45459581)

Why again couldn't Facebook or anyone else build "self-destructing" messages for well less than $3 billion?

Clearly Facebook could build whatever they wanted but it wouldn't be cool with tweens. That's what they would be buying.

Re:Why is SnapChat even a thing? (2)

ColdWetDog (752185) | about 5 months ago | (#45460593)

As has been pointed out, Facebook doesn't want the software, the want the victims^Husers.

Whether several million drunk college students are worth billions of dollars is another deep and unanswerable question.

Re:Why is SnapChat even a thing? (0)

Anonymous Coward | about 5 months ago | (#45459459)

Replying to you and your parent comment, there are already ways to recover snapchat images.

Which makes me only agree with you more, they should have sold.

The comparison to Instagram is misleading at best, simply because we're comparing what MIGHT BE for Snapchat with what COULD HAVE BEEN for Instagram. That is, hindsight is AT LEAST 20/20.

Re:Why is SnapChat even a thing? (2)

Connie_Lingus (317691) | about 5 months ago | (#45459399)

" Can't someone make a hack to permanently store the data?"

yeah...its called using the screenshot function of your phone to capture the pic while its there.

This story has zero to do with technology (0)

Anonymous Coward | about 5 months ago | (#45459335)

engineering or science, just saying.

Seen this before. (1)

the eric conspiracy (20178) | about 5 months ago | (#45459337)

Boss had a web site (silly little news aggregation thing).

Somebody offered him 12 million for it. He turned it down.

Now it isn't even on line and Boss is working for a salary somewhere.

Lesson: Take the bird in the hand.

Re:Seen this before. (1)

able1234au (995975) | about 5 months ago | (#45459867)

The question is when do you take the offer, when you dont have hindsight. What happens when he is offered 100k, then 1m, then 10m, then zero. If you take offer one and two you are stupid but if you dont take offer 3 then you are stupid. Hindsight makes it all easier.

Re:Seen this before. (1)

LynnwoodRooster (966895) | about 5 months ago | (#45459957)

My rule of thumb in selling ideas/patents/business seeds has been to sell out when the offer is 5X the money/time I put into it, at my normal consulting rate. If I put 50K into a patent - in direct costs and time - and someone offers me 250K for it, I take it. Yes, they make take it to $1+ million, but I've already got 5 times the value out of it - a fairly healthy return!

Re:Seen this before. (1)

able1234au (995975) | about 5 months ago | (#45460095)

This is too low for VCs. They expect a higher multiple. If the failure rate is 90% then a 5x payoff will lose you money.

Re:Seen this before. (1)

LynnwoodRooster (966895) | about 5 months ago | (#45460587)

Which is why I'm not a VC. I fund and develop my own things...

Re:Seen this before. (1)

able1234au (995975) | about 5 months ago | (#45460607)

Sure. understood, but if the odds of failure are the same, nine out of ten, then the same rule applies. My point is that people are complaining about people expecting ten times their money but if they fail nine times out of ten, then they are just breaking even. I know plenty of people who lost everything in a startup.

Re:Seen this before. (0)

Anonymous Coward | about 5 months ago | (#45460965)

If you sell for 100k, you're selling a working implementation. If you sell for 1M, you're selling a working implementation that has users. If you sell for 10M, you're selling a working implementation that is growing. Figure out what you've got and you'll know how much it's worth right now.

Maybe the market is tired of this type of startup? (4, Insightful)

mlts (1038732) | about 5 months ago | (#45459345)

We have gone through a first round of startups which were actually pioneering, back in the dot com days.

The next boom are startups which really don't offer much in the way of breaking ground. What they offer is the fact that their customers and their product are totally different groups. FB, Twitter, SnapChat, and many more follow this model.

The problem is that there is only so much money advertisers will pay, and only so much data they can squeeze out of their subscribers before they give the middle finger and move on. This is a bubble waiting to happen, because long-term, there isn't really any product, and their services are essentially fungible. Someone else can come out with a virtually identical service and wrest the userbase away, just like Facebook wrested MySpace's userbase away.

I can understand why people invest in these companies on the short term, but long term, what product do they have over time? Cable at least has fiber in the ground guaranteeing they will be around. Same with wireless providers and spectrum.

Making change (3, Insightful)

TheloniousToady (3343045) | about 5 months ago | (#45459351)

They'll be lauded as extraordinarily smart businessmen—perhaps smarter than the folks at Instagram who sold for a 'measly' $1 billion (and all this despite Snapchat making no revenue)

This billions-for-no-revenue thing reminds me of "The Change Bank" commercial that appeared on Saturday Night Live years ago:

A lot of people don't realize that change is a two-way street. You can come in with sixteen quarters, eight dimes, and four nickels - we can give you a five-dollar bill. Or we can give you five singles. Or two singles, eight quarters, and ten dimes. You'd be amazed at the variety of the options you have....All the time, our customers ask us, "How do you make money doing this?" The answer is simple: Volume. That's what we do.

And how much profit are these companies making? (0)

Anonymous Coward | about 5 months ago | (#45459397)

Please tell me about the price / earnings ratios.......

What's that, they're not making any profit?

Well, no, but future earnings when we splash ads everywhere could be ...... what do you mean a new company has just hit the headlines offering the same rather easy to implement functionality for free with no intrusive ads..... $15 billion for a website where (get this!) you can post pictures! And post messages for other users to read! ........ And who is this Ad Blocker guy you keep telling me about? Does he know that Cliff Lemming dude I just read about scanning Slashdot?

Heh, Lemmings (2)

readacc (3401189) | about 5 months ago | (#45459413)

Oh no!

*pop*

Or as I used to end up doing...

*pop**pop**pop**pop**pppooopoooppppppppppppppp [Amiga stutters]

Snapchat is like google, and it will go big (0)

Anonymous Coward | about 5 months ago | (#45459415)

While everyone else was popping up ads in user's faces at every turn, google kept ads of it's home page. Now while everyone else is compromising user's privacy as much as possible, snaptchat at least tries to protect it. If snapchat keeps challenging power and giving user what they want, it will end up like google.

Re:Snapchat is like google, and it will go big (2)

Shavano (2541114) | about 5 months ago | (#45460737)

No it won't because Snapchat's popularity is directly due to its simple UI and lack of ads. There's no way to put ads on Snapchat without being obtrusive and diminishing the quality of service. Do that and they will be instantly replaced by some new service that does what they used to do before they tried to monetize your fun. SharePix or something.

Google's serving up ads to the side and even among search results is actually part of what people want to use Google for. If I'm searching for "sweaters" there's a damn good chance that what I'm really doing is shopping for clothes. So ads for sweaters and other things that I might also be looking to buy based on my search terms are part of what I expect to see.

Compare that to Facebook ads. Facebook ads on the sidebar don't bother people much. But ads in the news feed and sponsored links with their friends names on them really annoy users. So far, not so much that FB users have abandoned the service. They keep it at a level where it's moderately annoying but won't actually change users' willingness to use the service.

The Founders Are Stupid (1)

george14215 (929657) | about 5 months ago | (#45459463)

It's the investors (who can afford to lose a few million) who are pushing to hold out. Their risk is "low" compared to the potential upside in this decision. To them holding out is good. For the founders, it's an idiotic move. But they probably don't control this decision at this point.

Re:The Founders Are Stupid (0)

Anonymous Coward | about 5 months ago | (#45459647)

Common sense says take the money and run.

These idiots just did the equivalent of winning the lottery and then walked to the nearest casino and betting it all on black -- more than once.

Sure you might double or quadruple up, but you're more likely to walk away with nothing.

Friendster (1)

Nick (109) | about 5 months ago | (#45459591)

Google tried to buy Friendster for $30 Million in 2003 and it was turned down. We all know what happened to Friendster not even 2 years later. At the end of the day you need to just use your better judgement and evaluate where you think the company is heading in the future. Although I fail to see how accepting a one billion offer on a company is a failure.

Re:Friendster (0)

Anonymous Coward | about 5 months ago | (#45459673)

Google tried to buy Friendster for $30 Million in 2003 and it was turned down. We all know what happened to Friendster not even 2 years later. At the end of the day you need to just use your better judgement and evaluate where you think the company is heading in the future. Although I fail to see how accepting a one billion offer on a company is a failure.

It's called greed. No one needs MORE than a billion dollars. Even split a dozen ways that's more than enough.

Re:Friendster (1)

geekoid (135745) | about 5 months ago | (#45459831)

IN short, some risk in business don't pay off.
The kind of people saying they would jump at the first offer are the same kind of people who would be to afraid to get away from the salary test to start their own business.

Dangling participle (0)

Anonymous Coward | about 5 months ago | (#45459651)

"That's led to talk of whether Snapchat was right to (reportedly) shoot down Facebook's bid of $3 billion for its business, considering how its growth and sizable user base."

Remove the word 'how', and you'll have a grammatically correct sentence. Non-apropos of that, the word 'right' should probably be 'wise' or 'prudent', for the sake of clarity.

FUD (0)

Anonymous Coward | about 5 months ago | (#45459663)

Here's the problem, it should be obvious to anyone who's worked for... ANY company.

You have some companies run by people who genuinely love the company and want to see it succeed.

Others are just looking for a payday, and the way this "OMG WHY DIDN'T SNAPCHAT DO IT" by investors is exactly that.

In my neck of the woods, there is a company right now that is profiting directly off my content, by iframing it. There is nothing I can do but throw in a
Header always append X-Frame-Options SAMEORIGIN

This lead to them crying foul that I'm ruining their business, and a bunch of sockpuppets supporting this company.

I'm not obligated to let you make money off my work. You didn't ask before you started, and you're only crying foul now because your investors didn't see this risk. Now if I hold the course and strangle this VC backed site, these people aren't going to end up with a payday, they're going to end up bankrupt and liquidated.

Re:FUD (0)

Anonymous Coward | about 5 months ago | (#45459679)

You have some companies run by people who genuinely love the company and want to see it succeed.

If you've got a measure of "see it succeed" that beats $3,000,000,000, I'd like to see it. I'd also like to see the results of your shareholders voting on it.

If you hold more than 51% of it, have a $3B offer on the table, and are still pre-revenue, I'd like to see the other 49% shareholders tear you a new one for shareholder oppression for turning it down.

The new pets.com (1)

PrimeNumber (136578) | about 5 months ago | (#45459837)

How many photo sharing apps do smart phones need? Remember what happened the last time we saw insane valuations for silly companies like this?

Re:The new pets.com (0)

Anonymous Coward | about 5 months ago | (#45460165)

Remember what happened the last time we saw insane valuations for silly companies like this?

Apparently not.

$ value per user (0)

Anonymous Coward | about 5 months ago | (#45460035)

How many $100s is a free user worth I'm betting I could start a service - give away millions of free iphones and profit.

now to the business model

* these are not new users - they also have fb accounts - just add a fb feature

* alternatively include a feature in the next android or ios update

* if u can see it you can copy it - just one app away from killing it's key selling point

I would have taken the money.

Not sellouts... (0)

Anonymous Coward | about 5 months ago | (#45460085)

Snapchat's founders evidently think they can score a better deal within the next few quarters.

Or maybe they're not sellouts who are just in it for the money. Maybe they want their "baby" to grow the way they want it to, not how some investor says it has to be.

Some of us actually like what we're doing and don't need a billion dollars.

Lemmings Don't Commit Suicide (2)

rubycodez (864176) | about 5 months ago | (#45460175)

Lemmings don't commit suicide by cliff or any other means, Disney actually rigged up a turntable to fling them off cliff for their "documentary" White Wilderness

Re:Lemmings Don't Commit Suicide (1)

Anonymous Coward | about 5 months ago | (#45460585)

Disney actually rigged up a turntable to fling them off cliff for their "documentary" White Wilderness

I kind of like the image of a turntable to fling stupid start-ups off a cliff...

Chatroulette (0)

Anonymous Coward | about 5 months ago | (#45460181)

remember Chatroulette they also turn down massive offers where are they now?

Never heard of Snapchat till this. (0)

Anonymous Coward | about 5 months ago | (#45460249)

Personally if I were them I would've tried to hold back my excitement, told my lawyers to review the offer. And once they gave me the go ahead that it's legit, I take the money and run. At some point you have to realize that having more money is pointless, especially when there is heavy risk involved. Look at Myspace, that went the way of the dodo pretty fast.

WTF is wrong with people? (0)

Anonymous Coward | about 5 months ago | (#45460629)

WTF? I go to their website and there's no info about their product. Why the hell are they worth any money at all? That's one of the worst websites I've ever seen.

Pure fantasy (1)

Shavano (2541114) | about 5 months ago | (#45460689)

How much revenue does Instragram generate? How is it that modern business "investors" have lost any inkling of a connection between revenue generation and enterprise value?

Digg (0)

Anonymous Coward | about 5 months ago | (#45460913)

A very good example of what happens when you try and ride the wave out yourself, instead of selling off when you are at the top.

Bubbling again? (1)

jandersen (462034) | about 5 months ago | (#45461337)

If I may go off on a tangent here; companies beign bought for billions, even though they don't make a profit - isn't that what has been behind all bubbles in the market? I wonder if it wouldn't be better to simply round up all venture capitalists, confiscate their ill-gooten money and shoot them. They are more than a bit like a disease; they infect the market, suck out the value and then let the host die, and like all parasites, they don't understand or care that it is going to kill most of them in the end.

Only joking, of course ...

I dont think so (0)

Anonymous Coward | about 5 months ago | (#45461629)

Facbook would have competed with Instagram if that were the case.

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