HN who is going to pick this company up? Facebook, Twitter, Yahoo, Google or Microsoft?
i think tencent did the investment, the point of which is likely "none of them".
Investors think Snapchat is worth $4 billion. That’s insane.
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Re: Investors think Snapchat is worth $4 billion. That’s insane.
#42While I have no idea what information investors are basing their decisions on, it's probably some evidence that Snapchat is starting to replace Facebook among some bellwether set of users. That could be a reasonable bet, depending on what the evidence is. But I don't know what the evidence is, and without it there is no way I can estimate what Snapchat's valuation should be. (Hint: and neither can The Washington Post…
I'm torn on this, I didn't think Instagram was worth 1B until my 16 year old niece told me the only things she used was Twitter and Instagram. If you tell me Snapchat is what all the kids are using I'm going to give it some leeway - though I still think there's a lot of greater fool investing going on. My biggest concern with these services is the seemingly fickle nature of their audience. Even if they're able to tur…
The trendy nature of these business is a negative on valuation in my book. Sure, it'll grow a bit. And then the next new thing will come along. It likely is really profitable for those investing early on and founders.
As an employee at a company like this, I'd worry about all the hard-work having a pay-off four years down the road when options vest, etc...
Re: Investors think Snapchat is worth $4 billion. That’s insane.
#43Part of the argument here for the valuation is that teens are leaving Facebook and moving over to services like SnapChat and Instagram. Maybe I'm missing something, but do teens really have that much disposable income? Do they click on / respond to online ads? Surely older people are a much more valuable target market? When I look at my parents, they are much more likely to be duped into buying something through clic…
No, but those teens are going to transition into adults, with (hopefully) some disposable income at that time. Don't know if it justifies the valuation, but certainly being a default in a large market is worth something to somebody.
And they'll transition into the next big thing, too, just as quickly as they transitioned onto Snap-Chat?
There can probably be made a good argument that younger generations don't have brand-affinity like older people. Younger people are being raised to move quickly from thing-to-thing? (I don't really know, but it sounds like someone should research this.) I cite some personal experience of younger family members who used to use Facebook when they were in college and when it was a college-only-thing. Now they don't use it anymore.
Re: Investors think Snapchat is worth $4 billion. That’s insane.
#44Here's how I like to view these 'valuations': I am certainly a 'nerd', 'geek', 'tech-head'; whatever sort of label you want to throw at me. I am also the furthest you could get from somebody who has half a clue about stocks, mergers, IPOs etc. Forget about the hype, the amount of users, the "mindshare", the paradigm-shifting omg-teh-adsense-ponies. To a 'regular joe' like myself, all I think when I hear anything abou…
Here's how you calculate the worth of a company:
Consider the lifetime of the company. Record an estimate of all the profits and losses the company will ever make over that lifetime. Discount each number for risk, inflation, and opportunity cost (because money is more valuable if you have it now and invest it in something profitable than if you wait 10 years - you should probably discount at least 4% a year, which is about what the average inflation-adjusted market return is).
This number is the appropriate value of the company.
Naturally, there's a lot of guesstimates going into here with the profits-and-losses / risk, even for big stable companies. The high price of Snapchat means that someone with money believes that Snapchat will generate a lot of revenue, or that they will be bought out. It's quite possible they're totally crazy, or that they've wrong about the risk.
Re: Investors think Snapchat is worth $4 billion. That’s insane.
#45Earlier quoted context omitted.
Nailed it.
If by "nailed" you mean "reduced a probability of rational discourse by trolling" then sure, he nailed it.
You're reacting more to his tone than his content.
He's right about how VC-istan works. There's this new engine of extreme productivity that no one understands well; those with early access loot it (getting into private financing rounds where prices are set on the golf course; using VC connections to be air-drop executives) and the public (including Bay Area engineers) eats the bill through failed companies and sudden job-loss, an innavigable career ladder, financial crashes due to overvalued stocks (pump-and-dump), and exorbitant housing prices just to have a chip and a chair.
He might be damning his credibility by using "retarded" in such a way, but he's on to the meat of the problem.
Re: Investors think Snapchat is worth $4 billion. That’s insane.
#46Here's how I like to view these 'valuations': I am certainly a 'nerd', 'geek', 'tech-head'; whatever sort of label you want to throw at me. I am also the furthest you could get from somebody who has half a clue about stocks, mergers, IPOs etc. Forget about the hype, the amount of users, the "mindshare", the paradigm-shifting omg-teh-adsense-ponies. To a 'regular joe' like myself, all I think when I hear anything abou…
This definitely feels like the 21st century gold rush where everyone's just rushing in before it's too late just in case that hot tech startup becomes the next Google. I don't know if wisdom can overpower the greed that people have.
Gold rush is a zero-sum game with unsustainable business model, while startups are not any of these things. I feel that such comparisons are misplaced and do not provide useful abstractions to effeciently reason about startups.
Re: Investors think Snapchat is worth $4 billion. That’s insane.
#47To quote Paul Graham: "Just as trying to think up startup ideas tends to produce bad ones, working on things that could be dismissed as "toys" often produces good ones. When something is described as a toy, that means it has everything an idea needs except being important. It's cool; users love it; it just doesn't matter. But if you're living in the future and you build something cool that users love, it may matter m…
"To put into context, how much do you think a telco company with 26 million US customers is worth ? If Snapchat is displacing text and calls as the medium of transient communication of the next generation, it could feasibly end up being worth a substantial amount." But things aren't as "sticky" as they used to be. You used to have to rent your phone from the telco, and you had no alternative providers. Today, users c…
You captured my sentiments better than I could above.
Virtually no barriers to switch apps + young generations being raised in an environment of reduced fear when switching.
Re: Investors think Snapchat is worth $4 billion. That’s insane.
#48Valuation conversations always remind me of something George Carlin once said: "ever notice that everyone who drives slower than you is an asshole, but everyone who drives faster than you is a maniac?"
I call it the Water Level Theory. It is that subconscious assumption that our personal thresholds for risk tolerance and boundaries of acceptability are the standard, and everything else is classified accordingly. It is in a similar vein to the notion of "one man's trash is another man's treasure."
As for Snapchat, I hope they're worth $4 billion. It gives me hope for my dozen or so crazy ideas being worth only a few hundred million each. :-)
Re: Investors think Snapchat is worth $4 billion. That’s insane.
#49I predict in the long run they should have taken the $1B from Facebook. Yes they have users, but where in future will revenue come from? Startups like this come in two kinds, one that can become a standalone business (think Apple or Microsoft or Google) and the other an IPO or sellout business (like Youtube or Instagram) that eventually makes sense to a buyer as a piece of their revenue puzzle. For the former you need products that people buy and the latter you need buzz that attracts buyers. For the latter any excitement increases the chance that someone will eventually buy it. To me Twitter is the latter kind but it's still trying to be the first.
Re: Investors think Snapchat is worth $4 billion. That’s insane.
#50Earlier quoted context omitted.
No, but those teens are going to transition into adults, with (hopefully) some disposable income at that time. Don't know if it justifies the valuation, but certainly being a default in a large market is worth something to somebody.
And they'll transition into the next big thing, too, just as quickly as they transitioned onto Snap-Chat? There can probably be made a good argument that younger generations don't have brand-affinity like older people. Younger people are being raised to move quickly from thing-to-thing? (I don't really know, but it sounds like someone should research this.) I cite some personal experience of younger family members wh…
Excellent point, and I think that's the bet -- capture their attention long enough to keep them around. Hard to imagine, but someone has to be thinking about that problem.