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Snapchat Said in Funding Talks With Alibaba at $10B

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Re: Snapchat Said in Funding Talks With Alibaba at $10B

#41

Post by Alupis »

eclipxe wrote: post #36
Alupis wrote: post #2

My company has already created an 11main.com (Alibaba's first US ecommerce website) account and setup a significant amount of our catalog. The site is still in private invite only -- but hopefully will go public soon. We expect Alibaba to come into the US on a storm. They are huge - they have capitol, and they can afford losses in the hundreds of millions per quarter just to compete with Amazon (and snuff out part of…

Amazon didn't post a $800m loss last quarter. They estimated next quarter a loss between $400-$800m (mainly for employee stock compensation)

Fair enough. I was attempting to make the point that they can post an $800 million loss and not sweat it. ;)

Re: Snapchat Said in Funding Talks With Alibaba at $10B

#42

Post by thenmar »

ulfw wrote: post #29

It seems, we are seeing the repetition of the first tech bubble when it comes to overblown valuations. Those valuations aren't really on realistic future earning potentials anymore. They rather are on future expected selling price. The idea being that 'I buy something for 10 times as much as it is worth, in hopes that I find someone who will pay me 20 times as much as it is worth' etc. Obviously that can't go on fore…

But we aren't seeing anywhere near the same number of tech IPOs today as we were in 1998-2000. As I understand it, the "bubble" came from companies too easily selling their shares to ignorant, every day consumers who assumed "internet" meant the company would be huge. The only people investing in the companies you think are overvalued are VC firms with huge amounts of capital.

Now, are these VCs providing the same amount of capital that the IPOs of 1998-2000 were? Hopefully someone with more insight can comment on this, but intuitively it seems to me that the burst couldn't possibly be as bad, since there's just less easily available money to suddenly dry up.

Re: Snapchat Said in Funding Talks With Alibaba at $10B

#43

Post by wf »

onewaystreet wrote: post #37
wf wrote: post #33

Alright, I really can't take it anymore. Is there any good literature explaining why users of Snapchat are worth this much? From my limited perspective it seems a lot of the services valued so highly for their user base have an incredibly hard time generating revenue from those users, particularly from short lived services like Snapchat. I keep seeing "promise" and "expectation" but what are those things when you're…

For investors, controversy is seen as meaningless (and sometimes as a good thing) unless it's hurting the business. In the case of Snapchat, it hasn't. As for making money, one shouldn't judge their ability to do so based on how the product looks today. More than half of Facebook's revenue now comes from mobile, a product that they only perfected a year ago.

It seems like Facebook had a relatively clear path with already having the news feed. Keeping users on a single page absorbing information with ads intermingled unobtrusively, but with Snapchat I'm in any of three views for just a few moments before I close the app again; all that to say, I just don't think it's a very good comparison.

Re: Snapchat Said in Funding Talks With Alibaba at $10B

#44

Post by Throwaway823 »

Alupis wrote: post #31
AndrewKemendo wrote: post #24

Earlier quoted context omitted.

Amazon has slowly been raising prices, so Alibaba could come and undercut prices but where Amazon has it's best advantage I think is in it's lightning fast delivery. Something that takes more time and infrastructure to compete with.

Absolutely correct -- The little known secret - products on amazon are often more expensive than found elsewhere. They charge a 15% - 30% commission fee per item sold, so majority of retailers raise their prices when listing on amazon. The category my company sells in has a 20% commission fee, so we raised pricing by 25%, and our volume of sales on amazon was not effected. If you find a product you want, and a decent…

I know their prices are average, or slightly more expensive, however, it's convenient. For example, say I need a pair of sunglasses, a fan for my computer, a new frying pan, and SD card for my camera. I go to Amazon, find the products I need, and place a single order.

That's much easier than trying to locate these items on a handful of different websites, signing up for new accounts and payment systems. It's also easier than going shopping downtown, finding a few items, but not the others, which means I need to place an order online either way. And if I need to place an order online, I might as well get everything on Amazon, so I qualify for free shipping.

Re: Snapchat Said in Funding Talks With Alibaba at $10B

#45

Post by mynewwork »

acoyfellow wrote: post #7
bsenftner wrote: post #3

I don't understand this valuation - it's makes no sense to me. Can anyone explain how SnapChat could be worth even a fraction of this? Where is the value in SnapChat's user base, future blackmail? It's not like someone using SnapChat is in the appropriate state of mind to follow any ads in the app. I don't get it...

It's a communication platform that the younger generations are using as their primary form of communication. That is big.. not saying it's $10B big, but SnapChat has the chance to become something larger than just stupid selfies.

So were ICQ, AIM, MSN, Google Chat, texting, maybe FB messenger, WhatsApp.

I myself have migrated my primary messaging platform through half that list. Isn't there a tremendous risk snapchat users leave that platform the way users have moved from one messaging platform to another for years?

Re: Snapchat Said in Funding Talks With Alibaba at $10B

#47

Post by onewaystreet »

wf wrote: post #43
onewaystreet wrote: post #37

Earlier quoted context omitted.

For investors, controversy is seen as meaningless (and sometimes as a good thing) unless it's hurting the business. In the case of Snapchat, it hasn't. As for making money, one shouldn't judge their ability to do so based on how the product looks today. More than half of Facebook's revenue now comes from mobile, a product that they only perfected a year ago.

It seems like Facebook had a relatively clear path with already having the news feed. Keeping users on a single page absorbing information with ads intermingled unobtrusively, but with Snapchat I'm in any of three views for just a few moments before I close the app again; all that to say, I just don't think it's a very good comparison.

That's the point I was making. As it is now, it's hard to see where they would fit in advertising or whatever. It's better to look at the product as a foundation. Having tens of millions of users using your product multiple times a day is a good starting place to build on.

Re: Snapchat Said in Funding Talks With Alibaba at $10B

#48

Post by joeblau »

A lot of people seem to have a misunderstanding of why Snapchat is worth so much. At first, I didn't get it either, but I think there is one main reason for this high, and what I feel might be justified, valuation.

"Single mode visual media capture" [1]. You might be asking "WTF does that mean?"; Well that's the title of Snapchat's patent which was granted for haptic video recording. That means all of the apps where you press and hold to record a video could face legal action for copying Snapchats technology. So if you look at the list, you've got:

  - Facebook's Slingshot, Instagram, Bolt
  - Twitter's Vine
  - Taptalk
  - Many others
One of my friends works for the USPTO and he says that a patent portfolio is the difference between a multi-billion dollar valuation and a multi-million dollar valuation. With the backing of Alibaba, Snapchat could essentially shut down all haptic recording apps or force clone companies to pay a licensing free for the technology.

[1] - https://www.google.com/patents/US8428453?dq=snapchat&hl=en&s...

Re: Snapchat Said in Funding Talks With Alibaba at $10B

#49

Post by ulfw »

thenmar wrote: post #42
ulfw wrote: post #29

It seems, we are seeing the repetition of the first tech bubble when it comes to overblown valuations. Those valuations aren't really on realistic future earning potentials anymore. They rather are on future expected selling price. The idea being that 'I buy something for 10 times as much as it is worth, in hopes that I find someone who will pay me 20 times as much as it is worth' etc. Obviously that can't go on fore…

But we aren't seeing anywhere near the same number of tech IPOs today as we were in 1998-2000. As I understand it, the "bubble" came from companies too easily selling their shares to ignorant, every day consumers who assumed "internet" meant the company would be huge. The only people investing in the companies you think are overvalued are VC firms with huge amounts of capital. Now, are these VCs providing the same am…

Very true. The IPO market has almost dried up (at least compared to back then). But the M&A market has almost replaced that. See Facebook's $19,000,000,000 acquisition of Whatsapp.

It's a little like the housing bubble. As long as I find someone who'd pay me even more than I bought something for, everything goes well and dandy and no one asks about the real value of a product/house/company.

Re: Snapchat Said in Funding Talks With Alibaba at $10B

#50

Post by panarky »

ulfw wrote: post #29

It seems, we are seeing the repetition of the first tech bubble when it comes to overblown valuations. Those valuations aren't really on realistic future earning potentials anymore. They rather are on future expected selling price. The idea being that 'I buy something for 10 times as much as it is worth, in hopes that I find someone who will pay me 20 times as much as it is worth' etc. Obviously that can't go on fore…

Just because it's expensive doesn't mean it's a bubble.

Remember the outrage at Instagram's billion-dollar valuation? Looks pretty cheap now. Same thing with Facebook, Netflix, Uber. Snapchat's simple idea is every bit as transformative as the simple ideas behind these companies.

Here's what smartypants bubble-callers were saying in 2004 about Google before their $2.7 billion IPO[0], also built on a pretty simple but world-changing idea:

"Pent-up demand for hot tech stocks is driving Googlemania."

"There are serious questions about Google's long-term viability"

"Word has it that Microsoft will feature an immensely powerful search engine in the next generation of Windows, due out by 2006."

"Taking down Google with better search is in [Microsoft's] strike zone."

"Google stands a good chance of becoming not the next Microsoft, but the next Netscape."

"It's tough to see why many Windows users would even bother with Google."

"Yahoo! has the advantage of being able to cull demographic data from its millions of subscribers and match them with advertisers."

"Google relies on ads for 96 percent of its revenue making it a one-trick pony vulnerable to the swings of the market."

Any of this sound familiar?

[0] http://www.newrepublic.com/article/politics/bubble-bath

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