Snapchat is Intrinsically Worthless

Facebook is the latest in a long range of "clones". It's not the first social media website of its kind, nor the 5th. Many have enjoyed temporary success in this market only to get crushed by some small misstep or other, or simply because something slightly better came along.

How many here remember sixdegrees.com? (1996) That's the first social networking site I remember signing up to...

Of course you must be "different", but the difference between each successive evolutionary step from Six Degrees to Facebook has been tiny.

While it is getting harder as the size of the successive networks have gotten bigger (SixDegrees reached a low number of million users), because of the network effects, it's not so much about features as about finding a way of building the network to a tipping point, and social networks are incredibly fickle and subsets can migrate to new services because they are not the dominant network.

Totally.

It's how the wind blows these days in "tech". It's reminiscent of a bubble with all of these mobile apps calling themselves "companies" when most aren't even profitable. It reminds of the early 2000s when "how many eyeballs do you get monthly" was the question of the day.

Does Pinterest really need $400M+ in venture to operate? What are they doing over there? Advanced robotics with neural implants? Burn rate of $30M a month?

Utter bullshit.

Like I said before, VC's aren't dumb but they're also not very smart, most at least - they don't need to be. They flock to whatever's hot and popular (trendy) and invest. Their exit strategy is simple: a highly overvalued IPO where the public market will buy based on hype or an acquisition.

These unsustainable trends in extremely overvalued companies/apps will continue for a while, unfortunately.

Until the shit hits the fan and one of these giants of venture capital infusion tank.

Unfortunately, it's so much more than an issue of Snapchat being worthless, it's a large chunk of the tech community today being generally worthless by looking for the EASY WAY OUT - building some stupid app, getting 5M+ users for a few years of engagement and raising large rounds and cashing out. There's no intrinsic value of any kind in this.

It wasn't like this before the App Store.

There is still great technology being developed out there, but most people (and human nature in general) flocks to the easy way out, the replication factor, globalization, the art of copying something, or as Peter Thiel would say" "the 1 to n of globalization."

> Why would you buy it?

The comment you replied to answered that: Because of the hypothetical situation that Google would want to pay $5bn for it. You'd buy it to shop it around to the big players.

To a certain extent, the valuation of some companies can be pumped on the basis of to what extent the big players are likely to be competing for it, and not always on the basis of possible revenue, but strategy too. E.g. denying a competitor a company that is seen as having some percent chance of being a threat if paired with the competitor, or buying a company that is seen as having some percent chance of helping you become a threat.

Consider that even if Snapchat on its own was/is worth 0, if SnapChat has even a tiny chance of helping Google propel G+ into the position of a viable contender to Facebook, Snapchat is suddenly worth a huge amount to both Facebook and Google. It might even be worth a lot to Google even if Facebook only thinks that the combination would be a threat, if it'd make Facebook tie up lots of resources trying to "counter the Snapchat threat".

(in that vein, I think that one of the ingenious part of the massive Gmail quota was that while it got quite a bit of PR attention that mostly swayed geeks, it terrified large parts of Yahoo - I was at Yahoo when Gmail "hit" - and it tied up hundreds of man-years worth of product manager, engineering managers, developers, marketing people and others radiating out from the Mail team, all trying to figure out how to respond; I can only imagine the same must have been the case in Hotmail and others; as a feature Google could've offered a much smaller increase over the competition and still gotten most of the PR, but that huge bump, which was largely symbolic, triggered massive resource hogging responses from competitors)

And a lot of that kind of thinking boils down to guesswork, which can work both for and against them in terms of valuation.

Since a lot of people have trouble imagining why Snapchat is popular, I wrote a blog post on it a while ago: http://www.brianchu.com/blog/2013/09/11/photo-embarrassment/.

One thing that bears noting is that Snapchat is closer to mobile messaging apps like WhatsApp than it is to photo sharing / social networking apps like Instagram or Facebook.

To be fair, the vast majority of the comments in that link are really positive.