Billions For Snapchat – Have We Lost Our minds Again?

 

$3 billion may not be enough for Snapchat, the latest social-media craze. Those of you as socially challenged as I am may not know that Snapchat allows teens (mostly) to send photos that get erased after a few seconds. Certain politicians would have paid dearly for this feature. And now there are so many bad photos zipping around the Internet (my wife alone is responsible for thousands) that the Snapchat message service may have great social value.

No question, it is a popular site for young users and is grabbing Facebook’s teenagers. But valuations like this strike me as well – ridiculous. Sure Facebook will try to keep this from Google and the latter will be reluctant to see Facebook grab the possible next big social media thing. I get that.

But value continues to be a funny thing in technology. 7,671 miles from Silicon Valley is India.  Looking over its shoulder at China, they finalized the deal to pick up a $2.3 billion aircraft carrier from Russia. A bit of a "fixer-upper" but it will now have two aircraft carriers. The Russian flag on the vessel was lowered, and the flag of the Indian Navy was raised. A coconut was then smashed against the ship’s side. 

I have a hard time reconciling these two values.  You can have a photo-sharing site with a clever algorithm and a fair number of eyeballs, for maybe 3 billion. Or you get a 45,000-ton vessel that can carry up to 30 aircraft and will have a crew of around 2,000 for a mere $2.3 billion, certainly an eye-popping conversation piece when tied up off the back dock. 

It’s hard for me to imagine that the vast R&D teams at Facebook or Google couldn’t whip something like Snapchat up in a few months. But even if taking a bit longer, if rumors are true, how do you turn down a $3 billion offer? And the bigger question: Is it really worth anywhere near that?

Comments

Creation of a SnapChat-like

Creation of a SnapChat-like app is a drop in the bucket (in regards to overall worth) when compared to market/brand recognition. It's easy enough to build something like SnapChat (as the author said) but the "mostly teens" are already on SnapChat and not likely to move to a competing service (any time soon).

Just look at Google+ as an analogy. Google has done a great job building a Facebook alternative but, outside of a few like-minded technology folks, absolutely none of my Facebook contacts use g+.

So, in my opinion, you shouldn't be asking how much the technology is worth but rather how much the user base is worth.

re: creation of snapchat-like

I see your point, but it's clearly not as simple as "how much the user base is worth." Interestingly, you use Facebook vs. Google+ as an example, but the oft-cited MySpace vs. Facebook story illustrates the exact opposite.