Snapchat, a mobile application that allows people to send pictures which self-destruct within 30 seconds, has become one of the most frequently downloaded Android and iOS applications. CEO Evan Spiegel told the Wall Street Journal that while Facebook had put forth a $3 billion offer for the app, he barely thought about it before turning down the social network’s bid.
An even larger bid from Tencent Holdings (a Chinese e-commerce company) for $4 billion was also turned down. While this may sound like Spiegel is an enthusiastic entrepreneur who wants to hold onto his creation, according to the Wall Street Journal’s sources, Snapchat refused the bids because Spiegel is expecting the app to generate enough revenue within the next year to make Snapchat even more valuable.
It is interesting the Facebook was willing to pay $3 billion for Snapchat considering that it barely paid $1 billion for Instagram, which has quickly become the most popular picture-based social network.
A recent valuation of the company placed Snapchat at only $800 million, since it has failed to attain significant revenues. Much like Twitter, Snapchat is currently trying to find a better way to make money off of its enormous user base.
Snapchat is a breath of fresh air in a world that is now almost completely void of privacy. The recent NSA revelations, put into the public spectrum by Edward Snowden, have only helped applications such as Snapchat. Unlike other platforms, namely Facebook and Twitter, the information shared on Snapchat is temporary, meaning that users have at least some feeling of privacy when using the app.
Of course, one of the main attractions of Snapchat is the fact that teenagers can send otherwise private or “naughty” photos without a trace, since the app notifies senders if the receiver takes a screenshot of the message.
In a recent interview with the BBC, Spiegel talked about where he gets most of his creative and business inspiration from. Emerging tech entrepreneurs have a tendency to look towards US-based companies in Silcon Valley or New York for their inspiration but Spiegel is looking to the east.
Spiegel has been following the growth of WeChat (a Chinese app, owned by Tencent) which not only has a great business model but it is now one of the most popular apps overseas. WeChat allows users to connect with people via video, voice, or text and unlike other messaging apps, it is based around mobile phones, making it similar to Snapchat in some ways.
If the Wall Street Journal’s sources are correct, Snapchat may seek out more investors sometime in 2014. If that happens, Spiegel has reportedly told current investors that he will sell a portion of his stock in the company.