Yeah, it's only been getting more and more popular as people realize it actually fills a real communications niche, and isn't just for sending dirty pictures.
People made the same argument when FB turned down Yahoo 2billion dollar bid. This kind of stuff is too hard to predict. It is a very risky play, but its all based on projected growth and what you feel it is.
Not sure why the above is getting downvoted, since the revenue number in the article is literally made up!
...it is possible to crank out a rudimentary model given reasonable assumptions. We were surprised that no one seems to have done this yet and so cranked one out just to see what happens. ... we arrived at the $1bn revenue target for 2016
When you use Snapchat you will notice that most of the top "news" publishers are the sort of Daily Mail and other tabloids infested with celebrities and kardashians bogus stories. It does not allow you to curate newsfeed per your taste. The publishers I want to read/watch/follow are not on Snapchat or I can't pick and create my selection. Unlike Facebook, where my wall is full with informational posts catered towards me, by me. This can tell you a lot about who is paying for advertisements on Snapchat and what type of audience they are catering to with what kind of content. It reeks desperation.
I often find it nearly embarrassing to check my "Stories" section on the bus, because right there at the top is some sort of sensational headline with an out-of-context, usually quite risqué photo.
In the recent past, the first few tiles would show some Kardashian sister in a wet shirt, bathing suit, or less. Just a couple days ago, I want to say, was a revolting picture of just two large tongues lashing one another... One of the best parts about my jailbroken iPhone 6 was that I could tweak Snapchat to hide those (along with the "Featured" Stories below, today in which is a whole communal story dedicated to eating pasta).
Check the magazines next to the cash register that you never buy: tabloids, US Magazine, other celebriscandal rags. That's what your Snapchat Moments appear to be.
Yeah, I wish they gave me the freedom to publish as well. Id love to be able to have my own "channel" as easy as it is having a facebook page. The story is too limiting.
Don't bother bending over backwards to cater to a sophisticated audience when the idiot demographic is what you're going to end up with in the end anyhow. They don't need a bunch of people saying 'Snapchat was alright for a while, now it's overrun with crap ads and shit content so I abandoned the platform.'
I appreciate their honesty, I'll never feel betrayed by them because they designed the UI to be hostile to anyone with discriminating preferences from the getgo. I'm not going to wake up one morning to discover the New York Times has suddenly become the Weekly World News.
Well it can be. I notoriously don't follow most of my friends newsfeed except the ones i see or talk to often. Then I follow pages that are of interest to me. Socioeconomic pages, tech pages, science ad medicine related, sports team I like and Oatmeal :)
As far ads are concerned, I use ad block on desktop browsers and Sponsored content can be tweaked to the point by continuous reporting that you will stop getting obnoxious Sponsored storied from Facebook.
Like it or not, this stuff is what normal people like to read though.
Take Twitter Moments. It's widely derided (lots of the content is the same as you describe - celebrity sports stuff), but I actually find it fairly interesting/valuable to keep in touch with "pop culture."
Since Facebook's IPO, which tech unicorns still feel bullish?
Here are the tech IPOs I can think off the top of my head. Maybe it's selection bias (I only remember the ones that don't look healthy), but this is what I thought of, and they all are not doing well compared to their IPO price, or were on a heavy downward trend:
Of course there have been other unicorns, less sexy media (including non-American) darlings that might be doing just fine. And of course Facebook still looks strong, but FB always seemed like it would do string, at least out of all the other social networks. I admit that I'm not much of a Snapchat user, even though many of my friends have migrated over. But does it really have the same potential as FB to integrate itself into all areas of digital life? Even if SNAP has strong underlying numbers, it'd be an outlier if it remained strong 3-5 years from now.
I didn't even know Shopify was in the unicorn category. I previously worked on a project that generated coupon codes programmatically for a Spotify shop. I just closed my testing account a couple days ago, and thought to myself 'wow, Shopify is still a thing'. No offense, I'm a programmer so I'm completely ignorant to the value I guess.
For any retailer selling a physical product, Shopify makes it super simple to list products and connect them with platform apps for fulfillment, marketing, etc.
My company, Pavlok (http://pavlok.com), is built on Shopify, and it's helped us hook up all our shipping/billing/marketing/payment services. Shopify is also a really awesome company -- we were one of their 2015 winners of their Build a Business Competition where they flew us to Necker Island to spend a week with Richard Branson, Tim Ferriss, Seth Godin, Daymond John, etc. Not many companies make a trip like this happen :) https://youtu.be/tmuF1xaW3Z0
Docker has not, to my knowledge, actually found a working and scalable business model quite yet. Doesn't mean they won't find one, of course, but that's kind of a prerequisite for an IPO.
Slack CEO's most recent comments suggest that IPO won't happen this year at least; they are also quite savvy (not the first rodeo for the founding team/leadership and they have plenty of investment demand plus the founders are all financially secure). I'd be surprised if we see a Slack IPO even in 2018.
Yelp, Square, Etsy. Yeah I dont understand this tech boom. Why are people starting companies when no one wants them? For the non-existant profits? Maybe Yahoo will buy them lol.
Ah well at least MSFT is back where it was in '99.
> Why are people starting companies when no one wants them
I think people want them, but private equity over evaluates them making it difficult to fulfill their promises. Millions of people use Twitter, but that doesn't mean they are worth the amount they are supposed to be worth.
But also a company that shares very little. Snapchat's positioning has always felt relatively scammy to me. Look forward to some amount of transparency around traditional metrics either as a result of this suit or through the IPO process.
1. A lot of my friends are leaving facebook
2. A lot of my dev friends no longer build on facebook's platform
3. Most of the young kids I know have moved to Snapchat.
4. Most of the older kids I know hang out on Instagram.
5. All the friends that worked at facebook have left to go work elsewhere.
The problem is those numbers are easily faked|manipulated.
I agree with OP in the same way that I believe the story about the shoe shine boy and the stock market. It may not happen tomorrow, but facebook is not cool anymore.
They can choose to count those in various ways. See the stories about Facebook exaggerating video engagement.
Additionally Facebook has gladly allowed obviously fake and spammy accounts on the site for ages.
Note also that nobody is claiming Facebook is a ghost town. Clearly a lot of people still use it. But it's not remotely cool any more. Most people I know who still have accounts think of it as a burden.
> A damning report published by The Information on Thursday revealed that Facebook has been struggling to reverse a 21% decline in “original sharing,” or personal updates, from its 1.6 billion monthly active users.
You seem to be talking about Facebook the company, whereas the parent comment is talking about the social media platform.
I'm not sure this rebuttal is relevant since the original claim is that the flight of users is a leading indicator of the platform's demise. Facebook owns Instagram, so maybe it's ad revenues are coming from places other than facebook.com?
Facebook seems to have determined it is a more mature network where kids graduate into it once they are ready for it. Seems like they are making money with this model.
I don't notice my friends leaving and I feel like it's dying too. The content just feels so manufactured and empty. About 80% of my news feed is:
1) Friend X liked a photo of someone I've never met and likely never will meet
2) A recipe video that I would never make, or some household 'lifehack' I would never use.
3) Meaningless images - 'Happy Friday', 'Share if you hate winter', 'Like if you love Christmas', etc.
Their engagement numbers may still be rising, but it feels like they've favored pushing up that metric at the cost of having actual quality engagements. It's all been hollowed out.
I'm very curious what their engagement numbers look like when broken down by region. It feels like FB is drying up in the west, and they're propping up their numbers by expanding in the east (especially their initiatives in India).
I've long wished for a way to filter out all the "viral" share junk people post. I am on Facebook to stay connected to friends not to get a terrible version of Reddit.
And on that note, Facebook PAuth seems near universally supported, whereas Google OAuth support is spotty at best. Facebook OAuth support is a nontrivial factor in keeping my Facebook account alive.
I have friends who moved to snapchat for a bit, then moved back to FB after frustrations with Snapchat like the poor UI - it looks cheap, for a lack of a better description.
I think it's going to take a lot to bring down FB, if it's even doable - it has become the dominant platform by far for most of my friends (musicians). Fortunately for Snapchat, it doesn't need to do that - it just needs to become a viable option.
ehh.. FB wasn't even monetizing their mobile products when they went public. There was huge growth potential there. Snap will have a much harder time. Showing ads between stories, is a tough sell. They aren't contextual and are poorly targeted ( no real known interest graph ). They could possibly determine some sort of interests from people you follow, but all they really have is location and device information. With device information you could possibly correlate PII, but even bluekai's information from device is pretty horrible. Most people don't use their real names and I know for a lot of people its similar to myspace where they just give out snapchat names to random people.
> FB wasn't even monetizing their mobile products when they went public
Back then they were saying FB couldn't do it and there wasn't enough screen real estate on a phone to make it meaningful. Google had the previous years good but it was about to end. Their ad platform at the time was also a failure and they were bleeding money. Lots of it rhymes with Snap, there are lots of parallels.
Line makes TONS of money from their apps. I'm not sure how much their stickers make. I read a story about the average user spending $12 for line run/jump (not sure what the name was, but some infinite runner or jumping game).
Did they 'move' to Wechat? I went to school and made friends with chinese students. They were already on WeChat, and made a Facebook account after coming to the U.S. I agree, though, that they seem to have left Facebook.
Twitter handles 80% of my news consumption somewhat like a "conversational RSS feed." I follow reporters and opinionators I respect and read the links they post to stories.
sorry for repeating myself, but I think they will have a much harder time and will do worse than twitter. At least with twitter you can identify an interest graph. Snapchat is similar in a sense but monetizing stories is a tough sell, because there is no real contextual information on what your friends are actually creating stories about. I just don't see people following brands on snapchat like they do on twitter. Snaps filters I will say are effective, but just how effective we'll see.
Snapchat's entire premise is based on ephemerality so even if someone were to advertise or brand, it goes away and is done. You can rewatch stories but even that is limited. Like twitter I don't see this product crossing over to a more general use of the population like facebook. Even expansion overseas will be hard because there are already major messaging platforms that have a strong foothold. Line, whatsapp, Snow ( snapchat clone), wechat and kikao. I also can't see them really expanding beyond the US.
surprisingly however, video as a medium has exploded recently and with the advent of 'live' and popularity of stories on instagram, Snapchat is in a good spot.
You are forgetting how geo-targeted it is, from the filters to grouping snaps about a single event together. You can sell ads for music festivals, concerts, sports games, informal social gatherings, etc based on where it is and who is there.
When social media get started loading fun part, then, they should think how to convert into a tool people can use within their daily social activities – increase user coupling grade.
This could as easily have been titled why X will be the most profitable social media IPO ever. It reads more like someone is hoping for them to fail and is grasping for reason to justify this unpleasant emotion.
Snapchat established itself in a challenging marketplace dominated by large, successful and well funded companies. Something Google inspite of all its engineering prowess, financial resources and influence has failed repeatedly to do. They have not even come close.
Let's give the founder some credit for gaining a large and engaged userbase. Its a huge achievement in any context and given competitors are making money there is no reason think Snapchat can't.
IPOs don't really generate profit for companies. They allow one group of people to trade equity for cash and a second group of people to make the exact opposite trade. On net, society is left with exactly the same amount of equity and cash. If the IPO jumps, it means the sellers lose while the buyers win. If the IPO falls, it means the sellers win while the buyers lose. In either case, it's pretty much distributional and zero-sum. I don't understand why this headline is newsworthy. Profit is not the purpose of IPOs.
(To be clear: IPOs do have purpose. They generate cashflow. And they diversify/broaden the investor pool.)
78 comments
[ 3.8 ms ] story [ 157 ms ] threadBut even if you assume it's real, the $25B valuation still makes zero sense. 25 times the annual revenue, not the profit.
Of course, if you only heard about it on HN/tech sites, you might think Snapchat is a recently popular phenomenon.
...it is possible to crank out a rudimentary model given reasonable assumptions. We were surprised that no one seems to have done this yet and so cranked one out just to see what happens. ... we arrived at the $1bn revenue target for 2016
Here's the spreadsheet they used: https://sentieo.com/wp-content/uploads/snap-model-1.xlsx
Google Docs copy for your convenience: https://docs.google.com/spreadsheets/d/1HGmor-k953dlAUvMJUvg...
Basically, plug random numbers into the blue figures and watch the rest dance around.
Edit 1: Grammar
In the recent past, the first few tiles would show some Kardashian sister in a wet shirt, bathing suit, or less. Just a couple days ago, I want to say, was a revolting picture of just two large tongues lashing one another... One of the best parts about my jailbroken iPhone 6 was that I could tweak Snapchat to hide those (along with the "Featured" Stories below, today in which is a whole communal story dedicated to eating pasta).
I appreciate their honesty, I'll never feel betrayed by them because they designed the UI to be hostile to anyone with discriminating preferences from the getgo. I'm not going to wake up one morning to discover the New York Times has suddenly become the Weekly World News.
As far ads are concerned, I use ad block on desktop browsers and Sponsored content can be tweaked to the point by continuous reporting that you will stop getting obnoxious Sponsored storied from Facebook.
Take Twitter Moments. It's widely derided (lots of the content is the same as you describe - celebrity sports stuff), but I actually find it fairly interesting/valuable to keep in touch with "pop culture."
Here are the tech IPOs I can think off the top of my head. Maybe it's selection bias (I only remember the ones that don't look healthy), but this is what I thought of, and they all are not doing well compared to their IPO price, or were on a heavy downward trend:
- Box http://finance.yahoo.com/quote/BOX?ltr=1
- Pandora http://finance.yahoo.com/quote/P
- Twitter http://finance.yahoo.com/quote/TWTR
- Tableau http://finance.yahoo.com/quote/DATA
- Groupon http://finance.yahoo.com/quote/GRPN
- Twilio http://finance.yahoo.com/quote/TWLO (too short of time to tell, but including it here anyway)
LinkedIn had fallen far from its high until Microsoft bought it: http://finance.yahoo.com/quote/LNKD
King (Candy Crush, etc.) was bought by Blizzard but even with the premium it sold at, it was still about 25% off its IPO: http://fortune.com/2015/11/03/activision-blizzard-king-digit...
Of course there have been other unicorns, less sexy media (including non-American) darlings that might be doing just fine. And of course Facebook still looks strong, but FB always seemed like it would do string, at least out of all the other social networks. I admit that I'm not much of a Snapchat user, even though many of my friends have migrated over. But does it really have the same potential as FB to integrate itself into all areas of digital life? Even if SNAP has strong underlying numbers, it'd be an outlier if it remained strong 3-5 years from now.
On a sidenote, would love to see an update to this NYT interactive at the time of Facebook's IPO: http://www.nytimes.com/interactive/2012/05/17/business/dealb...
edit: added KING (Candy Crush makers)
My company, Pavlok (http://pavlok.com), is built on Shopify, and it's helped us hook up all our shipping/billing/marketing/payment services. Shopify is also a really awesome company -- we were one of their 2015 winners of their Build a Business Competition where they flew us to Necker Island to spend a week with Richard Branson, Tim Ferriss, Seth Godin, Daymond John, etc. Not many companies make a trip like this happen :) https://youtu.be/tmuF1xaW3Z0
Slack CEO's most recent comments suggest that IPO won't happen this year at least; they are also quite savvy (not the first rodeo for the founding team/leadership and they have plenty of investment demand plus the founders are all financially secure). I'd be surprised if we see a Slack IPO even in 2018.
Ah well at least MSFT is back where it was in '99.
I think people want them, but private equity over evaluates them making it difficult to fulfill their promises. Millions of people use Twitter, but that doesn't mean they are worth the amount they are supposed to be worth.
Facebook will eat their lunch if they don't go cross platform.
1. A lot of my friends are leaving facebook 2. A lot of my dev friends no longer build on facebook's platform 3. Most of the young kids I know have moved to Snapchat. 4. Most of the older kids I know hang out on Instagram. 5. All the friends that worked at facebook have left to go work elsewhere.
I agree with OP in the same way that I believe the story about the shoe shine boy and the stock market. It may not happen tomorrow, but facebook is not cool anymore.
Revenue - 7.01B (up 59% YoY)
Net Income - 1.38B (up 166% YoY)
Additionally Facebook has gladly allowed obviously fake and spammy accounts on the site for ages.
Note also that nobody is claiming Facebook is a ghost town. Clearly a lot of people still use it. But it's not remotely cool any more. Most people I know who still have accounts think of it as a burden.
http://fortune.com/2016/04/07/facebook-sharing-decline/
MAU (monthly active users) - 1.79B (up 16% YoY)
DAU (daily active users) - 1.18B (up 17% YoY)
Revenue - 7.01B (up 59% YoY)
Net Income - 1.38B (up 166% YoY)
I'm not sure this rebuttal is relevant since the original claim is that the flight of users is a leading indicator of the platform's demise. Facebook owns Instagram, so maybe it's ad revenues are coming from places other than facebook.com?
1) Friend X liked a photo of someone I've never met and likely never will meet
2) A recipe video that I would never make, or some household 'lifehack' I would never use.
3) Meaningless images - 'Happy Friday', 'Share if you hate winter', 'Like if you love Christmas', etc.
Their engagement numbers may still be rising, but it feels like they've favored pushing up that metric at the cost of having actual quality engagements. It's all been hollowed out.
I think it's going to take a lot to bring down FB, if it's even doable - it has become the dominant platform by far for most of my friends (musicians). Fortunately for Snapchat, it doesn't need to do that - it just needs to become a viable option.
Back then they were saying FB couldn't do it and there wasn't enough screen real estate on a phone to make it meaningful. Google had the previous years good but it was about to end. Their ad platform at the time was also a failure and they were bleeding money. Lots of it rhymes with Snap, there are lots of parallels.
https://finance.yahoo.com/quote/LN
As for China, I don't think most people can access FB? Don't you need a VPN?
Snapchat's entire premise is based on ephemerality so even if someone were to advertise or brand, it goes away and is done. You can rewatch stories but even that is limited. Like twitter I don't see this product crossing over to a more general use of the population like facebook. Even expansion overseas will be hard because there are already major messaging platforms that have a strong foothold. Line, whatsapp, Snow ( snapchat clone), wechat and kikao. I also can't see them really expanding beyond the US.
This is of course not true for all markets and age segments but SC is extremely popular.
Snapchat established itself in a challenging marketplace dominated by large, successful and well funded companies. Something Google inspite of all its engineering prowess, financial resources and influence has failed repeatedly to do. They have not even come close.
Let's give the founder some credit for gaining a large and engaged userbase. Its a huge achievement in any context and given competitors are making money there is no reason think Snapchat can't.
(To be clear: IPOs do have purpose. They generate cashflow. And they diversify/broaden the investor pool.)