Is Snapchat Crazy, or the Future of Social Media?

Jacob Harper |

Now that the much anticipated Twitter (TWTR) IPO has come and gone, Silicon Valley’s short attention has turned to the purported next big thing in social media, Snapchat. And the attention has been almost universally negative.

Valley insiders and analysts have reserved a spectacularly gleeful ire for the company’s purported hubris, stemming from the fact they turned down an offer tendered by Facebook Inc. (FB) for $3 billion. Cash.

Of course, the temerity of a company helmed by a 23-year-old fresh out of college turning down billions is hard to sympathize with. Who does he think he is? Why does he not take the money and run?

Recent Tech History Says: Hold Onto What You Got

Ask Mark Zuckerberg. After all, he was the one who spurned two separate major offers for his social media company: first a $750 million offer from Viacom, and then a $1 billion offer from Yahoo Inc. (YHOO) . Facebook’s market cap now hovers around $112 billion.

Or Twitter. That company turned down a buyout offer from Facebook when internal valuations pegged them as a $500 million company. Their IPO pop set their Nov. 2013 market valuation at around $23 billion, or 46 times their old price tag.



Also, ask the founders of social networking hotrod Instagram, who did take the money and run. Facebook acquired Instagram for $1 billion, and Facebook scored a steal. Instagram is expected to ratchet somewhere between $178 million and $450 million in revenue in 2014 alone, and is expected to increase substantially over the next several years.

But is Snapchat the next Twitter, Facebook, or Instagram, or are they the next Friendster – a once hot social media company that turned down Google, only to go completely out of business by 2011?

First, it helps to answer the question: what does Snapchat offer that gives them staying power?

Messaging that’s Less Like Writing a Letter, and More Like Speaking

Snapchat’s main allure is that the “snaps” sent through it disappear 3-10 seconds after being viewed (the amount of time is set buy the sender.) Snapchat users send can write short messages, or use a Microsoft Paint-like feature to draw pictures on top of a message. 

But Snapchat isn’t just another app. It has the potential to completely reformulate the entire way social media is utilized.

Much of the focus on Snapchat has centered on its ephemeral nature, and rightly so. It’s a radical departure from the obsessive categorization and cataloguing of Facebook and their ilk. But it also represents a complete rejection of everything Facebook assumes about what users want out of social media. The Facebook (or Instagram, or Twitter) model assumes that every communication online should be default be saved for posterity forever, like a series of letters or a bronzed baby shoe.

Snapchat treats social media like a real life conversation. That is, social media can be as fleeting as a chat with a friend, and go unrecorded, and that’s okay. Maybe even preferential.

Of course, users can takes screenshots of a snap and thus preserve the exchange. But the other user is notified when this happens. In short, almost like a breach of etiquette. Think of it like using a tape recorder next time you go out and have a coffee with a friend.

Snapchat might be worth $3 billion, or far more or less. But itscore assumption, that social media should facilitate connection without record, is simple, beautiful, and a truly revolutionary approach. In its central ethos, it’s the anti-Facebook, and it’s either going to upend them or go down swinging.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
FB Facebook Inc. 145.47 1.79 1.25 14,407,175 Trade
TWTR Twitter Inc. 14.71 0.08 0.55 12,779,234 Trade
YHOO Yahoo! Inc. 48.15 0.63 1.33 9,860,363 Trade
JASTY Jastrzebska Spolka Wg Ord n/a n/a n/a 0

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