The story of Snapchat turning down an outright $3 billion buyout offer from Facebook ($FB) is sure to go down in business textbooks as a teaching moment. Whether the moral of that story will be “know when to stick to your guns” or “know when to cash out and take a trip to the Bahamas” remains to be seen, as we have yet to find out if Snapchat will live up to the lofty potential and impossibly high valuation Snapchat has received from analysts.
Or, conversely, whether their hype will disappear as quickly as one of their ephemeral “snaps,” leaving Snapchat with nothing but a lot of digital hype they didn’t monetize when they had the chance. So it goes in the trendy world of tech, where yesterday’s Facebook can become today’s MySpace. Suddenly uncool, suddenly unpopular, and thus suddenly worthless.
Since spurning that offer, Snapchat has grown in size, and recently went through another private funding round, notching up their valuation to the $4-$5 billion range. The bump certainly gave credence to the assertion that they were on the right track in their bid to not be Facebook’s top acquisition but their eventual competitor.
Snapchat’s allure is that it is the anti-Facebook. Where Facebook catalogues, publicizes, and makes searchable user’s personal information like some kind of funtime permanent record; Snapchat trucks in temporary, private, “exploding” messages.
Facebook saw the benefits in their antithesis, so made a bid. They were of course rebuffed. So rather than entrench themselves more firmly in opposition, Facebook just made their own Snapchat.
As reported by the Financial Times, the new Facebook messaging service will be called Slingshot, and it’s a carbon copy of Snapchat. Same functionality, same ephemeral nature, even the names sound startlingly alike. In a lot of ways, it’s a smart move for Facebook. If you’re a social media behemoth like Facebook, who’s mothership brand is surely yet slowly sinking, the best option is to buy into what’s hot. Photo-sharing on the rise? Buy Instagram. Cheap text messaging grabbed ahold of the teenage audience like so many digital Biebers? Buy Whatsapp.
It would seem then that in making a Snapchat knockoff, Facebook has done exactly that. And they have every right to do so. Social media doesn’t have the same type of laws that apply to healthcare companies; that is, Snapchat doesn’t get a name-brand grace period before generics can flood the market.
The revelation that Facebook was gearing up to release their own Snapchat copycat would seem then to be both a win for Facebook and a pie in the face for Snapchat. “Snapchat’s Possibly Ghastly Mistake” proclaimed an op-ed headline in Forbes. Despite the hedging in the language, the editorial made clear that in thumbing their nose at Facebook’s money, Snapchat was likely to get burned by a much larger company.
But if the history of tech is any indication, Slingshot will take down Snapchat like Bing took down Google. Or Google Plus took down Facebook. Both times, the tech giants thought they could just use their deep pockets to duplicate a competitor's service and reap the benefits. But they didn’t offer anything new, and thus give users a reason to adopt a new service. And in both cases, the knockoff has languished.
Returning to the name-brand/generic comparison, the reason generics thrive is because they’re cheaper. Slingshot certainly isn’t going to be any cheaper than Snapchat. So what’s the incentive for Snapchat’s fanbase to switch and take the “Slingshot Challenge?”
Facebook has every right to develop their own code and try to get in on the exploding message fad/trend/new paradigm. But to really squash the red-hot Snapchat, who are developing new (quite popular) updates like video messaging, they’re going to have to offer something truly new, or the story of Snapchat won’t be about their ghastly mistake, but of how they knew not to give up on a good thing.
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