The Snapchat Rocketship

Photo courtesy of slashgear.com

Photo courtesy of slashgear.com

In December 2013, most of the tech world was appalled when Evan Spiegel and Snapchat turn downed Facebook’s reported $3 billion acquisition offer. I wrote at the time that people were overreacting and predicted a 3-5X valuation within 18 months. Snapchat has grown even faster than my expectations and is now rumored to be valued at $10 billion.

I am now more bullish on Snapchat than ever. There are three factors that will drive additional growth and an ultimate IPO:

1) Snapchat’s daily usage among the under-25 crowd is insane. This demographic continues to send multiple Snaps a day, similar to their text messaging rates. It has become common to have a complete conversation with ephemeral photos. This places Snapchat as a competitor to WhatsApp, WeChat, or Facebook Messenger.

2) Snapchat’s My Story feature has filled a niche market need. Young people want to share content with each other in our public, social world. There are plenty of social networks that empower this sharing but they all have the same problem – the content lives forever. Snapchat was able to figure out a way to facilitate one-to-many communication without the fear of someone digging up the content two years from now. This small difference is powerful and compelling.

3) Snapchat ads are coming. Earlier this week, Spiegel hinted that the ads product would allow brands to tell a story in a similar fashion to My Story. With a highly coveted demographic, I’d expect brands to be attracted to this new, creative channel. Since self-service advertising appears to be farther down the product roadmap, I imagine the early advertising deals will be lucrative contracts with large agencies.

Additionally, most social platforms receive another level of validation when unknown individuals are able to build a celebrity following on the platform. We have seen this occur on Facebook, Twitter, Instagram, and Vine. Snapchat hit this milestone in the last 12 months. In some cases, thousands of kids are following a “random” person for multiple updates a day.

Everyone thought Snapchat was a fad back in December. It is clear that the company is not going anywhere for awhile. The big challenge for the team will be whether they can successfully execute their ads business. If all goes to plan, expect an IPO in late 2015 at a $25-30 billion valuation. This will be fun to watch.

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2 thoughts on “The Snapchat Rocketship

  1. Pingback: Snapchat Closer to Taking Over the World

  2. Pingback: Oh, Snap! The Other Side of Snapchat | Chatterbox | Chatterbox

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