While social media giant Facebook has been relentless in its acquisition drive, purchasing companies such as Instagram, Face.com and Snaptu in recent years, it appears that dollars can’t get it everywhere.
The $1 billion buy of photo sharing application Instagram in April 2012 was seen as a watermark moment in the technology world, marking the most significant purchase of Facebook’s history – and all for a company which wasn’t actually making any revenues.
Big businesses like Facebook, Google, Amazon, eBay and Twitter have been very successful in acquiring both complementary technologies and rival firms. But, it’s refreshing to see an enterprising start-up like Snapchat resist the desire to cash out and decide to try and compete with the big boys.
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Founded in 2011 by Even Spiegel and Bobby Murphy, Snapchat has raised an impressive amount of venture capital – nearly $100 million if you include the reported $20 million secondary offering to the company’s founders.
As with Instagram back when it was bought in 2012, Snapchat is a pure user number play. It does not charge people to buy the app, imbed advertising or offer in-app extras. Its sole objective has been to get as many people around the world using its service, which allows users to send a picture and decide how long it will be visible before being deleted.
While Snapchat’s founders have not been at this very long, unlike others who have been slaving away working 100 hour weeks for years and jumped at the chance for a mega pay day, turning down a reported $3 billion offer is a ballsy play by anyone.
It will be interesting to monitor the Snapchat story over the coming years, as the business has already revealed that it has detailed plans on how it will be making money in the long run. If it can work out a way to monopolise the 350 million pictures which are sent using its platform every day then it will surely start to be more than just a mild annoyance to the likes of Facebook and Twitter.
But for now, in the same month that UK start-up Shutl agreed to be bought by eBay, it’s great to hear that an enterprising team of young entrepreneurs are not being tempted by the piles of cash put before them – but want to go on to produce a world-leading company.
