The rise of Snapchat: From obscurity to a valuation of more than $25 billion

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In the spring of 2017, exciting news came from the American technology startup circle. It turned out that Snap, a company valued at more than 25 billion US dollars, was finally preparing to go public.

Snap Inc. is a camera company. We believe that reinventing the camera represents our greatest opportunity to improve the way that people live and communicate. Our products empower people to express themselves, live in the moment, learn about the world, and have fun together.

In Snap’s S-1 listing prospectus submitted to the U.S. Securities and Exchange Commission, it clearly states: Snap Inc. is a camera company. We believe that reinventing the camera represents our greatest opportunity to improve the way people live and communicate. Our products empower people to express themselves, live in the moment, learn more about the world, and enjoy life together.

Unique design that will burn after reading

Looking back at the development history of Snap, this new start-up was founded in 2011. Its main product, Snapchat, focuses on the feature of “burning after reading” and provides services such as social connections, reading news, and watching videos. When it was founded, it attracted many teenagers who said they were “tired of Facebook” and soon became a trend among young people. According to statistics, the number of daily active users of Snapchat reaches 130 million, which is simply the youth version of Facebook.

According to comScore, nearly 65% ​​of young people aged 18 to 24 in the United States use Snapchat. It is not difficult to find that the main users of Snapchat are concentrated between the ages of 13 and 25. However, recently, users over the age of 40 have also gradually increased. Many players favor its highly private design and like to use this app to send selfies to friends. Up to 30% of the photos will be sent to Snapchat groups.

In April 2017, more than 7 out of 10 young Internet users in the United States aged 18 to 24 used Snapchat. (comScoreSurvey)

Snap’s IPO prospectus is written eloquently, but I believe many people still find it incredible. Why can Snap have such a high net worth just by relying on Snapchat, an instant social app with simple photography and picture sharing functions? And why did the founder [Evan Spiegel] (https://en.wikipedia.org/wiki/Evan_Spiegel) (Evan Spiegel) have the courage to reject Facebook’s nearly US$3 billion acquisition proposal in 2013 when he had not even made any revenue?

What are the amazing capabilities of this company? According to data disclosed by the company, their revenue reached US$58.7 million in 2015. Although their revenue exceeded US$400 million in 2016, losses quickly accumulated to US$514 million.

Founder’s family background

The reason why this graduate of Stanford University, who was born in Los Angeles, can proudly say: “Looking around the world, there are few companies that have developed to this point like us. I think it would be really boring to sell it for short-term profits!” In addition to the “burn after reading” design concept, it shows Ivan Spiegel’s foresight on the importance of privacy. In fact, the success of Snapchat also has a lot to do with his family background.

He can be called the “Life Victory Group”. Both his parents are well-known lawyers from Ivy League schools. Therefore, Ivan Spiegel has lived a luxurious life since he was a child. He owned real estate and a Cadillac sports car to his name at the age of 17, which gave birth to a unique outlook on life.

Regarding Snapchat, which he co-developed with his best friend, he believes that users should enjoy the experience and use photos to communicate and express themselves anytime, anywhere. Therefore, he seems a bit dictatorial in business management, and rarely discusses the future development of products or the direction of the company with all employees. Unlike Facebook CEO Zuckerberg, who is often compared with others, he often likes to hang out with a bunch of engineers and product managers.

The Asian market is acclimated

Although Snapchat is quite popular among young people in Europe and the United States, the paradox is that the Asian online community (including Taiwan, Hong Kong and mainland China) who like new and foreign things seem to be a little acclimated to it. To this end, I did some research on the Internet, and the main feedback I got was that I couldn’t find friends, I didn’t know how to use it, and I lacked the guidance of opinion leaders or influential players.

Some friends told me that after installing the App, they don’t know how to use it? In addition, there are no friends to play with, so it is difficult to develop interactivity and stickiness. Imagine that Facebook’s development in Taiwan was not smooth sailing at the beginning. It was thanks to the popularity of “Happy Farm” that it quickly became famous. In addition, some people believe that Taiwan’s online social habits are still mainly about showing off and displaying the variety of life; therefore, there is no need for the automatic destruction function. This seems to be somewhat contrary to the privacy function that Snapchat focuses on, and therefore it is not taken seriously.

Of course, most people are a little repelled by unfamiliar social software. Most people will wait and see before considering using it in depth. However, unlike Instagram, Snapchat does not have a lot of attractive and colorful content. In addition, it has not been widely reported by local media, and it lacks the use of influential indicators. Therefore, although Snapchat also covets the Asian market with strong spending power and large population, it is still unable to share the market pie from Facebook, LINE or WeChat. Obviously, there are still many areas that need to work hard and overcome.

Snapchat is undoubtedly the darling of the global media after Facebook, and it can be expected that there will be a wave of craze after the stock is listed. However, this star company with a valuation of more than 25 billion US dollars has so far been unable to prove its profitability to the public. Whether it is the global layout or the establishment of an ecosystem, it has also shown its weakness. This can also be said to be a point of concern under the dazzling personal aura of Ivan Spiegel.

The world is watching to see how Snap plans to reinvent the camera into everyone’s hands. For this avant-garde technology company that hopes to change people’s lives and communication methods, it may be difficult to draw a conclusion yet, and more time is needed to observe whether it brings us brand-new communication thinking or just a temporary fascination.

★ Featured image source: Snapchat official website

★ Article source: This article was originally published in the March 2017 issue of “English Island” magazine

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