I first heard of Snapchat about a year ago. At the time, I still rocked the Blackberry (PIN: 31B5D8F4), but the app's function was common knowledge. Send a picture to your friend, and the friend can view for anywhere between one and 10 seconds. After that, the picture is gone forever, with no history of the "Snap" ever taking place.
Though many media outlets heralded it as the next generation's "sexting" app, the vast majority of Snapchatters use the app to make silly faces at their friends or send stalker pictures of their friends sitting in Dewick.
Stanford alums Evan Spiegel and Bobby Murphy created Snapchat in September 2011, and the app has shown promising growth since then. According to Snapchat, users shared 20 million photos a day in October 2012. That number has since ballooned to 400 million photos a day in November of this year. The number of users has also grown considerably, with over 20 percent of iPhone users - myself included - now using the app.
For the average social networking startup, these numbers show substantial penetration and huge revenue opportunities. But how do advertisers decide which users to target when the app itself deletes any information its users create?
In the words of Facebook - paraphrasing here - "Eh, we'll figure it out. How's $3 billion sound?"
In the words of Snapchat - again, paraphrasing here - "Thanks, but no thanks."
Spiegel, just 23 years old, turned down Facebook's $3 billion cash offer, stating that he expects Snapchat to grow to an even larger valuation with more users. Spiegel's assertion has already proven true, with Chinese e-commerce company Tencent Holdings preparing an investment that would value Snapchat at $4 billion.
This is not Facebook's first attempt to conquer the two-year-old app. The site - which boasts over one billion users - introduced the "Poke" app last year, essentially a Snapchat copycat that also featured time-sensitive text messaging.
Poke, however, never caught on - it quickly fell off the top apps list, and very few people use the app regularly. Facebook has had success purchasing competitors in the past - just look to last year's $1 billion deal for Instagram, a transaction that looked insane at the time but has proven to be a very wise purchase on Facebook's part.
Like Snapchat, Instagram had no sources of revenue at the time of Facebook's offer. Facebook doesn't need the app itself - its engineers can reverse engineer a copycat application like Poke in no time. Facebook just wants the users. Snapchat users fall into key demographics that Facebook has failed to capture more recently: teenagers and people in their early 20s - arguably the age group most susceptible to advertising. Spiegel also revealed that 70 percent of Snapchat users are women.
Despite these good omens, spurning a $3 billion offer from the largest social networking site in the world sounds ridiculous. Keeping the app cool - read: young and advertising free - will prove difficult if Snapchat wants to see serious revenue streams. Snapchat has a growing 40-and-older user base - my girlfriend's mother (hi Katie!) included - which could prove problematic if young people leave the app in the same way that tweens and teenagers have left Facebook.
As with the Instagram deal, taking the money sounds like far and away the better option, and usually the more common choice. The "Dot Com" bubble of barely 10 years ago is still fresh in the minds of many of these young entrepreneurs, but greed has won out in the case of Snapchat.
My wise, 20-year-old advice? Don't be afraid to sell. Do be afraid to make ridiculous faces in lecture.
Or don't. They're funny.
Walt Laws-MacDonald is a junior who is majoring in quantitative economics. He can be reached at Walt.Laws_MacDonald@tufts.edu.
