Are platforms such as Facebook and Twitter going to be as popular in ten years as they are right now? How about mobile-only apps like Instagram and Snapchat? In 2023, are we still going to rabidly share pictures of our pets and pastries with our friends and wait for the ‘likes’ to come rolling in? How about sending goofy (and sometimes risqué) pictures, only to have them delete in ten seconds?
If you feel strongly that we will, then we can agree to disagree and call it a day. If like me, however, you believe that the popularity of today’s hot-shot social media companies rely largely on the wits and whims of teens and tweens then there’s every reason to doubt the long-term growth potential of current Silicon Valley darlings. Remember, it was only last month that investors were spooked by Facebook’s declaration in its quarterly earnings call that it was seeing less engagement from its youngest users.
And therein lies the motivation behind the takeover offer for Snapchat from the social media gorilla itself. Why else would Zuck and Co. be so willing to fork over $3 billion (in cash!) to pay for a three-year-old messaging baby that until a month ago operated out of a frat-like, beachfront house in Venice, California. The answer, of course, is that Zuckerberg is cowering in fear of the idea that his own social media baby (turned giant) might lose its cool factor and become increasingly irrelevant to today’s teens.
In fact, as Jenna Wortham’s New York Times article suggests, that’s the very reason why Snapchat has been able to raise so much venture funding in the first place (led by none other than Benchmark Capital, the ultimate anti-Facebookists — see its early bets on Instagram and Twitter). There’s no doubt that at least part of Benchmark’s rationale for investing in Snapchat was to capitalize on Facebook fatigue.
And unfortunately this is why Snapchat’s rejection of Facebook’s offer is truly crazy (as if a 23 year-old CEO turning down $3 billion for a three year-old company with no revenue wasn’t enough). If Snapchat’s funding was premised on the idea that users inherently tire of their social media platforms due to overuse, and its attractiveness stems from its astronomical user-adoption curve (350 million snaps per day in September vs. 200 million in June), then why turn down such an enticing offer when an even younger competitor is surely right behind you and your own popularity will eventually wane?
How long will it be before we hear about an even younger social media platform that has millions of teenagers flocking to use its service over Snapchat’s? Surely there’s one already nipping at its heels. What were Snapchat executives and their investors thinking? Hold out until the service reaches its peak level of use and then sell at that perfect moment? The chances of that seem pretty unlikely. Ultimately, it looks like Snapchat may prove to be just as ephemeral in nature as the very messages it lets its users send.
Jeremy Hodkin is a founder and CEO of KISgroup.com, an aspirational-luxury video magazine based in New York City. He is a winner of the McKelvey Entrepreneurial Scholarship, member of the Young Entrepreneurship Council, and has been featured on Fox Business Live.