Evan Spiegel, Snapchat's 23-year-old CEO, has turned down a $3 billion offer for his company.
Snapchat is a mobile app that that lets users, mostly teenagers—mostly girls—add captions to photos or videos and share them with friends, and then make the content disappear. Photos can only be sent in the moment—no uploading later. Young girls take pictures of themselves making silly faces, Carlos Danger types maybe send more lascivious content, and then poof! Gone. Unless the recipient grabs a screenshot.
(For those who want deletion guaranteed, there's the Invisible Text app.)
"Mr. Spiegel's company has no sales and no business model," The Wall Street Journal, first on the story, reported Nov. 13.
The report went on to explain that Spiegel, a Stanford dropout, is holding out for more money.
"He thinks Snapchat's user numbers have more room to grow, and is encouraged by the high level of activity by current members, suggesting it isn't likely to fade soon, they said. This September, the company said its usage had nearly doubled, to 350 million messages, or 'snaps,' per day, up from 200 million in June," the report continued.
It also said that Snapchat won't disclose how many users it has.
Other reasons Snapchap turned down the offer, The New York Times reported Nov. 13, may include Spiegel's uncertainty about working for Facebook CEO Mark Zuckerberg, and his reluctance to leave Venice, Calif., and see his business become another Silicon Valley startup.
Still another factor may be the influence of Benchmark Capital, a person close to the Snapchat offer told The Times. The investment firm made an offer for Instagram, which eventually was sold to Facebook for $1 billion. Months later, Benchmark turned its interest to Snapchat, making a $13 million offer and anticipating that young teenagers, leaving Facebook, would turn to Snapchat. Spiegel, encouraged, also anticipates this trend.
He's also planning to offer users things they can buy within the app. (If the mind boggles, The Times article mentions Line, a Japanese messaging company that makes $10 million a month in revenue selling stickers that users can send to friends while chatting.)
"One of the really interesting things about entertainment products is that people tend to pay a lot for them. Whereas utility products, such as traditional social networks, have to be monetized using advertising," Spiegel said during a radio interview with the BBC that Spiegel Tweeted Nov. 14. "We believe that Snapchatters are willing to pay for added-value services."
He declined to say what he planned to sell.
Spiegel did say, though, that it's not all about sexting, that 70 percent of Snapchatters are women, and that the app is really just about having fun with friends.
"If you want to work on your personal brand, there's a lot of great places to do that on the Internet. Snapchat is all about having fun with your friends," said Spiegel. Snapchat allows you to tell jokes and be who you are."
A mobile company du jour walking away from billions may remind some of Groupon. Its CEO reportedly turned down a $6 billion offer from Google. Investors were confident the company could get far more in an initial public offering. It did, and then it took a nosedive. In February, its CEO and founder was fired.