The empire snaps back

I came across this article today that Snapchat is considering raising another round of investment at $3.5 billion valuation.

Its a really interesting investment at that valuation. Snapchat has 350million pics submitted daily. Up from 200mil pics a few months ago, and 150mil pics a few months before that. They clearly have traction, growth in # of photos submitted, stickiness and currently no revenue model.

snapchat

Snapchat’s exploding pics are becoming popular

But the correct question isn’t how Snapchat will make money.

I believe the correct questions are:

1. Are they changing people’s behaviour and becoming a part of their daily lives?

2. Will the # of photos and # of users keep growing at an increasing rate?

3. Will it become a verb – after you take a pic will people say “snapchat” it?

4. How sticky is the product?

5. Is this a behaviour that you can see 100million people doing?

The volume of photos is already 2-3X that of instagram in the past quarter and this was a stat from a few months ago. See the presentation below from Mary Meeker on the State of The Internet 2013.

It could be like Line or WeChat and sell in-app-purchases for emoticons, visual effects you can add to the pics. When are you are at that size with that kind of user behaviour, there are ways to make money.

Personally I don’t use it and I don’t like the product design, but I’m not in the target demographic. I regularly ask the teenagers at my church what apps they are using, and Snapchat and Subway Surfer are top of the list. I see them laughing when they talk about snapchat and how they use it to send funny pics and selfies. Snapchat is onto something for this market. I’m not in the selfie picture market.

snapchat vs instagram

Snapchat photos surpass Instagram

Snapchat growth

Snapchat’s explosive growth

Its very different to other products out there because its a private one to one conversation, not a one-to-many social network like twitter, facebook, instagram, or pinterest. Also, is it a social network if its one-to-one? The best description I’ve heard is that its a visual walkie talkie.

The advertising model is also potentially different. It could introduce a new type of advertising unit that fit within the context of the product. Perhaps an an ephemeral advertising unit that could be used for flash sales, temporary offers, instant rewards, and time sensitive downloads. Some brands are starting to use it already too.

Oh and if you have read this far – add me to snapchat! My username is “inspiredworlds” 🙂

I’m out like snapchat pics

Matt Ho

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