SnapChat vs Facebook – A $3 Billion Mistake?


There has been a lot of noise lately as to Snapchat’s decision to turn down $3 Billion dollars from Facebook, and if indeed it was the right move. While $3 Billion dollars may seem like a lot of money, especially to those looking from the outside in, it perhaps is not as big as an offering as it may seem especially considering the huge amount of users and the enormous amount of engagement Snapchat has already worked hard to create. There is, however, one piece that the whole media hasn’t really talked about on the topic and that is…

Snapchat still has a ton of potential especially because many people to date have yet to hear about it.

Here is how we got there. Lets look at Snapchat as an investment rather than a business, and let’s consider the rule that the behaviors of Main Street typically dictate the behavior of Wall Street (which in this case is the money). If you actually read many of the comment on many of the articles following this interesting story, you will notice that the majority of the comments are individually saying that Snapchat should have sold as it has very little worth in its current state. While it may seem true to the naked untrained eye, there are also a ton of comments on the fact that people don’t use Snapchat and therefore it has no worth. Most people consider this a terrible thing and would tell you that people don’t like the product which is why they are not using it, but its highly untrue which we think is the reason the founder and 22 yr old CEO, Evan Spiegel, is holding off and believes his vision is far from its destination.

It is true that over 100 million users currently use Snapchat and snap over 350 million times a day on average but still leaves plenty of people barely aware of Snapchat’s offering and plenty of demographics untapped. There still is a huge opportunity for Snapchat to double that in the next 12-16 months if it plays its cards right which could increase its valuation significantly and make it the single largest purchase Facebook or another giant will ever make.

Our belief is that Evan Spiegel’s vision was never to reach 100 million users but rather compete in the likes of 500 million to a billion. Part of this $3 Billion rejection we believe is part of that scheme to attract more common awareness into Snapchat, what it is, and its huge following which many are unaware of currently.

Just remember that $3 Billion is a lot of money, but is no different than $1 Million to someone who has none. A true entrepreneur isn’t swayed by the money he is thrown at but rather understands how far along in his journey he is and what that’s worth to someone else regardless of what that number looks like. We commend him for that.