When Snapchat reportedly turned down a $US3 billion offer from Facebook, the knee jerk reaction from a lot of people was, “Are the crazy?!?”
It’s a lot of money to pass on. But, according to venture capitalist Marc Andreessen, Snapchat has an opportunity to build something much bigger, much more valuable.
In an interview with the Wall Street Journal, Andreessen was asked about Snapchat’s future as a business. Here’s his answer:
“The bull case on Snapchat is that there’s a company in China called Tencent that’s worth $US100 billion. And Tencent is worth $US100 billion because it takes its messaging services on a smartphone and then wraps them in a wide range of services — things like gaming and social networking and emojis, and video chat — and then charges for all these add-on services. And it has been one of the most successful technology companies of all time and is worth literally $US100 billion on the Hong Kong Stock Exchange. Maybe that’s [CEO Evan Spiegel’s] plan. Maybe Evan’s plan is to transplant the Tencent business model into the U.S., which nobody has actually been able to do yet.”
Obviously the “if” in here is huge.
But, next time you hear about Snapchat getting some massive valuation, think about this before you dismiss it as crazy. Big businesses based on messaging exist elsewhere in the world.
Investors are starting think it can happen here, too.