This Tweet Explains Why Snapchat Is A Multi-Billion Dollar Company

Snapchat Evan SpiegelAPSnapchat founder Evan Spiegel

Snapchat is one of the most polarising startups out there.

It allows users to take meaningless goofball photos and send them to friends. After a few seconds, the photos are erased. It’s popular with teenagers, but it’s growing to be popular with people of all ages.

It sounds like an unsustainable business. If there are no permanent photos, then there is nothing to keep users loyal in the long-run. There is no lock-in effect.

Also, the company has no revenue, and no clear sure-fire way to make money.

And yet, Snapchat is in talks to raise money at a $US3.6 billion valuation.

For people that don’t get Snapchat, venture capitalist Bill Gurley tweeted, “If you still don’t understand Snapchat, take a look at this tweet from our government’s FCC:

Gurley’s firm, Benchmark Capital, is an investor in Snapchat.

The lesson of this tweet is that people shouldn’t be leaving a trail of their actions online. A tweet could be taken out of context, or it could be sent at the wrong time. Similarly, on Facebook some people post party pictures. Or, their friends post party pictures, which can have unintended consequences.

The reason Snapchat is big, and will continue to grow, therefore, is that it doesn’t have the messy consequences of Twitter or Facebook for users.

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