Snapchat rejects a $3 billion offer from Facebook. The reason for the offer being, teenagers are now more inclined to a social network that offers more privacy, drawing Facebook’s younger crowd to Snapchat.
Earlier in the month, Mark Zuckerberg offered to buy out Snapchat for $3 billion, but Evan Spiegel, the 23 year-old CEO of Snapchat, refused the offer.
What is Snapchat?
In 2011, Evan Spiegel and Bobby Murphy (25) founded Snapchat, an app for iPhone that allowed you to view a photo (and now videos) for a maximum of 10 seconds. The service allows people to share photos without them being saved, unless the other person took a screenshot, of course.
Its purpose was simple, private, and efficient and its interface user-friendly. Teen communities around the nation began using the app and through word of mouth the app soon became yet another form of communication.
Why Facebook cares:
Last month it was announced that 350 million photos are shared on Snapchat every day, matching the daily number of pictures uploaded on Facebook. With the usage of young teens on Facebook steadily declining, it doesn’t come by surprise it wants to buy out its competitor for $3 billion. The Stanford-graduate duo, however, knows their place in the social media realm today and refused the deal.
The $3 billion offer followed Zuckerberg’s first $1 billion offer, the same amount he bought out Instagram for last year. But Snapchat is holding out and driving up the price, something Instagram should have done.
Rumors say that Snapchat had even seen a $3 billion offer from Twitter way before Facebook’s latest offer and that after it was made Google outbid Facebook for $4 billion.
Why the Snapchat holdout makes sense:
Spiegel (CEO) is experiencing something that most people will never encounter. It is possible that they can’t see down the road properly because his ego is in the way. Denying an opportunity such as the one that presented itself may never come around again in a tech-savvy-evolving-world where nothing is guaranteed (especially with Mark Zuckerberg, the young Steve Jobs of today).
The second (and more likely) scenario is that they are playing their cards right. Snapchat knows it holds the younger millennial market segment that Facebook lacks to stay afloat in the long run and as long as that holds true, Facebook’s offers will not stop.
The attention generated from this news story favors Snapchat by increasing the awareness of Snapchat’s younger millennial leading numbers and also by promoting it to potentially new market segments.
Zuckerberg will have to stay on the edge of his seat until next year for Spiegel stated that no more offers will be considered until 2014.