An interesting article written by fellow classmate Nick Haggert caught my attention, as it involved a service that I use very often. Nick’s blog is very well written, and for the most part, our ideas point to the same direction, although there are discrepancies. Earlier this week, Snapchat rejected a buyout offer from Facebook at the Valuation of 3 billion dollars US, but how has this non-revenue based company developed so quickly and successfully in just a short period of time?
Snapchat is a prime example of successful entrepreneurship combined with an efficient use of information technology systems. Although the services provided by the company is more of a vitamin than a painkiller, people experience enjoyment when sending a message or “snap”. Even though the company does not charge users for its service, they have been able to monitor the current number of snaps sent and received. With this valuable information, they have knowledge of the different demographics that currently use their services. Opportunities that emerge from information as valuable as this allows other companies to advertise their products to a certain demographic. For example, the next X-men movie is currently sending short clips periodically that eventually tell a story that cannot be found elsewhere.
Companies like Facebook not only find this information extremely valuable, but also see these emerging companies as a threat. Young users in the teenage range are found to be using Facebook’s services less and less. With that being said, Snapchat, with no revenue, only believes that their company can continue growing into more than what they are today. There have been instances in the past where companies overvalued their future selves, but only time will tell where this simply successful company will go.
http://online.wsj.com/news/articles/SB10001424052702303789604579196023009484870
http://www.smartinsights.com/wp-content/uploads/2013/11/snapchat.jpg