Are the CEOs of a startup company crazy to decline an offer of $3 billion for a company that doesn’t generate any profit? In the eyes of some they could be, but being crazy isn’t exactly what Evan Spiegel and Bobby Murphy, the two CEOs of Snapchat, a company that recently gained popularity for sharing temporary videos and photos with friends, identified themselves as when they declined the offer from Facebook.
An analyst at Forrester Research, Julie Ask comments on the situation being,
“[A] classic bird-in-hand versus bird-in-bush. Snapchat must believe the bird-in-bush is bigger.”
The CEOs of Snapchat, believe that holding out in the long run will generate more money in the future compared to cashing in the company at this moment. They intend to follow the path of companies like WeChat and Line, and make money from virtual goods, games, and services. It is a profitable stream after witnessing Line generate $10 million from emoticon sales in a month.
I believe that Snapchat should remain as a standalone company and not give in to the current offers, even at a high $3 billion. Snapchat has identified possible streams of revenue based on what applications in other countries have done, making it one of the few social media companies that can be profitable in the future. Also, the two startup CEOs are both young, being in their early twenties, and have a lot of time to invest in building Snapchat. I am sure Snapchat will inevitably make revenues upwards of $3 billion, thus surpassing current take over offers.
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Agree with you , young CEO has a potential in keeping a company and don’t play it in safe way.