Snapchat, an unprofitable social media company allows users to send instant pictures and text. What makes Snapchat unique from other existing social media is that they value users’ privacy. Unlike Facebook or Twitter that keeps tracks of user behaviour, and then sell ads based on the detailed knowledge of user preference. However, it is both their strength and weakness by not having track of user behaviour. Since most of the unprofitable social media Apps generate profit from ads, and most of the efficient ads are targeted on users’ preference. Thus, Snapchat could face a hard time making money by selling same ads to all users instead of targeted ads.

Snapchat has recently turned down an all-cash acquisition offer from Facebook Inc. for at least $3 billion. Based on the mass amount of user base and the popularity of Snapchat, maybe these young and intelligent founders have made the right decision. We could not predict if Snapchat would be as lucky as Facebook, which now worth about 118 times what Yahoo has offered in 2006. Snapchat is now focusing on “building their business and maintaining their independence”, and make $3 billion bet on themselves.

Work cites:

http://www.bloomberg.com/news/2013-11-13/snapchat-s-founders-make-3-billion-bet-on-themselves.html