For many entrepreneurs, the goal is to launch a prosperous cooperation, grow it into a household name and sell it off for millions or even billions of dollars.
So what happened when Mark Zuckerberg offered Snapchat co-founder Evan Spiegel $3 billion for his creation?
Evan Spiegel and Mark Zuckerberg
He said no.
What did Zuckerberg see in this photo sharing company that perpetuated him into offering the biggest offer Facebook has ever done? What would even cause Spiegel to deny this offer? Let’s break try to break this decision down.
The Offer
So what makes Snapchat so attractive? I firmly believe the appeal stems from the potential marketing it provides. Companies like Facebook are slowly losing their grasp on the younger demographic, whilst Snapchat holds 9% of phone users; 26% of them are between the ages of 18-29. So why wouldn’t Facebook simply create their own version of Snapchat instead of spending $3 billion dollars. Turns out they did. They called it Poke, unfortunately for Facebook it did not prevail which may have shown Spiegel the true value of his company.
The Decision
What would ever inhibit a 23 year old to decline a $3 billion dollar offer? Well, I believe that Spiegel has always believe that real success only comes from big risks. For example, he left Stanford University with 3 classes remaining for his degree in order to further his company. Spiegel definitely has the ambition and I believe he has grown attached to this creation and won’t simply sell it until he believe it’s the right time. This risk could potentially payoff if Snapchat continues to grow. However, there are certainly risks. There have been many companies like Groupon who denied a $6 billion dollar offer from Google; only to have the firm value fall by $10 billion the following year.
Statistics of SnapChat
Although the risk is high by denying this potential once in a lifetime offer, the potential payoff could be worth it based of the exponential growth Snapchat has done in the past year. With the characteristics of a risky entrepreneur and the vision of co-founder Evan Spiegel, Snapchat has the potential to upend the social media hierarchy.
Bibliography
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