Snapchat was developed by 2 stanford students when they found that students liked to send raunchy photos but wanted them deleted auomatically without leaving audit trail. This became popular as teenage students started using it even for messaging each other. Recently Facebook made a $3 billion bid but Snapchat declined the offer as they didn’t want to cash out as they expect the bid to be larger in the future with a growing customer base. Snapchat does not make money today, but there is potential to monetize their customer base as Facebook has done over that last couple of years. In my view, snapchat was getting an attractive offer and should have taken the Facebook offer. While the base could grow in the future, the social network scene is driven by teenagers and students who can be quick to switch the moment a new ‘cooler’ becomes available. facebook realized that their share price fell 10 % when a teenager stated on CNBC that facebook was losing its ‘cool facor’. These bubble valued ‘yet to be profitale’ companies should realize that customers, values and success can be ever so fleeting. This interesting blog by Constance Ang provided different angles yet reinforced my opinion.

http://blogs.wsj.com/digits/2013/11/13/snapchat-spurned-3-billion-acquisition-offer-from-facebook/