image from Snapchat logo

I’ve preliminary analyzed Snapchat in my last post, read COMM101 Section103 Joseph Lee’s Blog, and I am going to delve deeper to the consequence and impact of Mr. Spiegel’s refusal to Facebook’s acquisition request.

From the positive side, it maintains its competitive strength among high-tech mobile social app industries. The fact that Snapchat as a startup created itself around $4bn value within two years, is solid enough to argue that it has competitive advantage and room for appreciation due to its point of difference: unique messaging mode. He is trying to break the law that high-tech startups cannot escape from the destiny of eventually being taken over by technology giants. Many cases in history proved that the operation of parent companies is not capable of improving the performance of companies after acquisition. Before acquisition, workers fear being laid-off, so they don’t have motivation to work; after that, the steep organizational structure of big company has problems such as low efficiency in communication and time lag of operation.

However, being taken-over eliminates risks. Snapchat gambles on fickle teenagers, while audience of Facebook, LinkedIn, Pinterest are from multiple generations and occupations. Buyout makes the bet more secured.