Not many entrepreneurs will ever see a $3 billion buyout offer from a company like Facebook. So imagine getting such an offer in cash from the social media giant. Then imagine deciding to turn down that offer - even though your company isn’t making any money at all.
Well, 23-year-old Evan Spiegel, CEO and Co-Founder of mobile app SnapChat, apparently has done just that. In fact, media reports say Spiegel has been approached twice by the bigger company with very lucrative offers. But he just said, no thanks.
So what’s the story with this guy, is he nuts?
Well, experts don’t think so.
First, SnapChat is a new breed of photo sharing/instant messaging service where images and messages are seen only by designated friends or connections. They can be viewed only once for 10 seconds or less before being deleted forever.
Here’s a closer look at how SnapChat works:
So why’s Facebook so interested in the service? Well, The Wall Street Journal reports:
“Facebook is interested in Snapchat because more of its users are tapping the service via smartphones, where messaging is a core function. Facebook has rapidly increased the share of its revenue coming from mobile advertising, but said last month that fewer young teens were using the service on a daily basis.”
SnapChat has that audience. Sources say 13 percent of teens between 13 and 18 use the app. That’s compared to 4 percent of adults between 19 and 25.
What’s more, that audience is steadily growing with 350 million snaps a day currently, up from 200 million a day in June. Investors have been lining up to give Spiegel their money. There’s little doubt Facebook will be back — perhaps with an even bigger offer.
For other entrepreneurs, the lesson is simple. Know what your business is worth from the beginning. This will keep you from settling for less.