How Snapchat Could March Startups Right Off the Cliff, Lemming-Style 143
Nerval's Lobster writes "Two investors are Tweeting that Instagram, had it stayed an independent company, could be worth between $5 billion and $15 billion today. That's led to talk of whether Snapchat was right to (reportedly) shoot down Facebook's bid of $3 billion for its business, considering its growth and sizable user base. Snapchat's founders evidently think they can score a better deal within the next few quarters. If they manage to sell their startup a year from now for twice as much, they'll be lauded as extraordinarily smart businessmen—perhaps smarter than the folks at Instagram who sold for a 'measly' $1 billion (and all this despite Snapchat making no revenue). But for other startups in the space, the Snapchat and Instragram stories won't do them much good. Propelled by dreams of ever-increasing millions (perhaps billions!) startup founders could end up turning down perfectly good acquisition offers in favor of continuing to bootstrap — and find their businesses eroding and imploding, as the market for their particular app or service either fades away or (more likely) ends up crowded out by competing software. The startup market is a shark-tank, and most of those who don't get out of the water as soon as possible are eaten, dreams of grandeur or no."
Those that don't learn from history... (Score:5, Informative)
The original "but we're worth so much more than they're offering" dot.com story...
http://en.wikipedia.org/wiki/PointCast_(dotcom) [wikipedia.org]
How many have their been since?
Re:Oh, dear. (Score:5, Informative)
Instagram, had it stayed an independent company, *COULD*could be worth between $5 billion and $15 billion today.
The important word here is "could". The truth is, Instagram pulled off an amazing scam and they were smart to just go for it.
-- Instagram takes $50 million from investors and gives them 50% ownership of the company
-- 3 days later, Instagram, which has 13 employees and zero revenue, agrees to be bought by Facebook for $1 Billion
-- Investors see their investment go from $50 Million to $500 Million overnight
-- The founder of Instagram gets half a billion in the process.
-- PROFIT!!
What's not to love?
Re:Oh, dear. (Score:5, Informative)
There's such a thing as "enough", and there's no particular reason to press your luck when you already have it.
The snapchat founders have been able to monetize their situation such that they've already got at least 10 million in the bank. [cnet.com] That's enough "FU money" to press their luck and ride this thing all the way to the end, glory or otherwise.