Snapchat – created by Standford University students Daniel Smith, David Kravitz, Bobby Murphy, and Evan Spiegel, and released in 2011 – is a photo app that allows you to take a photo, caption it, and send it to your friends.
The catch is, the photo is impermanent and disappears after about 10 seconds of being sent – unless the sender saves it.
Right now, Snapchat is free to install and use – much like twitter, facebook, tumblr, and pinterest. Just another photo-sharing platform, one among the hundreds of file-sharing social media platforms that seem to sprout like mushrooms after a rainstorm these days, except of course, for the fact that those photos aren’t stored in a receiver’s drive. Seems innocuous enough, right?
Then why did Institutional Venture Partners (IVP), a leading later-stage venture capital firm invest $60 million in Snapchat at a competitive $800 million pre-money valuation? It bears noting that General Catalyst, SV Angel, Benchmark Capital and Lightspeed Venture Partners also invested and Sony Entertainment is jumping on the Snapchat bandwagon. Buy Instagram views at the cheapest prices so that the manufacturing expenses of the person will not be increased. Proper check should be done at at online websites for gathering information about the likes and comment on the posts.
IVP has a history of investing in successful companies, averaging at $20-100 million in yearly revenues. Snapchat’s revenues are… $0.
So what gives?
Why would would a multi-million dollar venture capital company get so excited about an app that is not raking in revenue? The answer is simple: Mobile Social Media.
It is no secret that social media is a way of modern life and is rapidly overshadowing traditional modes of advertising and media. This is because social media connects the bridge between companies and advertisements and consumer lifestyles. Social media started as a channel to share one’s life with others – instantly and in large quantities. It has plugged users into a cyber matrix, and as such, individuals and companies are at an equal standing.
The evolution and proliferation of mobile devices, such as smart phones and tablets, makes the cyber matrix even more accessible – from any place, at any time. In fact, mobile devices are quickly replacing PCs as the primary platform in accessing the internet and tech services, Business Insider reports. With billions of mobile users on the planet, mobile traffic is eclipsing PC traffic rapidly.
Snapchat is tailored to this trend. Already, 200 million photos are created and sent each day, an increase of 50 million from just two months ago, according to the app’s founders. It seems the trend will only grow. With such staggering numbers, the folks at Snapchat are working on ways to monetize the system and their investors clearly see the potential.
So what does IVP know that you don’t? How can sending impermanent messages be monetized and exploited in the areas of marketing and business by companies?
Snapchat describes itself as a true lifestyle app, where sharing honest moments with friends is more important than posting edited selfies on Instagram or posed photos on Facebook. Whereas other forms of social media allowed a celebrity and reality TV-obsessed culture to play out its own fantasies of fame on the internet, Snapchat keeps it real, genuine, and intimate.
Intimacy is a guiding factor. It makes people feel special and privy to the “real” person beyond the perfectly coiffed Facebook profile photo. In Snapchat’s own words, the app is about “the moment, a connection between friends, and not just a pretty picture.”
Reality shows and social media have saturated the market, and they no longer create a feeling of specialness. People long to be unique, and the pendulum is starting to swing the other way towards privacy, intimacy, and exclusivity.
What about the feature that allows senders to save images they capture? This is a great strategy to create literally one-of-a-kind images and maintain complete control over them. As a brand, that gives you immense power over what you show, how, when, and why. With other social media platforms’ tendency towards oversaturation (hence devaluation), this feature allows you to control your value.
If brands can tap into that, they will not have just dazzled new fans; they have gained loyal followers for years to come.