In the movie “Wall Street,” Bud Fox famously and rhetorically asks Gordon Gekko “How Much is Enough?” Apparently, 25 year later, $4 Billion in cash is not enough in the no-limit game of startup valuation. It’s hard to handicap from here in the cheap seats, but if you won’t take $4BN, then where DO you exit? $10B, $20B? We’re all capitalists here, so stay in the hand as long as you can, by all means. Just don’t over-play it and ultimately need to ask for cab fare home.
All this, while the company has no (public-and-apparent) roadmap to profitability, and a user base that is virtually guaranteed to revolt in a major way if/when the company does try to monetize the platform. The canopy can collapse at any moment on this thing, as hyper-fickle tweens decide they don’t like it anymore and move the party to the next hip thing. “You’ll know the days are numbered when your mom gets an account,” is a popular guidepost for the kill-clock on the cool factor of many social media staples. Teens scoff at the mere mention of Facebook these days, saying their time is spent on Instagram and, yes, Snapchat.
The story of a rejected $4 Billion offer seems primed for a “Whatever happened to” article in two or three years. The lead-in might go something like: “After turning down $4 Billion in cash from Google, Snapchat rode the roller coaster down the righthand side of the valuation mountain, and was ultimately sold to blah-blah & blah equity partners for $156,000 and two one way (coach) tickets.”
Trivia: In “Wall Street” Gekko brags about making an $800,000 profit on his first real estate deal. Then says “Back then, I thought that was all the money in the world…now it’s a day’s pay.” Adjusted for inflation, Gekko would be making $1,680,080.22 per day today, or $436,820,857.20 per year. The Snapchat guys have been at it two years and were offered $4 Billion, or $2 Billion per year, putting them well-over GG’s number for the fictional 1985.
Here are some reports from earlier in the week:
Links
Rejecting Billions, Snapchat Expects a Better Offer (NY Times)
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