Snapchat, A Qualified Success


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Company: Snapchat, Venice California

Product: Mobile Photo Sharing App

Description: Snapchat is a two year old company that makes a photosharing app that allows users to send photos that "self-delete" in 10 seconds of less. The sender determines how long the user has to view the image before it is deleted. Snapchat users are currently sharing 350 millions photos each day illustrating an oustounding growth curve.

Snapchat is a "qualified" success because, like Twitter, they have not established a significant revenue model, but few would question the success of Twitter.  Also like Twitter, Snapchat has attracted major investments from premiere venture capital investment firms, making it one of the highest valued startups ever founded in Los Angeles. 

Snapchat is a success because:

1. Snapchat is focused exclusively on mobile. The growth curve on mobile and tablet use is leading many to predict the demise of desktop computing so apps that are exclusive to mobile users are attractive to investors. Their plan is to make Snapchat a "core utility" that ships on the main screen of mobile devices.

2. User engagement, traction, growth curve, momentum. Snapchat users were sharing 20 million photos per day October 2012, 150 million photos per day April 2013, 200 million photos per day June 2013, 350 million per day September 2013. Snapchat won't discuss the user counts but that number is clearly growing along with the photos shared.

3.Age of the audience and size of market. Snapchat users are a prime demographic for using the technology and attracting advertising dollars.

4. User Generated Network Effect. When a Snapchat user sends a photo to another user they have likely acquired another Snapchat user without the company having to spend to acquire the user.

5. Snapchat's technology clearly adds value to what currently existed and does not require an intricate sell. Users can see the value of the technology without much of an explanation.  

6. Regular user engagement. Snapchat's technology is not a one-off fascination. Users engage on a regular basis.


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