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Why Snapchat will never be worth $3 billion

Caitlin McGarry | Dec. 5, 2013
It's big with fickle teens, but that's a poor indicator of success.

But once you do have friends on the app, sending self-destructing images with funny captions or hand-drawn doodles is a pretty great way to waste time. I use a lot of social apps, mainly because it's my job, but I rely on a few stalwarts because my family and friends use them. Few people I know are on Snapchat, so I talked to one 25-year-old who uses the app regularly. New Yorkbased Derek Smith uses Snapchat to send funny photos and videos to his friends, who work in the same creative circles. Snapchat isn't like Facebook or Twitter, Smith says, because it's for messaging your close friends.

"I think that's something that's appealing about Snapchat—there's so much more control," he says. "It's not something that's going to be seen by anyone who checks out my profile. It's strictly something I can get creative with."

He adds that although Snapchat has built up a reputation as a sexting app, he thinks that more people use it the way he does—as a Vine-meets-Microsoft-Paint service for silly private messages.

But it might be difficult for Snapchat to fight that naked-selfie image and broaden its appeal—if that's the service's goal.

What's the big deal?
>Snapchat CEO Spiegel is obviously either holding out for a bigger payday—yes, bigger than $3 billion—or biding his time for a public offering, as a slew of other social media companies have done in recent years. But those companies have found that they need to prove their worth beyond just being a diversion for teens.

America's youth are a highly sought-after market, but as columnist Farhad Manjoo noted in the Wall Street Journal last month, teens are notoriously fickle and not at all good predictors of what will be successful when it comes to technology. Teens loved MySpace. Then Facebook came along, and it was newer and cooler, and soon they adored Mark Zuckerberg's college-only social network more. Now Facebook is a big ad business, and kids today just want to send silly photos on Snapchat.

Facebook probably should be worried that teens aren't checking in as regularly as they once did. Exactly how many users Snapchat has is unclear, though by some credible estimates the app has about 25 million active users in the United States. Facebook wants Snapchat, but even as Spiegel continues to rebuff Zuckerberg's offers, Facebook boasts more than 1 billion active users and is entrenched in people's lives. Teens have found something that's more fun right now, but they'll grow up, they'll quit taking risqué photos they need to hide from their parents, and they'll move on. Their relatives, friends, classmates, and coworkers will converge on one social network—maybe Facebook, maybe whatever comes after Facebook—and the babies born in the aughts will find some new way to share their lives online. It's the circle of life.


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