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Snapchat Leverages Value by Rejecting Facebook Offer

Nov 16 2013, 1:55am CST | by , in News | Technology News

Snapchat Leverages Value by Rejecting Facebook Offer
Photo Credit: Getty Images

Many thought rejecting Facebook’s offer was a big mistake. However, what they didn’t realize was that there was a method to the madness. The ploy increases Snapchat’s leverage power.

Snapchat’s CEO, Evan Spiegel rejected an offer of $3 billion by Facebook. There were quite a few who thought this was madness of the highest degree. But there are inside reasons to Evan’s stratagem. Though the deal went awry, Evan did get something worthier in return: leverage and empowerment for future haggling. Now the future lies open to Snapchat. Had Spiegel sold his startup to Facebook it would literally have been the end. 

He would have been left with a whole lot of cash on his hands and nothing else. In fact, Facebook would have been paying close to $4 billion were other factors added up. Even Tencent and Google made their respective offers only to face rebuffs that left them reeling. 

Snapchat is going strong though. It is a successful venture that has amassed millions in funds. Its user base is increasing at a rapid pace. And the future prospects look excellent for this messaging firm. Spiegel has made it known that he is not interested in any offers whatsoever until early next year. By then the user base will have expanded so much that a higher bidding price may be made. 

Facebook in the past came up with “Poke” a messaging application that bore some resemblance to Snapchat. However, it failed to make it and had to be scrapped. Snapchat is a unique experiment that has seen an astounding amount of prosperity. Its fortunes cannot be replicated easily by anyone else. 

Source: WSJ

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