Original Facbook VC Talks What Snap Has To Do For Success

Posted: Mar 2 2017, 5:16am CST | by , in News | Latest Business News

 

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Original Facbook VC Talks what Snap has to do for success

Chien doesn't plan to buy into Snap

Back when social network Facebook was called The Facebook and was only for college students Chi-Hua Chien was an associate with Accel Partners. He ran across The Facebook thanks to his .edu email address, joined up and then turned Accel partners onto the budding social network.

Before long Accel had put in $12.5 million that was worth over $10 billion when Facebook went public later. Many are looking at Snap and wondering if it will be the next Facebook. Chien talked with CNBC a bit about what Snap needed to do to become the next Facebook. The first thing you should know is that Chien doesn't plan to buy Snap so he must not think it's another Facebook.

Chien says that the IPO valuation at around $24 billion is rich for a company that lost $515 million with only $404 million in revenue back in 2016.

"Look at 2024 to 2027, when the company is generating significant EBITDA and cash flow," he said, pointing to Goodwater's best-case projections of $7.3 billion in EBITDA on $14.8 billion in revenue by 2027.

"What you'd need to believe is that Snap has built a very substantial defensible position as a mobile media company among millennials. That's a generation that doesn't watch linear TV, doesn't listen to the radio, but uses Netflix and Spotify."

He continues, "Advertisers say look, I cannot get these people anywhere else, I need to buy somewhere. I can't let the business die with people over 30. That's a big bet." Chien figures that Snap can drag itself to $15 billion a year with money from TV advertisers. Chien figures Snap is going for brand advertising that is mostly still tied to TV.

"Snap is going straight up for that," he said. "Major high-quality broadcast-quality content. Not user-generated content."

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<a href="/latest_stories/all/all/3" rel="author">Shane McGlaun</a>
Tech and Car expert Shane McGlaun (Google) reports about what's new in these two sectors. His extensive experience in testing cars, computer hardware and consumer electronics enable him to effectively qualify new products and trends. If you want us review your product, please contact Shane.
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