Snapchat

Tue 08 September 2015 Written by Evi
Evi

 

 

Snapchat: from 0 to 1.5 Million active users in less than a year!

Written by Evi

 

You have an itch. You have a great idea for the next huge app and until you actually go out and build it, put it in the hands of actual users, there is no telling what will happen. How do apps go from 0 users to over 1.5 million active users in less than 1 year? What kind of a valuation is given to 1.5 million users? (hint: the answer is in the last paragraph). This is the inspiring story of Snapchat.

 

What prompts Mitch Lasky, a partner in Benchmark Capital, and one of the most influential venture capital figures, to claim that Snapchat “can become one of the most important mobile companies in the world?"

 

It starts with a moment of inspiration. In 2011, Evan Spiegel & Bobby Murphy, Snapchat’s co-founders, were schoolmates in Stanford. One of their friends, Reggie Brown, reportedly stormed into Spiegel’s dorm room and blurted something similar to “I wish there was an app to send disappearing photos.” That night they set out to find a developer. Brown claims two candidates declined; regardless, they settled on Murphy, who had just graduated.

 

Spiegel and Murphy did not have it all mapped out. They did not have a business model, did not identify “revenue streams” or “monetization” strategies. They just felt this is a “multi-million-dollar” idea and went about to explore if people will like it.

 

And they did. But not immediately. They started first with a website-based service, which was pretty lackluster. Then, they switched to a smartphone-app, and that proved to be a key.

 

decision in the right direction. Still, even when venture capitalists saw the app, many wondered why anyone would want to send a disappearing photo.

 

The turning point was when Spiegel’s mother had told her niece about the app, and the niece’s Orange County high school had quickly embraced Snapchat on their school-distributed iPads, since Facebook was banned.

 

And then, it exploded!!!

 

It did because Snapchat created a way for teens to share photos freely—without the ramifications of other social services like Facebook. And the social aspect of the app made it viral. And so, when a moment of inspiration is followed by a cool and hip product that is easy to use, it is a matter of putting it in the hands of those who adore it and manage the expansion and evolution to stay one step ahead of the competition.

 

I promised to tell you what is Snapchat valued. Here goes. During its last round of financing (12/2014), Snapchat raised $480 million with a valuation of $10 billion.  Investment discussions from earlier this year with Alibaba Group Holding Ltd are talking about a valuation of $15 to $20 billion !