How rejecting a $3 billion buyout offer proved fruitful to Snapchat promoters and investors
Snapchat, an American multimedia messaging app developed by Snap Inc., formerly Snapchat Inc was launched in 2011. It was promoted by Evan Spiegel, Bobby Murphy and Reggie Brown, former students at Stanford University. One of the key features that made Snapchat stand out amidst various messengers was disappearing pictures and messages.
Within a short span, it gained tremendous popularity. As of November 2012, Snapchat users had shared over one billion photos on iOS app.
In 2013, they received a USD 3 billion buyout offer from Facebook which the promoters declined. It was a great opportunity for promoters to nab easy millions under their belt. They went against the tide and rejected the offer from Facebook, twice. They believed in their product and thought Snapchat was worth more than the offer.
Which entrepreneur or a start-up doesn’t dream of being the next Google or Facebook: multi-billion-dollar empires that have changed the world and will practically continue to dominate for years to come. When a founder or promoter sells, that dream dies. Cashing in limits how big the company could potentially grow and how large a role a promoter can play.
History is evidence, Google turned down an offer from Yahoo and later surpassed in value, scope and impact. Facebook also turned down a billion dollar offer from Yahoo, and it continues to dominate social media presence.
It was a prudent decision to repudiate Facebook’s offer multiple times. Snapchat has grown magnanimously since. As of July 2021, they had 290+ million daily active users. On an average, more than 4 billion photos are sent each day. And in terms of moolah’s, it is worth USD 115+ billion (39x’s more than Facebook’s original offer).
What we learn from the promoters of Snapchat is to believe in self, your product and stand your ground. Had they accepted the Facebook offer, while the investors would have made few quick millions, promoters would have missed this splendid ride to pinnacle of their company’s growth. It was a win-win all around including the shareholders who made a fortune during this ride.
Never underestimate the determination of a kid who is time-rich and cash-poor.
― Cory Doctorow, Little Brother
Sources:
https://www.bbc.com/news/business-24935361
https://mashable.com/2014/01/06/snapchat-facebook-acquisition-2/
