SnapChat has been taking mobile user and investors by storm. For uninitiated “Snapchat is a photo messaging application. Using the app, users can take photos, record videos, add text and drawings, and send them to a controlled list of recipients. Users set a time limit for how long recipients can view their Snaps (the range is from 1 to 10 seconds) after which they will be hidden from the recipient’s device and deleted from Snapchat’s servers”.
If you have parents who in 50s/60s/70s or you are a rational analyst/investor – one wonders what utility does this app fulfill…..because utility means revenue, which means profit and which means valuation. I guess that’s pretty normal for people in stock market fraternity. However Silicon Valley seems to work on totally different tangent “make a cool product and let market see if it has utility” SnapChat belongs to that category.
Market is amazing, one of my professor use to say “you are born in market, you live in market and you die in market”. Free market captures true essences of nature or Darwin principle “survival of fittest”. To just re-word the phrase of Gordon Gekko from movie Wall Street “Market, for lack of a better word, is good. Market is right. Market works. Market clarifies, cuts through, and captures, the essence of the evolutionary spirit”.
For all of us rational investor & analyst kept on wondering what utility SnapChat can provide, porn or adult entertainment industry has found its usage. (I am not here to debate on legality & harmfulness & morality etc of porn or adult entertainment industry), (Read more here – NYTimes) I just want show what wonder market can create, I am not sure whether inventor of SnapChat thought about it, just like Mark Zuckerberg & Team at Facebook they just thought it would be cool product and look what their invention is doing. For that matter, many of us where questioning the utility of Facebook in very beginning and look where it is today, FB pretty much created & revolutionize an industry “social media”.
Anyway if you thought that SnapChat was only used by adult industry, you should re-think. Sometime back SnapChat introduced a concept of story (read whole story here and here), where strings of pics can be attached and resulting movie last for 24hrs. Plus the movie doesn’t come up on friends’ timeline or mail; person/friend has to actively seek out. Articles in above link would give one very good idea on working of SnapChat and how people have started using it.
One of the key things I have learned after reading tonnes of books & interacting with of lot of successful & failed entrepreneur is what nature teaches us, “One turtle lays anywhere between 50-200 eggs (depending on species) of which 1% survive over long time”. Provide small funding to many entrepreneur and let market decide which one win.