Evan Spiegel, founder of Snapchat, recently made news by declining, among other bidders, Facebook the chance to buy his app that deletes pictures and videos after only a few seconds for $3 billions dollars. Most outside the tech industry have questioned the 23 years old’s apparent hubris at balking at such an offer but, if this fascinating profile from CNET is any indication, such a bold move is not out of character for the young entrepreneur.
It remains to be seen, though, if Spiegel’s decision will be a wise one or one that he will eventually regret. One way we might glean some insight into this question is by looking at other popular startups and businesses that were offered to be purchased and seeing what eventually happened to them. By doing this, we might gain an inkling of what the future holds for SnapChat and its young founder.
Offered, at one point, a staggering $6 billion by Google, the “deal-of-the day” group coupon website has apparently wasted no time in proving to themselves that they should have made such a deal, now posting an average $100 million loss every quarter.
Seemingly rocked by controversy and impropriety at every turn (analysts have accused the company of being everything from a “Ponzi scheme” to calling their business model a “disaster”), Groupon still has the potential to regain their metaphorical footing but this seems unlikely, according to many.
Rumors keep circling the pinboard style photo sharing website that Google is interested in purchasing it for a few hundred million dollars. Even without Google, though, Pinterest is doing quite well for itself, having just been valued at $3.8 billion dollars after receiving over $200 million in equity funding.
Proving popular amongst women and those interested in food, drink, arts and crafts, there still appears to be very much of an upside for the young company, currently proving that it doesn’t always pay to sell to their first potential bidder that comes along.
If one were to point to a single website as the poster child for how fickle and fleeting success in the tech industry can be, one needs to look no further than the once ubiquitous but now mostly irrelevant MySpace. Founded in 2003 by eUniverse employees, the company was purchased in 2005 for $580 million by Rupert Murdoch’s NewsCorp, who beat out companies like Viacom for the rights to control what was the first truly popular incarnation of social media as we know it today.
The reasons for MySpace’s decline in popularity are numerous and well-documented but, suffice it to say, when MySpace was purchased by Specific Media in 2011 for $35 million, the decision of the original founders’ to sell the company when they did, that is, before MySpace began losing ground to Facebook, which overtook them in 2008, apparently proved to be the correct one, at least from a financial standpoint.
Do the respective successes or failures of these popular startups that were offered to be purchased and that either did or did not sell provide any lessons for Snapchat? If so, what are they? Do you believe Evan Spiegel is wrong for rejecting Facebook’s offer? What would you do if you were in his place?