Fleeting moments are expensive: Snapchat reportedly in $10B talks with Alibaba

by Garrett Reim
July 31, 2014
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Snapchat is rumored to be in talks for a new round of financing that would value the company at $10 billion, according to a report by Bloomberg. Chinese tech company Alibaba is also rumored to play a large role in the discussion, though the company has declined to comment.
 
$10 billion is not bad for a company that just last November rebuffed a $3 billion acquisition offer from Facebook and only started in late 2011. 
 
Why Snapchat is so valuable may seem mysterious and speculative to outsiders. The company does not have a revenue stream and its most valuable product quite literally is made to disappear. But revenue concerns aside, a vanishing product is what makes Snapchat valuable. In a world of manufactured abundance, scarce fleeting moments are all the more cherished. And, nothing is scarcer than a disappearing image.
 

Fleeting moments are the most expensive

This phenomenon exists in other industries too. The value of fleeting moments is why musicians can demand more for live concerts than recordings, why Broadway theater is thriving and cinematic theater is stalling, and why people pay an upwards of $4,000 to attend TED conferences when they could watch the same content online for free.

It is also why the Millennial generation values experiences over possessions. These days manufactured possessions can so easily and cheaply bought that the fleeting moments of life feel all the more precious. Snapchat is in the perfect position to profit from this value shift.
 
In addition to their disappearing picture and video messages, the company has been experimenting with a so-called ‘Our Story’ feature. During the World Cup final when users in Rio de Janeiro, Brazil sent their Snapchats to ‘Riolive2014,’ they were able to share their photos and short videos with the world. The Our Story stream captured the spirit and experience in and around the World Cup final in a way that television or any other medium could not. We remember great events and moments in Snapchat-like snippets, so the concept may be a great way to expand the collective memory.
 
Features like Our Story may also solve Snapchat’s revenue problem as it offers a great opportunity for the company to connect advertisers to users en masse. 
 
Whatever Snapchat’s valuation becomes the company is certainly pioneering content that feels more and more real to the human experience. If they can find a way to bottle that feeling and profit from it, $10 billion may just be the beginning.
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