I was at a social apps conference a few months back and some interesting statistics were shown about Snapchat. One of the statistics was that Snapchat allows picture messages to be sent 10x faster than regular SMS. I found this fascinating because this is when I stopped looking at Snapchat as an incognito picture sharing app and more of a new, more efficient communication channel.

I don't know how Snapchat plans to monetize. It might be advertising. It might not be. But it's hard to dismiss Snapchat as being valueless when clearly millions of users are using it every single day.

Yeah, Snapchat is much more than a new way to send dick pics to unsuspecting girls. I use it more than SMS these days for legitimate communication with friends. Not the kind of serious communication which requires precision, but the informal type of chitchat you have with people when you hang out. People are underestimating the concept, some form of picture-based communication is around to stay. But I can't say that it'll be Snapchat which is the end of the line, and I do think they will have trouble monetizing.

I've never used it. Is there not a network effect, like Facebook, where leaving is costly "because all my friends use Snapchat"? This switching cost is what ultimately allows social networks to place ads without people jumping ship.

Possibly, but the ease of moving between networks with a common hub (Facebook integration, probably) seems to make the user base fairly fluid.

People said pretty much the exact same thing about Facebook.

Look how that turned out.

People said pretty much the exact same thing about MySpace. Look how that turned out.

You're right and this is the actual measured risk taken by VC in this case. It's a straight forward bet: if the horse they are better on (snapchat) is given enough of an opportunity (money) to implement far better than any potential competitor without that opporunity, then Snapchat can become a Facebook.

The key differentiator between Snapchat and other competitors is that Snapchat has millions of dollars to throw at problems which, if implemented well, will give them considerable product differentiation through access to the best talent and marketing.

It's a high risk gamble - welcome to VC capital - but it's the business VC is in.

MySpace sold in 2005 for $580MM. In 2007 they had $550MM in revenue, and in 2008, $900MM.

I know you were being snarky, but those numbers are pretty solid. Probably not the best counterexample.

Snapchat has the same demographic, but it's now much larger and their users are spending way more time in the app.

"Toys are not really as innocent as they look. Toys and games are preludes to serious ideas.”