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.”