Evan Spiegel, the 24-year old co-founder and CEO of Snapchat, famously turned down a $3 billion offer for his company this year when Google Inc (NASDAQ:GOOGL) (NASDAQ:GOOG) came knocking. While many, including myself, doubted the wisdom of this decision at the time it’s turning out he may have been correct in doing so.
Snapchat: First revenue stream
The Street largely values the company at $10 billion as venture firms such as Kleiner Perkins Caufield & Byers continue to invest and even Yahoo! Inc. (NASDAQ:YHOO) has committed funds to keep the company in money. But to warrant that valuation, the company needs revenue and Spiegel revealed at the Vanity Fair New Establishment Summit in San Francisco, that untargeted ads are coming “soon.”
The ads will appear with the Snapchat Stories part of the application, but unlike Facebook Inc (NASDAQ:FB) will be more random than targeted.
Top value fund managers are ready for the small cap bear market to be done
During the bull market, small caps haven't been performing well, but some believe that could be about to change. Breach Inlet Founder and Portfolio Manager Chris Colvin and Gradient Investments President Michael Binger both expect small caps to take off. Q1 2020 hedge fund letters, conferences and more However, not everyone is convinced. BTIG strategist Read More
“We’re cutting through a lot of the new technology stuff around ads to sort of the core of it, which I think has always been telling a story that leaves people with a new feeling,” Spiegel recently told Katie Couric in an interview. “They’re not fancy. You just look at it if you want to look at it, and you don’t if you don’t.”
In its three year existence this will be the first revenue stream for the startup which provides self-deleting messaging to its users.
Taco Bell and Grubhub, who already use Snapchat to offer promotions will be among the first to advertise with the app.
Our Story and the Hong Kong Protests
Spiegel also spoke to the company’s desire to help groups of people in the same location or attending the same even communicate following the success of its Our Story feature that grew in popularity during the World Cup and continued into the college football season.
“More people are watching college football on Snapchat than they are on television,” Spiegel said.
The young CEO also defended the company’s choice to not create and “Our Story” feature for the recent protests in Hong Kong after “a pretty big internal debate”
“One of my pet peeves over time has been the technology industry has tried to sell counterculture, sell the revolution, and we have been really resistant to doing that,” Spiegel said. “We didn’t feel like pushing these photos and videos out would turn that attention into action that would be helpful in Hong Kong.”
Which should probably be read as we really didn’t want to get banned in China. Either way, ads are on the way.