Snapchat--newly infused with a $60 million round of funding--is hiring engineers, bolstering its server space, and adding fresh perspective to its board. The company is valued at $800 million.
In short: Snapchat, a scrappy 17-person Los Angeles company behind an app for sending vanishing photos and text, is growing up. So why can't our ideas of what the company does--and does very well--step up out of the gutter?
That's easy enough to answer for anyone who's sent a disappearing image with something silly or profane drawn on it to a friend. It's funny. And maybe it's even a little addictive.
But if you think it's absurd that a company that just simplifies sending lewd or absurd self-destructing photos is valued at $800 million, you're completely correct. But that's not what Snapchat does best--nor is it what caused the app to take off initially, according to sources who study and observe its use.
In 2011, when Stanford grads Evan Spiegel and Bobby Murphy launched Snapchat, user-adoption was slow, but students at a few California grade schools began downloading it as a very convenient work-around for communicating. Firstly, it allowed them to send messages, in photos and writing, away from the eyes of parents and teachers (but, heck, this secrecy is the same reason Snapchat is allegedly blowing up on Wall Street). Second, it works over Wi-Fi, so sending messages doesn't deplete the family's data plan, as does texting. Third, the app works on devices that aren't smartphones--so teens who don't yet have phones could also join the messaging fun.
"One reason it's become so popular among younger teens is you can use snapchat with an iPod touch," says Jake Katz, the general manager at YPulse, a youth-market-research company. "Kids who don't have cell phones or data plans can use it."
A New York Times overview story about Snapchat contained a telling nugget about how the app's use spread--starting with a Southern California high school.
Mr. Spiegel and Mr. Murphy shared an updated version for the iPhone with about 20 friends in September 2011. A few weeks in, they started seeing an influx of new users, paired with unusual spikes in activity, peaking between 8 a.m. and 3 p.m.
It turned out the activity was centered around a high school in Orange County. Mr. Spiegel's mother had told his cousin, who was a student at the school, about the app, which then spread throughout the school.
Other high school students in Southern California picked it up, with the number of daily active users climbing from 3,000 to 30,000 in a month in early 2012.
Gene Marks, the owner of a small-business in Philadelphia (and a columnist for both Inc. and The New York Times), is also the father of three recently graduated high-school seniors, who began using Snapchat their junior year of school.
"It's free, it's a simple way to communicate, and it avoids the data plans," Marks says. "My kids abuse it all the time, though." He says they used it throughout the school day, even though cell-phone use was banned during class. He attributes the app's popularity not only to the data-use avoidance, but also to the changing nature of communiations amongst teens.
"Historically, everybody complains about how much their kids text. The second complaint was: 'they are not even using full words anymore!' Communication is getting shorter and shorter," Marks says. "Snapchat takes it further--there need not even be words."
Katz has another theory about Snapchat's sustained popularity amongst the coming-of-age-one-click-at-a-time set.
"It's like beta testing yourself, pressure-testing your forming identity in real time."
--Jake Katz, Ypulse
"You can get feedback from friends without leaving a trace," he says. "It's not embarrassing--but it's equally rewarding as uploading something to Facebook. It's like beta testing yourself, pressure-testing your forming identity in real time."
Consider Snapchat not Instagram-with-vanishing images, but rather like What's App--the hyper-popular messaging app--with selfies. Lots and lots of selfies.
In April, Spiegel boasted moving upward of 150 million images through the Snapchat servers on a daily basis. That was a three-fold increase from the previous quarter. And growth is continuing: Today it's up to 200 million images daily. The company's announcement of new funding from Institutional Venture Partners, General Catalyst Partners, and SV Angel, among others, brings its total funding to $75 million.
Yes, that's an incredible amount of money for a company without a plan to monetize and whose primary service disappears without a trace after a few seconds. Investors aren't fazed. IVP partner Dennis Phelps wrote in a blog post that his firm was impressed by Snapchat's hold on a young demographic, but also noted: "It's no secret that Snapchat has yet to turn on its monetization engine."
The future of Snapchat, if we look to its new line of business, might be less ephemeral. It is moving into the "Post Millennial" demographic, with a new product announced Saturday, called SnapKidz. While Snapchat is limited in use to teens 13 and older, SnapKidz is designed for toddlers and up--and allows photos, captioning, drawing--and for these compositions to be saved by parents rather than sent off into the ether.