Rich Tales: Meet the millionaires behind Snapchat, who don’t need Zuckerberg to be filthy rich
Monday, October 28, 2013/
Facebook. Twitter. LinkedIn. The big three have made their founders very, very wealthy. And they’ve made plenty of other entrepreneurs wealthy too.
For most up-and-coming tech founders these days, the path to riches is through acquisition. And the big three have been willing to play that game.
But it doesn’t always work.
Last week, the Wall Street Journal revealed that Facebook founder Mark Zuckerberg was willing to pay more than $1 billion to buy up-and-coming social network Snapchat, which he believes is a competitive threat to Facebook.
That’s more than he paid for Instagram. But Snapchat’s founders turned him down.
Snapchat cofounder and CEO Evan Spiegel is just 22. The other founder, Bobbi Murphy, is 24.
They’ve pocked millions from their funding rounds. According to Valley Wag, they offloaded $20 million worth of personal stock in the company in June as part of a $60 million funding round. And that’s not counting their ‘paper wealth’ – that tied up in their ownership of Snapchat, whose valuation keeps rising.
Point being, they don’t need Zuckerberg to be millionaires.
Snapchat isn’t yet well-known enough that everyone’s heard of it. But since its founding in September 2011, it’s been a large and growing deal among the younger users of social media.
It’s essentially a messaging service with a difference.
Snapchat allows users to take short videos of their life, and send them on to another person. The twist is that after being viewed once, these videos disappear.
That’s made Snapchat controversial. It’s the favourite network of those sending sexually explicit videos, and has been criticised for not truly deleting the videos of its users (they are stored on people’s phones as well as its servers, and can be retrieved with relatively little tech know-how).
But Snapchat has grown strongly. While it isn’t believed to be profitable yet, in September, the service reported that it was processing some 350 million “snaps,” or messages, per day. That’s up from up from 200 million in June.
It’s also mulling another $US200 million funding round, according to the Wall Street Journal, that values the company at $US3-4 billion.
Is the company destined for greatness, or is this the high point? Its younger demographic, who are perceived to quickly move on to the next thing, and limited functionality have made many sceptical. As has the fact that its founders are already cashing out.
Regardless of how the network pans out 12 months from now, in going big early, Snapchat’s founders have earned themselves a handy little fortune right out of college.
It isn’t a bad use of their early 20s.