America, in many ways, is nothing if not a corporate entity. It has some eccentricities, no doubt; guns, a weird president, an angry, not-taking-it-lying-down press.
But corporate myth making is perhaps its greatest strength – it’s how Apple shifts all those smartphones at twice the price it might have to without the cult of Steve Jobs, and Microsoft sold all those PCs – by creating the illusion that twiddling your thumbs and sending emails to the person sat opposite you was the best way to run a business.
So kudos to Evan Spiegel and “Snap” then – it looks like he’s done it again. Who could ever have known, like Spiegel seemed to, that adding cartoon bunny ears to a selfie and only letting your friends see it for 10 seconds was a game-changer?
Let’s feast on some of the juicy details of the deal. Mr Spiegel himself, who is 26, will own a post-IPO stake in the company of $5.5bn, if the company hits its projected $25 billion valuation, and he’ll take home a cool $750m bonus if it is reached, it’s being reported.
Incredibly, new shareholders will not be given voting rights, meaning the management alone will take all the big decisions about company direction, product releases, branding, director appointments and mergers and acquisitions. Even if they get fired or leave. That doesn’t see like a big, scary responsibility at all ; )
“Reinventing the camera represents our greatest opportunity to improve the way people live and communicate”, says Snap in their IPO, before immediately qualifying this statement as investors reach for the sick bucket with a pledge to turn the business into a glorified advertising platform, just like Facebook.
Snapchat is actually loss making, shedding $515m in 2016, but its revenue is increasing – witness the seven-fold increase in revenues in Q4 2016 compared to the previous year.
It has 158m monthly active users; Facebook has 1.2 billion, and Instagram 600m. Ouch! Its revenue per user in the US is $1.05 – Facebook’s is $19.81.
Now, could it be the case that Snapchat, like Facebook, is kind of one gigantic self-fulfilling prophecy?
Remember, when Facebook did its IPO the naysayers said it could never make money, that the ad model wouldn’t work. It did, and then some. But Facebook’s supremacy appears to be based as much on destructive business practices as constructive ones – and Snapchat know all about that.
Instagram stories is a rip-off of a Snapchat idea. So are Facebook’s disappearing messages. With so much financial clout, Facebook can simply overwhelm the competition, in the same way Microsoft once did, or copy it, or buy it.
They couldn’t buy Snapchat – Spiegel turned down a $3bn offer for the company from Zuckerberg a while back. But it feels like some of the sheen that surrounded the tech start-up scene in Silicon Valley is beginning to fade.
The cool Californian company with the cartoon messages and the hipster vibes is about to become a giant corporate – and that means, in terms of cultural capital, Snapchat has most likely already shot its bolt creatively. Time for the Evan Spiegel foundation, the mansion in Hawaii, and the presidential bid?
Don’t rule it out. Anyone for some fake news?