Hate to re-hash the Innovator's Dilemma here, but this makes me judge big media companies less harshly. With Facebook, we have a company that is roughly just a decade old, and yet instead of organically creating a service that is well within their capability and talent, they find it easier just to acquire.
Just a decade or two ago, newspapers also had this kind of buying power and tendency to acquire rather than create...the New York Times bought About.com for $400M in 2005, and then sold it last year for $300M (in cash).
I was never a big user of About.com, but the way its layout didn't change much over the years, and how it seemed to be built on a not-very-flexible CMS, makes me think that if instead, the NYT in 2003-2005 (when it had even more money to spend) just had an in-house team of technologists and a budget of $20-40M a year, could've built a much-better info source, and one that would've, by now, been as dominant as About.com, but with the quality of NYT-in-general.
I know Facebook's clone, Poke, ended up being a failure...but it can't be just because the engineers and thinkers who work at FB are, on average, worse than the SnapChat inventors. How much management and political baggage did it have? (I'm assuming that the cost to build Poke was also under $1 billion...I hope)
Well I'd argue that it might be political baggage.
Is SnapChat's product really worthless? I mean, what it offers -- the ability to casually and anonymously (...or not) send selfies and other private missives -- is clearly valuable to people. And if Facebook buys it just to shut it down, won't people just eventually flock to another service?
Or, worse, won't people stop using a FB-owned-and-operated SnapChat precisely because it is owned by FB, and thus has even less of an illusory sense of privacy? And similarly, any FB-managed service has that lack of illusory privacy and casualness...so what does FB accomplish here? The two or so years it takes before people flock to some other non-FB service?
To Facebook, yes. Facebook managed to throw together a Snapchat clone (Poke) in a couple of weeks. There is no IP, no technology worth acquiring, nothing that couldn't be done in house at very low cost.
What Facebook doesn't have is the brand. I suppose you could argue SnapcChat's product is the brand. That's what's valuable. Personally, I think it's a foolish play. As Facebook know well, there's no guarantee SnapChat users won't flock to another service in a few years (let me rephrase that: SnapChat users will flock to another service). And SnapChat currently has no business model to speak of in terms of per-user revenue.
SnapChat's product is not worthless, it just doesn't comprise much of the value of the company. People don't use SnapChat because of the product itself, they use it because of the brand and popularity among their friends.
Think about what an exact clone of SnapChat with no users or brand equity would be worth. Probably negative value to most of us, without distribution resources. It would be of some value to Facebook, but getting people to change behavior and gel around a new product is hard, even for Facebook.
So yes, the value of SnapChat, and most consumer companies, is not in the product itself.
Just a decade or two ago, newspapers also had this kind of buying power and tendency to acquire rather than create...the New York Times bought About.com for $400M in 2005, and then sold it last year for $300M (in cash).
I was never a big user of About.com, but the way its layout didn't change much over the years, and how it seemed to be built on a not-very-flexible CMS, makes me think that if instead, the NYT in 2003-2005 (when it had even more money to spend) just had an in-house team of technologists and a budget of $20-40M a year, could've built a much-better info source, and one that would've, by now, been as dominant as About.com, but with the quality of NYT-in-general.
http://mediadecoder.blogs.nytimes.com/2012/09/24/times-compl...
I know Facebook's clone, Poke, ended up being a failure...but it can't be just because the engineers and thinkers who work at FB are, on average, worse than the SnapChat inventors. How much management and political baggage did it have? (I'm assuming that the cost to build Poke was also under $1 billion...I hope)