How Does The Snapchat IPO Make Any Sense?

The article is by Mike Wade, Professor at the top-ranked IMD business school in Lausanne, Switzerland and Director of the Digital Business Transformation Center, an IMD and Cisco initiative.

The shares of Snap will start to trade on the US markets today. The IPO price of $17 per share values the company at about $24B. Based on interest in the shares (they were ten times over-subscribed), the value of the shares, and the company, are likely to rise substantially during the day.

Does this make any sense?

On the ‘yes’ side, the price per regular user is in line with recent deals. Snapchat has about 300 million regular monthly users, about half of whom interact with the app on a daily basis. Thus, at $25B, that’s about $100 per regular user. Microsoft paid a similar price for LinkedIn last year. Facebook paid a little less per active user for WhatsApp in 2014, but it was in the same range. Unilever paid substantially more per user of Dollar Shave Club in 2016. Of course, all users are not alike, and Snapchat is extremely popular with the 13-24 crowd, and thus attractive to many advertisers. Plus, its base in North America and Europe gives it plenty of room for global expansion.

The ‘no’ side also has some strong points. When evaluated on traditional financial metrics, such as revenue (about $500m) and profit (are you joking?), the company shouldn’t be valued anything close to where it is. Plus, growth rates appear to be slowing. Competitors, like Facebook with its copycat Instagram Stories, Google, We Chat, and others, are one imitation away from stealing Snapchat’s notoriously fickle and disloyal youth audience. More disturbingly, Snapchat’s main competitors have other lines of profitable business that they can use to subsidize their attacks on Snapchat. By contrast, Snapchat, at least today, is a one-trick pony.

My biggest concern, however, is with the service itself. People use Snapchat because it is disposable – send it and it disappears. It operates with the attention span of today’s youth, i.e. none at all. Snapchat is popular largely because it is simple and fast – a quick social hit. Users don’t need to scroll though masses of irrelevant updates and holiday pics to get to the really interesting stuff. This makes the service fun to use, but it is a disaster for advertisers. People don’t go to Snapchat to search for information (like Google) to find a job (like LinkedIn), to deeply engage with friends (like Facebook), or to buy stuff (like Amazon and Alibaba). Its medium, much like Twitter, is inherently poorly designed to support advertising, and beyond this, there are no obvious sources of revenue or profit.

Would I invest in Snapchat? That depends. If I was looking for a satisfying quick hit (like I might do when receiving a Snap), then yes. If I were thinking about anything more than a few months, then no.

10 Top Things in Tech This Week

Busy is the way a majority of the world is living nowadays. If you ended up missing up on your tech updates this week due to the busy life that you're living, here we're to bail you out and give you all the things you must know that happened in the tech sector this week.

1) Microsoft Joined Linux, Exactly 15 Years After Calling it a ‘Cancer’

Yes, this happened. A news that caused a major shock in the tech industry all around the world, tech giant Microsoft ended up joining forces with its once archenemy Linux. The news is particularly shocking because in the year 2001, Microsoft’s previous CEO Steve Ballmer Ballmer called Linux a cancer. He said, “Linux is cancer that attaches itself in an intellectual property sense to everything it touches.” But, now it seems, Microsoft has come a long way from this, under the leadership of its new CEO Satya Nadella.

2) Imperva Introduced an Anti-Mirai Tool That Makes Your IoT Device Hack Proof

Considering the havoc that Mirai, the malware, was causing, an anti-Mirai tool is a necessity that every IoT device owner was looking for since long. For the unaware, Mirai has be responsible for single-handedly causing one of the worst distributed denial of service (DDoS) cyberattacks that the world had experienced in the last few years, and it has now spread and infected internet-connected devices in over 177 countries all around the world.

Seeing this, Imperva decided to come to the rescue of IoT device owners and developed a way through which they could easily come to know if their IoT devices were vulnerable to malware like Mirai. The USP of the tool is, that you don't have to physically buy or install anything to use it — all that you have to do is to visit the scanner website on the IoT device that you want to check. The scanner meticulously analyses the IP address and smart products details used for internet access.

3) Happy Finish Launches AI Technology Prototype Ahead of Crowdfunding

This week saw Happy Finish, the company known for its VR content and global production studio, announcing the launch of its Artificial Intelligence (AI) technology, Shoegazer.

The AI, which is currently in the proof of concept (PoC) stage for the fashion and retail industry, makes use of image recognition and transfer learning technologies to identify brands and models of trainers in real-time, that too with a remarkable 95% accuracy. In order to support the full launch of Shoegazer, the company, which is renowned for its work in virtual and augmented reality and boasts of an impressive portfolio of commercial VR and AR experiences, is also gearing up to embark on a capital fundraising round for a whopping £395,000.

4) Google Teams Up With Indian Govt. To Solve India’s Infamous Toilet Problem

India's toilet problem is famous all around the world. According to data, about 60 percent of the total population in the country still defecate and urinate in the open. Not only is this figure really sad for the country with the second largest population on Earth, but it is also leading to serious sanitation issues in the country.

While the governments over the years have been trying to tackle this problem in their own way, the Modi government has decided to take the help of tech giant Google to solve this problem. India’s Ministry of Urban Development (MoUD) and Google have joined hands to give people in India a toilet serach or toilet locator facility, that will give them the power of searching for toilets within the Google Maps by typing relevant words in English or in their native language, like “toilet,” “lavatory,” “swachhata” and “shulabh.”

5) WhatsApp Rolls Out Video-Calling Feature

Finally, one of the most-used messaging app gave its users a feature they have been vying for a quite a long time-the power of video-calling. Starting now, people will no longer have to have a separate app for instant messaging and a separate app for video calling because Facebook owned WhatsApp will now be able to provide us the best of both worlds. However, However, so far the update has been only rolled out to Windows Phone users.

6) Snapchat’s Snap Inc Files for IPO

Starting its journey in 2012, Snapchat is being termed as one of the fastest growing company that the world has seen in the recent times. And now, Snap Inc, which is Snapchat’s parent company, has filed for an initial public offering (IPO).

According to reports, the company could go public by March next year, and will be valued at $20-$25 billion. This will make it one of the largest technology IPO since the Chinese e-commerce major Alibaba Group Holding Ltd’s went public two years ago valued at a whopping $170.9 billion.

7) Demonetisation Effect: Google India helps Indians find an ATM nearby

In order to help Indians who are now on the streets constantly looking for a functional ATM, a scenario which is almost similar to the ones being witnessed a few months ago during the peak of Pokémon Go popularity, tech giant Google has decided to help the common man in their this search.

Google India’s homepage now has a ‘Find an ATM near you’ link, which when clicked takes one to Google Maps with a list of ATMs marked their surrounding areas.

8) Apple Contemplating to Integrate Augmented Reality into iPhone Camera App

According to a report in the BusinessInsider, Apple’s much famous iPhone's camera app could soon come with Augmented Reality integration, which allow users to point their phone at a real-world object and have it be recognized. Interestingly, the AR mode in the app could also allow app to recognise faces and add filters to it, something very similar to what Snapchat currently does. In 2015, Apple had acquired FaceShift, a company that was working on such a technology.

Tim Cook's passion for virtual reality and augmented reality, and how much potential he sees in the these two emerging computer platforms isn't unknown. In an interview earlier in the year, he had said, "There's virtual reality and there's augmented reality - both of these are incredibly interesting. But my own view is that augmented reality is the larger of the two, probably by far."

9) US Researchers Develop an e-device that can Monitor Heart, Recognise Speech

Researchers from the University of Colorado-Boulder and Northwestern University in the US have successfully developed a tiny, soft and wearable acoustic sensor that has the ability to measure vibrations in the human body. In addition to this, it even allows monitoring of human heart health as well as recognises speech. The device, which weighs less than one-hundredth of an ounce, and resembles a band-aid, can be mounted on almost any surface of the human body.

10) Intel pledges $250 million for autonomous driving tech

Considering that autonomous driving was declared as one of the top 5 Hottest Emerging Technologies of the year 2016 by the World Economic Forum, it comes as no surprise that Intel Capital has pledged to invest $250 million in autonomous driving over the next two years. The announcement was made by company’s CEO, Brian Krzanich, at the recent held Los Angeles Auto Show‘s Automobility event.

With 8 Billion Daily Video Views ,Snapchat competes Facebook Video

If your business doesn't have a video presence on Snapchat, now might be a good time to get into the game.

Snapchat has hit 8 billion video views per day, said CEO Evan Spiegel, putting the ephemeral messaging sharing app on par with competitor Facebook, which hit that 8-billion figure back in November.

In a keynote speech at the Morgan Stanley Technology, Media and Telecom Conference in San Francisco this week, Spiegel said that the Snapchat has over 100 million daily visitors who log an average of 30 minutes on the app per day. Spiegel also said that 41 percent of the 18- to 34-year-olds in the United States are on the app every day, with more than half of new users joining the app over 25.

As of last month, the company was valued at $16 billion. February also saw Snapchat make several moves with an emphasis on advertising. The company made a deal with Viacom that allows the media company to sell ads on Snapchat's behalf and it started using Nielsen Digital Ad Ratings to measure how many users the service is reaching through its mobile advertisements.