Last week the messaging service Snapchat turned down a $3 billion offer from Facebook. Many viewed both the offer amount and the fact that it was turned down as crazy considering that all content sent through Snapchat disappears forever after 1 – 10 seconds making it incredibly difficult to monetize the service.
According to Business Insider however, an impressive 46% of the 758 million pictures shared each day can be attributed to the two year old Stanford University start up. Considering Facebook has another 46%, along with the 7% from Instagram which they acquired in 2012 for a cool $1 billion, this latest investment would effectively give Mark Zuckerberg and co a clear monopoly.
This begs the question, is having monopoly of a market with next to no means of monetizing a feasible investment? Having any kind of a monopoly is a no brainer yet unless there is a dollar value attached at the end of the line Facebook together with their Instagram purchase will be investing $4 billion into one of the most expensive hobby projects of all time.
So are we in a second true tech bubble?
Facebook just offered to buy SnapChat for $3 BILLION DOLLARS. I double-dog dare you to tell me we're not in a bubble.
— Peter Shankman (@petershankman) November 13, 2013
It’s a topic which has been thrown around time and time again following the first dot com bubble of the late 90’s. Seeing numerous web giants come out virtually unscathed and thriving throughout the Global Financial Crisis gives a certain amount of credibility to the value of social networks.
On the other hand a bubble by its nature continues to inflate to extreme levels before it unexpectedly bursts. Whilst the market today is very different than it was in 1999 the sheer magnitude of many of evaluations for these digital services with no clear path to monetary return outstripping manufacturing giants that have been in business for decades simply defies logic.
Forbes.com put together a rather handy list of $1 billion plus tech industry acquisitions, declines, bungles and successes.
So do you believe we are in a tech bubble? We would love to hear your perspective so please leave your thoughts in the comments section below.