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Comment by zrail | Hacker News Reader

Serious question: how can a company be profitable without any revenue? Or do they have non-obvious (to someone who doesn't use the service) revenue?

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I don't think they are running any ads yet but they could easily make money. A couple ideas:

-Ads that quickly flash for 2 seconds before the 8 second photo snap. "Transformers 5 in theaters tomorrow." Kids have very short attention spans as it is -- this is all you need these days. No more 30 second spots. You have to see it to see your friend's snap, no skipping or blocking.

-Celebrity endorsement snaps. You see a new snap appear from "selena91" or whatever. Open it and it's a quick video selfie of Selena Gomez telling you to check out her new movie/album.

OK, so it's not clear what the best way to make profits while retaining users is.

EDIT: To clarify, I mean that if the service is dirt cheap, it'll also be dirt cheap for competitors to pick up where Snapchat left off.

craigslist is a perfect counterexample. I'm not sure if this will be true for snapchat, but network effects probably dominate.

The first thing is ... the most annoying thing i've heard from a while. I don't even use snapchat..

2 second ads on Snapchat would be a lot less annoying than the 30 second ads you get before short news videos on most news sites nowadays..

You have to wait anyways, this is just putting a picture as part of the countdown, at least that's my understanding (not a SC user either).

The countdown refers to the amount of time you can view the snap (video/photo) before it is inaccessible. Snaps are immediately viewable (given a fast connection).

Well, then that advertising idea seems like a bad one. Thanks for the update!

How it's different that 90% of the "skip after X secs" ads on video sites, news portals and the like?

The advertiser KNOWS the whole ad will be displayed, vs creating a 30s ad that most users don't see most of because they skip after Xs.

The ad is over almost before the user realizes it's started.

No more conditioning viewers to instantly enter the "how and when can I skip this" mindset. (Tangent: none of the full-window "here's an ad while the page loads" ads work on me; I'm conditioned to instantly hit "skip" and make a point of not noticing the ad itself).

Knowing the ad will be very short, viewers are more likely to not attempt to skip it because it will be done (or very nearly so) before they can do so.

If a user is going to see a given ad frequently, best to get it over with and not turn it into a harrowing experience of repetitive tedium.

There's probably a worthy study of ad effectiveness between the initial awareness of the ad and the cognitive turn against it. Get it over with before the desire to skip begins, or a "I hate this ad" arises.

Just make sure the viewers don't explode from the density & pace of content.

They should show the ad after the 8 seconds, still a mostly captive audience. less annoying

Sure, there are lots of ways for them to make money. But they aren't (yet).

Blipverts? Just 20 minutes into the future...

There is always the standard way to make money: sell all the user data to advertisers and anyone else who wants it. Want a list of people in city X that chat more than Y times a day with influential network of Z people? It's all for sale, just no one brags about it.

I'm not actually sure how valuable that is. What am I supposed to do with a list of supposedly influential names and cell phone numbers? Match them to addresses and send them direct mail? Sounds like a lot of work.

Correlate it. You've got phone numbers. That's a strong identifier. Phone/Power/Gas company will sell your their name and address. Other sites need a phone number and might have more details as well. There are a ton of big data brokers out there that do just this.

Sure, I get that. It just doesn't seem like you would get rich that way.

Think about it. If I know you, everything about you, I can sell directly to you. Not just things that are vaguely intersting to you, but to the most primal want you have. The key is getting an accurate image of who you are, tapping into the "I cant resist" part of your individual monkey brain. We all have somethings that we don't think rationally about,and if someone can map you down to you that point, then they have you. Your patterns on social media leak that data. The more sources, the more accurate they can construct "you."

The next step is biometrics. The kinect is a good example. Im betting that is looking to measure pupil dilation, heart rate, etc. if its not already. Looking at an ad and your heartrate goes up and pupils change? Time for these similar ones, ever deeper and deeper into you.

If I can do that, I can sell that info to a vender with an actual product, making myself very wealthy just moving data around. Its even better if Im also that vendor, like in microsofts case with games. Then I cut out the middle man and vertically integrate myself to the moon.

>Not just things that are vaguely intersting to you, but to the most primal want you have

And that's a good thing actually

Why sell the data when you can sell targeted ads to the desired demographic? Why give away the cash cow of actual people-to-properties key-value maps?

Who needs profit?

This is the God damn age of creating value out of nothing! Snapchat is not worth $3 billion, it's been 'valued' at $3 billion but it is intrinsically worthless.

Another reason this kid should've taken the money and ran like hell. In another 12 months the kiddies are going to be on to the next coolest social media trend and they'll be left in the dust.

Maybe, maybe not. I'm sure people were saying the same about Facebook a few years ago. The fact that they can still easily choose who receives their "updates" makes for a longer lasting product in my opinion. The "My mom is on Facebook!" phenomenon has led to a dropoff in adolescent usage. Snapchat is a supplement/replacement for texting in my experience with younger family members.

Yeah, I get that part. I'm just reacting to the idea in a headline, that just because something is VC funded and "dirt cheap" to keep running makes it profitable.

Not generating revenues doesn't mean worthless. They have a lot of virtual assets (emails etc).

Of course $3 billion is completely ridiculous, but it's a little unfair to say they are worthless.

Any asset is worth what someone will pay for it. FB were willing to pay that (not sure if they would be still?), so that's what it was worth.

I wonder why this base of economics is so hard to get for so many people.

Snapchat's done campaigns with HBO's GIRLS and even Taco Bell IIRC. Could just be experiments, though.

IHOP is using it too, though it doesn't indicate what kind of deal they have with Snapchat- https://twitter.com/IHOP/status/416298001079226368

Easy. The founder/founders have to be from the right social circle. Then you're worth Billions with a B. Profit? Revenue? Who cares!!

I was just thinking that myself. They haven't done a single thing that I've seen so far that makes them any money

I think it's "eventual profitability", as in the author explains how SnapChat's infrastructure costs are essentially nothing, so getting from some millions of users to profitability should be extremely simplistic without the highly redundant data store needs.

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