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Snapchat, the company behind the app that made disappearing photos cool, is in talks with Chinese investors about an investment that would value the company at $10 billion, Bloomberg News is reporting.
That number, if you didn't catch it the first time, is a one followed by 10 zeros. Coincidentally, $0 is the exact amount of revenue this company has generated in its existence, as far as we know. Welcome to the tech industry.
According to Bloomberg, the group of investors includes Alibaba, the mega-success Internet company that's essentially the Chinese version of Amazon. These guys aren't dumb. The reason Snapchat or any other company without a way of making money raises funding is that investors expect them to be super-profitable someday.
A Snapchat spokesperson declined to comment on the valuation when reached by email.
Brushing off early, big-dollar offers is a large part of how Facebook became Facebook and Google became Google. Coincidentally, both of those companies reportedly tried to buy Snapchat for $3 billion and $4 billion, respectively. Snapchat is said to have turned down both offers.
It's hard to reconcile what money means to regular folk -- who spend 9 a.m. to 5 p.m. collecting it to feed and bathe themselves -- with what money means in Silicon Valley. Burger King and Western Union, which don't get to breathe the air under California's tech bubble, must sell hamburgers or process wire transfers to justify their own $10 billion valuations.
Even in Silicon Valley terms, $10 billion is a crazy big number. Airbnb and Dropbox are also valued at $10 billion, based on their most recent rounds of funding this year. Small difference between those two and Snapchat: They have revenue, and Snapchat doesn't.
After enduring mockery for turning down billions to hold onto his little disappearing-photo app, Snapchat's 24-year-old CEO Evan Spiegel suddenly looks like the smartest guy in the room. The only thing we can mock him about now are the misogynistic emails from his fraternity days in college.
Could he be building a new Facebook or Google? Maybe. But there's another possible fate. In 2010, Groupon's Andrew Mason turned down a $6 billion overture from Google. Today, Mason, who has since been fired from Groupon, is a self-employed musician.