[babakian]

What Snapchat has is millions of users who have formed the habit of opening the app every day and using it to communicate, sending 350 million* snaps a day. You can go ahead and make clones of Snapchat (or Facebook or Twitter), but building a clone does not guarantee that you will get the number users that Snapchat (or Facebook or Twitter) have. The investors are betting that the folks at Snapchat will experiment to find ways to extract money from some small subset of Snapchat's users (e.g. let's say Snapchat has 350 million users and they find a way to extract $10 a year from 1% of their users, then that's $35 million a year). This is the bet that the investors of Snapchat are making. It's a risky bet, but they're OK with that. They're used to making risky bets. Most of their bets don't pan out, but the ones that do...well, you're smart, you get the picture.

* This number was taken from the article.

[Edited to fix typos.]

[Guest98130]

That's a steal. Buying at 4bn and earning 35m a year, it'll be paid off in a short 114 years. After then, it'll be smooth sailing.

[babakian]

Ha! I should have used larger made up numbers! How about $100/yr from 5% of their users? Anyhow, you know that the investors are betting that the numbers will grow.

My main point is, Snapchat has a lot of users who have formed the habit of opening the app and sending snaps, totaling hundreds of millions of snaps/day. Simply cloning the app in no way means that you can generate those kinds of numbers. The numbers are stellar, and the investors seem to think so as well.