Posted by: Dr Pano Kroko Churchill | March 12, 2015

Money from the sky falling on startup snapping limbs

Alibaba invests $200 Mil in Snapchat a company that can’t even keep it’s privacy use up and running.

Jack Ma is a serious man but here he plays a game because he knowingly invests in a company whose whole Modus Operandi is built on a bogus premise of Privacy…

Yet it’s important to note that the Alibaba cash infusion deal values Snapchat at a whopping $15 Billion.

Talk about money growing on trees… in Cali

But maybe the money i actually growing in China and is from here where Jack Ma, Alibaba Group Holdings Chief, says that he is investing in Snapchat in a deal that values the messaging company at $15 billion, to capture the moment of growth.

But I say that he is a fool, because he fell victim to the latest scam of obscenely escalating valuations for one of technology startup worlds’ biggest losers.

Or he is a simpleton and a liar and is investing in Snapchat only as a benefit to the Chinese firewall censors to be able to capture that “market” for fishing in the murky water of “snapchat” for the gullible Chinese dissenters who are always on the lookout for a medium of somewhat safe and “private” communication to use. And maybe this signifies another major crackdown operation in the offing in Beijing’s halls of government…

And knowing Jack, I can vouch that he s neither of the above, so this transaction must be a coerced effort with some deeper significance for all concerned and for the guiltless public always seeking to find ways to express themselves and to communicate in private, at a time and an age where all of our communications are surveilled. Same as Snapchat is albeit it pretends to be otherwise.

Still for all practical purposes the Chinese e-commerce giant has invested $200 million in cash in Snapchat, according to people deeply involved in the transaction, as the deal values Snapchat at $15 billion — market time. And this is cash that the company sorely needs to keep on running.

That valuation marks a significant increase over it’s previous state of being valued at 4 Billion US when the last cash offer came from Google to buy this mirage of a company…

To see where this is going, it’s important to recall that Snapchat was voted most unreliable company…
On May 15, 2014, the Electronic Frontier Foundation (EFF) released their fourth annual “Who Has Your Back” report on companies’ customer privacy policies. Snapchat, along with AT&T and Comcast, were given the lowest ratings but Snapchat was the only company that earned only one star.

The six criteria the EFF used to rate technology companies are:
1)whether companies require a warrant in order to disclose any communications content generated through its service
2)whether companies inform users on government data requests
3)if companies publish transparency reports
4)if they fight for user’s privacy rights in legal disputes
5)if they publicly resist mass surveillance
6)if they publish law enforcement guidelines

The only category Snapchat earned a star in was the sixth, for publicly disclosing the ways in which they respond to government data demands. Snapchat spokesperson Mary Ritti told the Washington Post that “the very nature of Snapchat means that we often don’t have content to divulge” because the company deletes all content from its servers once all recipients have opened the Snap. But forensic researcher Richard Hickman has proved otherwise. He discovered that Snapchat photos, particularly on Android phones, aren’t deleted but merely hidden and can be retrieved with proper forensic software. They do not “disappear forever” as Snapchat had many users believing and may be passed down to unknown third parties without user consent. To this day, Snapchat still claims that Snaps are not stored unless they have not been viewed, in which case they remain on Snapchat servers for 30 days.
However, on October 2014, hackers got their hands on at least 100,000 supposedly deleted Snapchat images. The hack – being called “The Snappening” – reportedly rivals that of the iCloud breach that recently targeted celebrities and filled people’s screens with nude photos.

Business Financial Formation and Valuation background for the Company:
By October 2012, Snapchat had not made any revenue and Spiegel said at the time that the company was not open to being acquired.

By February 2013, Snapchat confirmed a US$13.5 million Series A funding round led by Benchmark Capital, which valued the company at between US$60 million and US$70 million. On June 24, 2013, the company’s blog welcomed IVP as the lead investor from the Series B financing round, in which General Catalyst, Benchmark Capital, Lightspeed Venture Partners and SV Angel also participated.

By mid-July 2013, a media report valued the company at US$860 million. On November 14, 2013, The Wall Street Journal reported that Facebook offered to acquire Snapchat for US$3 billion, but Spiegel declined the cash offer. According to Om Malik, Google then offered US$4 billion on November 15, 2013 to acquire the company, but Spiegel again declined. On December 11, 2013, Snapchat confirmed US$50 million in Series C funding from Coatue Management … and now Alibaba comes along and OPEN SESAME fat Chinese wallet arrives.

This is clearly like getting egg Foo Yong in your face, in Hong Kong, where Jack Ma’s investment arm resides.

Money falls from the sky and Snapchat is now a darling for an IPO while losing money and hemorrhaging cash daily.

Yours,

Pano

PS:

One can only surmise where this train of suspension of disbelief will ultimately lead…

Is it a train wreck destined to happen, an IPO made in heaven, a conspiracy convenience, or an investment Ponzi scheme ?

This remains to be seen.

However what is clear is that the full on globalization of Start Ups is upon us as I have predicted in our Global StartUp Fund; and it has taken root in the interchange between China and America far more firmly than anything else, we’ve seen before now.


Responses

  1. The full on globalization of Start Ups is upon us as I have predicted in our Global StartUp Fund and has taken root in the interchange between China and America far more firmly than anything else, we’ve seen before now.


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