How Snapchat became a multibillion dollar enterprise without turning a profit

Back in 2008, Evan Spiegel met Reggie Brown, during the freshman year. The same year when they joined together the Kappa Sigma fraternity house of Stanford. There they met Bobby Murphy.

In the spring of 2011 Reggie had this idea – how cool would that be – if the photos he was sending to a girl would soon disappear. That is how in 2011 the idea behind Snapchat was born. The three young men put together an app which at the time it was called Pictaboo.

By the end of the summer, the app only had 127 users! The name was changed in Snapchat in the fall of 2011. However, the app soon started to get media coverage, and through word of mouth gained traction.

In less than a year, by the spring of 2012, Snapchat had 100,000 users. The first investment arrived in April 2012, when a venture capital firm made its first seed investment by valuing the company at $4.25 million.

By the spring of 2013 more than 60 million snaps were sent each day.

The incredible thing about this story is that Mark Zuckerberg is reported to have offered $3 billion to acquire Snapchat, although at the time the company didn’t turn a dollar in revenue.