I recently read about a high school in California that invested a relatively small amount ($15,000) in Snapchat in 2012. After Snap IPOd this month, the high school sold two-third of its shares for around $24 million. In 2017, this obviously seems like a slam dunk investment, but I don’t think we can assess investing in Snapchat with this much foresight. As late as 2011 the company was still called Picaboo, its founders were fighting over equity and the order of their names on the technology’s patent, and Evan Spiegel was still attending college full-time.
What would you have looked for in 2012 that showed you Snapchat was a unicorn in the making?
It is no more likely that you will pick a unicorn than it is you will pick the right lottery numbers. However, there are lots of great companies that, although they are not unicorns, they do return 10x. Never try to pick an idea. Pick a functional team filled with great people. They always find their way to success.
Not me. I can be wrong without much angst, but 1) there is no proven model at any price, and 2) anything they do can be replicated easily by FB. This is like Groupon spurning a buyout by Google. http://www.investors.com/news/technology/snap-stock-snaps-as-underperform-rating-knocks-snapchat-market-size/
I would have researched for the market its need and its scope of growth.
There are 2 major elements for social media unicorns: being heard, and Metcalfe's Law.
The success of Web 2.0 is rooted in the dopamine hit that comes from the appearance of being heard and appreciated. Making good content is hard. Is the product able to get that rush of acceptance with less effort?
A good social media platform provides a strong incentive for acquaintances to join. The more acquaintances on a network, the more value there is in joining. As a result, non-users acquainted with a lot of users will see a lot of value in joining the network.