Can you really make REAL revenue with a consumer mobile app?

<p>And what is that "some fashion"? That was my question.</p>

<p>Plenty of mobile apps scaled and still never made a dime. If they hadn't gotten purchased, what was their plan?</p>

I generally agree with you in the sense that these apps will need to raise large rounds of funding just to stay in business because they don't generate any revenue. Their plan is to be bought by a large company like Facebook or Google.

Look at Snapchat; they might regret turning down Facebook's offer to purchase them from over $3 billion, since Facebook purchased WhatsApp instead and Snapchat raised another round which increased their valuation even more.

Now whoever purchases them will have to pay more than what they're valued at, which limits the amount of companies that can do that, since there are only a handful that have that kind of money and would be interested in a company like Snapchat; and at the moment the only likely one is Google since they're desperate to compete with Facebook on social.

Anyways, my point is that these VC backed mobile apps that are designed to grow fast but not generate revenue are really a gamble, since they all depend on being purchased by a large company rather than generate serious revenue on their own. VCs actually tell the founders of these companies not to try to generate revenues since that will lower their valuation.

A company with 100+ million users that has no revenue but is growing fast has great potential, so they're valued high, but a company that with 100+ million users that has 5 million in revenue but is growing it's user base fast has demonstrated that their business model is a failure, so their valuation will lower as a result. VCs play those kinds of games.

SnapChat will not regret jack. Founders took money off the table in their last funding round. Either way they've made bank. They may not have made Zuckerberg-style bank but more than you or I would see in our lifetimes.

Speak for yourself. But I think they will regret it anyway, it's an ego thing.

I'm the guy you're replying to. I believe their most recent round of funding was around 500 million or so. Even if they took the whole round of funding off the table, which obviously isn't the case, that still wouldn't equal to 3 billion.

I think they made a mistake because even if they get purchased for more than $3 billion now, the investors will get almost all of it, since each funding round they lose a percentage of their company. Each co-founder is probably down to around 10% equity now, since I believe there are like 3 co-founders and they've already taken several rounds of funding.

Let's say they sell for $10 billion, which might not happen; that would mean less than $1 billion for each founder once other factors are considered like VC money being out first then they get their percentage of equity. So, the founders would get something like $600 million each in such a scenerio, which again is still less than $3 billion.

The longer they wait, the more rounds of funding they'll have to raise and the more diluted their stock becomes. It's not good selling your company for $10 billion if you only own 0.1% of it. The VCs will be happy though because they'll get much more money.