Snapchat: the app losing money seeking to raise $3.9b
For a place filled with the very smartest of people, Silicon Valley is a really stupid place.
Let's take Snap, the company behind the app Snapchat that on Friday announced it would launch on the stock market.
And before we get bogged down in details, yes Snap is based in Los Angeles rather than Silicon Valley - but given the market it is in we're lumping it in with its San Francisco-or-bust neighbours.
The plan is to raise $3.9 billion and, after the float, the company will be worth about $26 billion to $34 billion.
I've got nothing against Snapchat but, not being in the 15-25 age group, I've got nothing particularly for it either. The filters are a bit of fun but it's not an app I use every day - or even every month.
It has its fans, particularly in that young demographic. Specifically, it has 158 million people who use it daily. And, aside from being a popular tool for teenagers, it does a much better job than Facebook in making sure the news it spreads is not fake.
Here's the reason Snapchat is flawed: it is yet another app that doesn't make any money. Actually, it's losing money by the bucketload and, even if you were to dress that bucket up with a vomiting rainbow filter, that is still an ugly look.
The Snap float will make a few rich people very, very rich, from the co-founder Evan Spiegel (yep, Miranda Kerr's fiance) to early investors like US-based Aussie Jeremy Liew, who Forbes estimates is set to turn his original $634,000 investment into $2.75 billion.
But when you announce you're about to go public you also have to go public with quite a few details and the documents Snap released last week highlight the madness of an era where having users is often seen as more important than having a sustainable business model.
The good news is that, unlike some popular apps and social networks, Snap has a revenue stream that brought in about $523 million in the last year. The bad news is despite that it still lost more than $654 million.
Then there is this statement, written in black and white, in documents submitted on its public offering: "We have incurred operating losses in the past, expect to incur operating losses in the future and may never achieve or maintain profitability."
And this: "We face significant competition that we anticipate will continue to intensify. If we are not able to maintain or improve our market share, our business could suffer."
Yes, Snapchat has 158 million daily users but Snap's own figures show that growth has slowed significantly since Instagram launched Stories, a clone of one of Snapchat's best features.
It's all about perception when it comes to the tech world and in going public Snap is hoping it is perceived as not the app that is increasingly like Instagram but as something else.
The first sentence of the overview in Snap's documents sums it up: "Snap is a camera company".
So, if you perceive that an app on your phone that relies on the camera that is built into your smartphone is actually a camera, then maybe you can perceive of Snap being a good investment, just as Jeremy Liew did when he tracked down the then undergraduate Evan Spiegel when he heard a friend's teenage daughter say everyone at school was using Snapchat.
Three years ago, when Spiegel turned down an offer from Facebook to buy Snapchat for $3.92 billion, I thought he was mad. How many billions does anyone need?
Now that the company is going to be worth about eight times that, maybe that's the answer.
In the world of smartphone apps, there are plenty of very smart ideas. It's just the maths that leaves me stumped.