Snapchat Turned Down $3 Billion in Cash From Facebook

On July 8, 2011, three Stanford students released an iPhone app called Picaboo. It let people send photos that disappeared after being viewed. Evan Spiegel, Bobby Murphy and Reggie Brown had built it over the summer at the Los Angeles home of Spiegel’s father. The name was already in use by another company, so in September 2011 the app was relaunched as Snapchat.

It spread quickly among teenagers. Fortune counted about 1,000 daily users in late 2011 and 100,000 by early 2012. In early 2013 the venture firm Benchmark led a $13.5 million investment that reportedly valued the startup at more than $70 million.

Facebook’s first move

Facebook had already tried to compete with its own disappearing-message app, Poke. Buying was the next option. Facebook had agreed to pay $1 billion for Instagram in April 2012, and it now made at least one offer for Snapchat.

On November 13, 2013, The Wall Street Journal reported that Snapchat had recently turned down an all-cash acquisition offer from Facebook of about $3 billion. According to Built In, that was triple an amount Facebook had reportedly offered earlier in the year. It would have been Facebook’s largest acquisition.

What Snapchat had, and did not have

Snapchat was two years old and had no revenue. What it had was growth. In September 2013 the company said users were sending 350 million snaps a day, up from 200 million in June. Facebook was interested, The Drum reported, because more of its own users were on smartphones, where messaging was central.

Spiegel was 23. The Journal reported that he was unlikely to consider any acquisition or investment until at least early 2014, because he hoped the number of users and messages would grow enough to justify a higher valuation. Other money was available: the Chinese internet company Tencent had offered to lead a $200 million investment that would value Snapchat at $4 billion. The New York Times, as summarized by eWeek, added other reasons: doubts about working under Mark Zuckerberg and a wish to keep the company in Los Angeles.

The cost of a co-founder

One cost of the early days arrived later. Reggie Brown, who said the disappearing-photo idea was his, was pushed out in 2011 and sued in 2013. Snapchat’s lawyers argued he had contributed nothing of value. In 2014 the company settled. Its 2017 IPO filing disclosed the total: $157.5 million, $50 million of it paid in 2014 and the rest in 2015.

2017: About $24 billion

Snap Inc. went public on March 2, 2017. It priced its shares at $17, raised $3.4 billion and was valued at about $24 billion, the largest valuation for a US tech IPO since Facebook in 2012, GeekWire reported. The shares closed their first day at $24.48. Revenue had risen from $58 million in 2015 to $404 million in 2016.

On paper, the refusal had paid off. The IPO valued Snap at about eight times Facebook’s 2013 offer. The money raised in the IPO alone was more than Facebook had offered for the whole company.

Growth without profit

The years since have been harder. In 2016 Instagram, owned by Facebook, launched its own version of Snapchat’s Stories format.

In 2025 Snap reported revenue of $5.9 billion, up 11%, and a net loss of $460.5 million, smaller than the $697.9 million loss of 2024. Daily active users reached 474 million in the fourth quarter. The company made a small profit, $45 million, in that quarter alone.

What the record shows

• Saying no was a bet on growth. Spiegel turned down cash for a company with no revenue because he expected its users to be worth more.
• The bet paid on paper. The IPO valued Snap at about eight times the offer, and the IPO raised more than Facebook had offered.
• Value is not profit. Eight years after the IPO, Snap still reported a full-year net loss.
• Early disputes get expensive. The co-founder who left in 2011 was paid $157.5 million.

Other offers in this archive were refused with very different results. Yahoo turned down the chance to buy Google, and Blockbuster passed on Netflix for $50 million. Facebook’s $1 billion purchase of Instagram went the other way: the founders sold.