As many as 4.6 million users of Snapchat recently had their usernames and phone numbers hacked, and the company may be out big bucks as a result.
Like really big bucks. The security breach is bad news for founder Evan Spiegel and other investors in the so-called “sexting” app valued in the billions.
Snapchat, for those unfamiliar with it, allows users to send text messages, pictures, and videos that self-destruct just seconds after being received.
The whole company's hook is that messages can’t be stored on incoming phones or devices and are also erased from Snapchat servers immediately.
That means there’s no potentially incriminating or embarrassing evidence left behind anyone you know (or don't know) who's perusing your selfies or texts.
Spiegel and his Stanford fraternity buddies reportedly invented Snapchat as a way to securely “sext” co-eds with impunity but the app has since expanded.
According the company, Snapchat processed a staggering 350 million messages last September alone, up about six-fold from the prior February.
The leak included not the pics, texts and messages themselves but just usernames and phone numbers, the company says, but skepticism remains.
Last fall Spiegel reportedly turned down as much as $3 billion from Facebook and $4 billion from Google. Yes, he turned down billions with a B.
The basis of the offers was Snapchat’s coolness with the kids and potential for grown-ups, making it well worth that sum to the two giants he rejected.
But is Snapchat’s valuation and credibility in danger now if it's as vulnerable as it appears from a security perspective, and offers no anonymity?
Snapchat seems laid-back about the issue, issuing a snarky statement expressing gratitude for the individuals who brought the problems to their attention.
Yet if the company is this easily hacked by a group whose sole motivation seems to be embarrassing the company, what happens with a more nefarious attacker?
It doesn’t take much for an app or web phenom to lose its mojo. Time will tell if Evan Spiegel just passed on $4 billion for a company that just lost its reason to exist.