This, plus the fact that benchmark is one of the major sharehold of snapchat, and the main shareholder of zenly, plus the fact that snapchat is currently having a not-that-good user growth, and that the share is tanking...

All of this makes me wonder what kind of financial trick is under that deal. Any proficient VC that could explain what could be going on here ?

EDIT: the stats are 4 millions users not two. But that's still 70$ per download .

I mean FB paid $1b for Instagram's 30m users. $33/user

Ok so... a much better deal then?

Instagram was financially a steal for FB, in retrospect. And no, you can't just say "they paid this much for download, that is dumb". There is a lot of nuance, for example:

- Does the company need it to survive or succeed?

- Can the acquiring company better monetize or grow the asset?

- Are the growth trends exponential, such that a huge amount of other people may soon be using the product?

- Is there some strategic advantage to the team - or product category expertise?

- Is the product easily defensible? (e.g., strong network effects)

I can't speak to this particular acquisition, but there are a number of examples where heavily "overpaying" may actually be a steal in the long term (and of course, the opposite).

A user. This app had 2 million downloads.

Trajectory matters more. Valuations are forward-looking.

2 million downloads as of September 2016: https://techcrunch.com/2016/09/26/zenly-raises-225-million-f...

Sounds like users are mostly teens or younger too. ::shrug::