Ever since the dot com bubble in the late 90s, the tech scene hasn’t given up its taste for oversized valuations and IPOs. Snapchat is the latest company to hop on board. The social media startup allows users to send pictures and videos to friends that disappear after an amount of time specified by the sender.

CEO and co-founder Evan Spiegel became famous when he turned down an acquisition offer by Facebook in 2013 to the tune of $3 billion. At the time, he was called "foolish" and "arrogant." But since, he’s built the app into a worthy competitor in the social media space.

$15 billion valuation

At a recent Re/code conference, Spiegel announced that his company is planning an IPO. Without giving any details, he simply said that he wasn’t planning on fielding any acquisition offers, preferring to keep Snapchat independent.

"It’s more fun that way," he said.

In February, the company was seeking to raise close to $500 million in funding, which would value the company around $19 billion. Then the company received some funding from Alibaba, among others, in March, which valued the company at $15 billion.

So back to the oversized valuations issue, how does a company that generates little to no revenue — and certainly no profit — snag such a high valuation? Like other tech firms, it’s all in the future, at least the speculated one.

Snapchat is unlike any other social network in the industry. Rather than letting users polish their photos and lives (a la Instagram filters), Snapchat is simply about having fun. It’s about making a funny video and sending it out to friends and not worrying about it staying on the Internet forever. It’s spontaneous, raw, uncut and authentic.

Additionally, there’s no popularity contest with Snapchat. Users aren’t throwing out pictures and videos in an attempt to get the most likes or comments. There are no political discussions, no arguments about religion and no trolls to deal with. All said, it’s remarkably refreshing.

Snapchat is for the young — most users are between the ages of 13 and 25 — and brands are fighting to gain access to influencing those young minds. The company has yet to nail down a revenue-building strategy (it killed its original Brand Stories ad platform in April), so that may be concerning to investors. But it has so far been successful with its new Discover tool, which allows media partners, such as National Geographic, Vice, Comedy Central and People magazine to offer video content to users.

Additionally, more than 40 million people tuned in to watch the Coachella music festival live in April, all on Snapchat.

How does this affect Facebook and Twitter?

Facebook will likely remain at the top of the social media food chain for a while. And Mark Zuckerberg probably knew Snapchat’s potential back in 2013, which is why he tried to snap it up. But as Snapchat gets the funding it needs to invest in its product and ad strategy, both Facebook and Twitter should be on their guard.

The fact that Snapchat’s user base is so young is a major advantage. Facebook, who has seen a major decline in its young user base, has Instagram to compete. But even Instagram can’t compete with the spontaneity of Snapchat. Instagram also doesn’t have the capability to live stream events or have content partners.

As for Twitter, Snapchat’s live streaming of Coachella shows that Periscope has a worthy competitor. Snapchat has 100 million daily active users, which is growing exponentially, while Twitter is slowly losing traction in its user base.

Snapchat also has two things Facebook and Twitter don’t: It’s 100% mobile and it’s incredibly simple; both of these are exactly what younger users want. There’s no worry that the company will use their data or force them to accept changes to their timeline. And they can do everything from their phone.

Conclusion

The Snapchat IPO will certainly be an interesting one. Is it overpriced? Likely. Spiegel himself believes that the tech bubble is going to burst, though he plans to take advantage of the bubble while he can. But Snapchat’s business model and sharing platform is just what teenagers want and an IPO is just what Snapchat needs to build out its product better and nail down an ad strategy to better monetize it.