If you have been within five miles of the internet over the past few days, you must have heard that Snapchat, the mobile app that allows you to share temporary pictures that evaporate after a set time period, turned down a $3 billion offer form Facebook, and possibly a $4 billion offer from Google! Then the internet exploded!

“What are they nuts?” “That silly app is not worth even a tenth of that amount!” “They just dug their own grave!” And on and on. People laughed. People scratched their heads. People were genuinely confused wondering what the founders of Snapchat knew that they did not. The answer is the basic elements of the economic system. I am of course referring to supply and demand.

How much is a diamond worth? A lot, right? Well, I am no diamond expert but something tells me it is worth so much because it is rare. If there were diamonds that grew on trees, I have a hunch the value of diamonds would decrease. It really is very simple. If people need it and you have it, the more they need it and less other people have it, the more you can charge for that item.

How much is Snapchat worth? Well, apparently Facebook and Google think it is worth a lot. “But Snapchat has no revenue!” Apparently, there are other metrics of success besides plain old revenue. Like what? Like the fact that Snapchat is where it’s at. It is where teenagers are hanging out and it is where people are sharing photos at a rate that is set to surpass the Goliath Facebook any second now.  For context, 55m photos are shared a day on Instagram, and  350m on Facebook. The same 350m a day are shared on Snapchat, and 400m on Whatsapp, but that is another discussion.

The same people who are looking at Snapchat as just another stupid app are the same people who ridiculed the value of Instagram, Tumblr, and most recently, Twitter. It is not a question of how much Snapchat is worth, it is a question of how much it is worth to… (Insert tech giant that is being schooled by Snapchat on a daily basis)

When you buy a loaf of bread or a steak, do you ponder if the value of that item is really what the venue says it is or do you understand that the more we depend on those things, the more the value increases? You see, Zuck can’t have his main asset, pictures, stolen from him, not by Instagram and not even by Snapchat, where the pictures disappear. It is not about viewing those pictures later, it is about mind share, it is about eyeballs, and it is about Facebook owning our pictures whether on the web or on our mobile devices.

To be honest, I get why Facebook needs Snapchat. Google? Something tells me they want it because Facebook wants it and nothing else. Google has some seriously amazing photography tools across all its properties and Google’s user base is not going anywhere anytime soon.

Whatever the case may be, we can ponder why the two companies want Snapchat so badly from today till tomorrow, but the fact is, they do, which is all that matters. Will Snapchat eventually crash and burn like others did who turned down big offers (ahem Groupon) or will they flourish with the knowledge that they are in it for the long haul and no big flashy offer will distract them from their determination?

Before you answer that, just remember, Facebook turned down a billion dollar Yahoo offer and we all laughed. You were saying?