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SnapChat’s founders sure have balls. What, you prefer, courage? Whatever you call it, we’re talking billions of dollars – billions, with an “s” – worth of belief in their product.

This realization comes as the WSJ reports today that the ephemeral photo messaging startup turned down an anything but ephemeral $3 billion acquisition offer from Facebook, which was itself an increase from its initial offer in the range of $1.2 billion. SnapChat is said to be in the process of raising another round of venture capital at a valuation as high as $4 billion, which will supposedly include strategic investors such as China’s Tencent.

The Twitter/blogosphere lit up with news of the spurned acquisition. “What were they thinking?” seemed to be the prevailing wisdom, as cries of “mind-blowingly reckless hubris” and “big mistake” came from all quarters. A few prominent digital pundits played devil’s advocate, however, calling it “not crazy” and even “logical.”

So which is it? Are Evan Spiegel and Bobby Murphy out of their minds for turning down a life altering payday or are they simply better at predicting the future than the rest of us, meaning they will ultimately be rewarded for their patience?

The answer boils down to your belief about whether the company can defy the odds and stay hot within the notoriously fickly teen and young adult demographic. Because that’s what this valuation is all about: teens. Facebook is losing its grip on young social users; SnapChat has them in spades.

The problem is that teens change their minds about what’s “cool” as often as adults change underwear. There’s every possibility that SnapChat’s popularity, like its exploding messages, could be gone as quickly as 3…2…1. And if SnapChat has ambitions beyond this young, cool demo, or heaven forbid monetizing, it will only accelerate the erosion of its coolness among its core teen audience. The company should remember that it’s this same fickleness that led teens to flee Facebook’s permanence and land in the arms of the low-pressure SnapChat.

The most compelling justification I read today is one of legacy. After all, Spiegel and Murphy already pocketed $10 million each in the most recent funding round and will presumably take even more off the table in the forthcoming financing. More millions may appear to be gravy at this point, but the idea of being the guys who invented something that transcended generations, and changed the way people communicate is more compelling.

It’s not just SnapChat’s founders who are making a big bet. It’s also the company’s early backers. Institutional Venture Partners, General Catalyst Partners, Benchmark, Lightspeed Venture Partners, and SV Angel each invested in the company at somewhere between $0 and an $800 million valuation and are all turning down a payday amounting to several times their initial investment. Any non-founding employees will also be missing out on a mini-windfall and will presumably look to grab a piece of any future secondary liquidity.

Back to that valuation. One major unknown in the calculation is the precise number of users on SnapChat. The company does not reveal these metrics, but the Guardian reports 5 million monthly active users and Forbes cites Pew data indicating that the number may be as high as 26 million. Regardless, SnapChat’s audience would appear to be just a few percent of Facebook’s total active user base and less than half the number that Instagram had when Facebook acquired it for $1 billion in 2012.

SnapChat bulls will argue that the key to the company’s current valuation isn’t users but its alleged eye-popping engagement metrics. The company’s few million (mostly) teen users are said to send 350 million messages daily, as of September, and spend far more time per day in the app than was ever the case with Facebook, Instagram, or any of its social predecessors.

No, SnapChat hasn’t monetized yet. But the the thinking goes that this engagement, even if balanced with the limited lifespan of each message, means major advertising opportunities. The company’s recently added “Stories” feature, which allows users to share a collection of daily moments, only extends this opportunity. Finally, one of the biggest things that SnapChat has going for it when it does choose to pitch advertisers is extreme demographic concentration.

I don’t buy the idea that SnapChat is a feature, not a company, and I’m not swayed by the fact the company hasn’t monetized. SnapChat is, I believe, a very valuable company. Today. The real question is whether it will be as valuable – specifically more valuable than Facebook’s $3 billion valuation offer or the $4 billion Series C valuation it’s reportedly commanding – in two years. Not even Spiegel and Murphy, 23-years and 25-olds respectively who are smack in the center of the company’s target audience, can predict whether SnapChat will stay cool with their generation.

I’ve had a number of conversations recently with people that I consider to be smart consumer Internet (and mobile) investors and entrepreneurs and asked each, which company would you rather own 10 percent of, SnapChat or Pinterest? – both of which rumored to be valued at nearly $4 billion. Not once has anyone chosen SnapChat, and I completely agree. It’s not that SnapChat isn’t valuable. It’s that teens are fickle. On the other hand, Pinterest’s audience skews toward soccer moms and scrapbooking grandmas, a far less flighty group. In a similar way, Facebook’s value exploded – both to its shareholders and its users – when it managed to amass multiple generations on its platform. With its scale and reach comes massive lock-in effect and switching cost.

Maybe adults just don’t understand SnapChat’s value – namely the “old people” that populate tech media and the VC firms not invested in the company. Fortune’s Dan Primack put it well, and proved that he’s not among this group, when he tweeted: “[The] disconnect is that many adults have been conditioned to view social networks as records of activity. Not as fleeting interaction.”

Teens may consider SnapChat cool because their parents don’t use it, but the company should think about whether this is also its biggest weakness. For Snapchat’s founders, they better hope that their spurning billions is more like Mark Zuckerberg turning down Yahoo’s $1 billion acquisition than Groupon’s Andrew Mason rejecting Google’s $6 billion offer.

[Image via dotcomplicated]