And now we turn to a made in america success story with a twist. Imagine you're living with your parents when you have a great idea, an idea so good that facebook offers you billions in cold cash to... See More
And now we turn to a made in america success story with a twist. Imagine you're living with your parents when you have a great idea, an idea so good that facebook offers you billions in cold cash to buy it. How is it possible the two guys turned the money down? Linzie janis tells us. Reporter:23-year-old evan spiegel and 25-year-old bob murphy built snapchat out of a venice beach bungalow. Maxing out their credit cards to fund the business, spiegel is still living with his dad. Two years later, the stanford fraternity brothers are turning down three billion dollars in cash from facebook's mark zuckerberg. Even though their company makes no money. They're holding out for more money. Reporter: So what does snapchat have that facebook wants? Young people. If facebook wants to continue to grow they need to get everybody. Reporter: The idea for snapchat started when one of spiegel and murphy's friends sent a picture and later regretted it. Snapchat lets its users send instant photos and messages to friends, but unlike other social media apps, the messages self desruct. Disappearing within 10 seconds after they've been viewed. It's something some parents have complained encourages teens to send inappropriate photos. But the company argues young people are being smart. They don't want every photo and off the cuff remark to live indefinitely. Spiegel and murphy belief they've hit on something huge. If they are right they could end up better off like facebook, the company that's trying to buy them. It turned down a billion dollar offer from yahoo! And it's now worth more than $100 million. If they're wrong turning down $3 billion will likely be the worst decision they've ever made. Linzie janis. Abc news, new york.
This transcript has been automatically generated and may not be 100% accurate.