Snapchat CEO’s leaked memo on survival
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In this sense they are following a similar path as Bebo, where I worked before they were acquired by AOL. Launch viral product to teens, blow up huge, score huge business deals, and then growth stagnates because it turns out the original vision only encompassed a product, not an entire platform. Bebo ended up selling to AOL right before it became clear the entire business model was failing thanks to Facebook. I saw a comment below about 2019 being the year that Snap is acquired. I could very much see that happening.
The only thing that would turn things around is if Spiegel can pull another rabbit out of his hat and launch a category-defining product somewhere. Augmented Reality could be where they do it. They did fail miserably with Spectacles, their first take on smartglasses, but again, give credit to them for having the balls to invest in hardware and ship a product. That said, the fact that they shipped a v2 of Spectacles that didn't fix any of the core problems with the original isn't a good sign.
Still, augmented reality is going to be the future of computing when it merges with consumer wearables. It's early days in this market. Every Big Tech company is racing to launch the iPhone of smartglasses. Snap has managed to be the first to launch consumer glasses with a camera. If they can pull their sh*t together and ship something that is actually useful and doesn't look ridiculous, they could still emerge as a dominant player.
Google tried but clearly market maturity is not there yet. Doubt it will be 2019. We need to squeeze more into chips before a regular-size glasses will be available with AR built in.
Also personally I doubt it will be iPhone of AR. Too many companies are working on it and probably will come up to light at the similar time. It will be more like cruise control that so many car makers basically invented at the same time.
All signs point to Apple launching their glasses in 2019 or maybe 2020 if they slip. I don’t have insider info at Apple but if you look at the rate they are hoovering up AR companies it’s clear they’re prepping for a big move. If they don’t launch by 2019 somebody else will steal their thunder with the first consumer smartglasses that don’t totally suck, most likely a fast moving startup with a killer niche product.
So yeah, although the innovation never progressed beyond a killer feature for some users, it was still... innovative.
What are the core problems you are talking about? Personally the biggest issue with me in v1 was how flashy they looked, v2 got rid of that and now it's a great device. I made some really good footage with it. People are missing a really good experience not having it imo.
1) the camera is still way too conspicuous
2) only post to Snapchat
Field of View: 105°
F-stop: f 2.2
Photos: 1642 x 1642 px
Videos: 1216 x 1216 px at 60 fps
I remember buying stock in the company, and the same week, their big update rolling out, and quite literally burying my friends and their stories underneath the "overcrowded pile of clickbait" mentioned in the article. That, I believe, is where Snap really went wrong, and what drove 3 million users away from its platform.
When you combine Instagram's own story implementation with the fact that Snap's focus seems to be mainly on Discover from this point, it seems unlikely to me that they'll ever regain the interest of people who abandoned it back in February.
It will be interesting to see which changes they roll out in the months to come, but honestly, as long as the Discover page has even less meaningful content than a Taboola "Content you May Like" block, I can't foresee it being a real draw in for new users.
Literally the same week, 90% of them stopped posting, and it never recovered. Now it's a ghost town.
People who followed friends got hit, people who follow celebrities got hit, I just don't get it what was on their mind.
That's hard to believe but during my one year of usage before I gave up, I had an issue with playing videos. Videos were always laggy, they would play for two seconds and then freeze until the end. They did not fix that in one year of updates.
And that's a core feature of the app, it's unbelievably buggy, it would be the same as Facebook freezing when you like a post or Youtube freezing when switching videos.
On "Instagram Insights" you can see: Interactions of the last 7 days, profile visits, email clicks, reach, impressions.
Also in-depth demographics by your audience as well: city/country breakdown, age range, age range by gender, gender percentage, followers per hour and per day.
And get similar statistics / demographics for all images and stories you post.
If you were paying someone to promote content - these help justify payments made for content.
Compare to snap with the stat of: "I have 10k follows" and that's it.
Marketers want to know they are getting value for money, so need these to help justify paying someone for promotions/ads.
eg. http://musemarketinggroup.ca/wp-content/uploads/2017/08/insi...
Does Snapchat actually collect all this information about its users? If yes, when it's such an unbelievable miss.
I started on Facebook at 12 years old when it first became popular, I’ve gone through many platforms but dropped them all and I’ve been using only Snapchat for over 4 years now and it seems to have the perfect level of privacy. It also doesn’t feed as much into the whole “look at how awesome my life is compared to yours” trap of facebookish platforms, at least the way my friends use it.
Once a company gets to this level, they need to recognize the role that luck played into their original product and design. They hit a resonance with people, and it was probably more luck and timing than anything else. Changes to that core product need to be treated as an experiment and conducted as such. Show some discipline.
You can still innovate but those ideas should be made to stand on their own, grow on their own. Just because you have control over a platform with millions of users and can make changes doesn’t automatically mean you can do no wrong at this point. It just means you will have more time and resources before those mistakes take you out of the game completely.
He should be punished for his mistakes by the board installing some experienced adult supervision for a while until he shows he can fix his current mess (reverse negative growth) and innovate in at least an additional major product category tangential to Snap. If he can’t do that in the next 24 months, he should step down for the good of the company.
Admitting part of their success was luck is tantamount to admitting "I went from nothing to a billionaire because the dice came up right."
I don't know many people who would be comfortable truly accepting that. And even fewer who could do so AND be the type of driven person necessary. All while everyone around you is looking to you for answers.
This is because the introduction of such a data driven mentality meant the only people empowered to suggest decisions or experiments or approve the work were all in marketing. Because they were basically deciding what workload they wanted and of course you won’t put more on your plate if you don’t have to.
This isn’t to say it’s about data vs. vision. The original success is usually created in large part due to a healthy collaboration between the visionaries, the engineers, and whoever else is in the mix. Once you take one part of the team out of the equation and tend too heavily towards a particular bias then you might well have lost the secret to the initial success.
You can just as easily A/B your company to death.
A/B usual represents an incremental comparison from one situation to another, and it helps 'walk down the feature path' ... but when you need to change paths, A/B testing is not going to help, this is where a bit of great PM talent is going to work.
Moreover, the more subtle the change, or more the basis' are not very comparable (two different apps), the less A/B has value.
For example: Snap was considered 'too complicated' for many users, they needed to make it simpler. But by doing so, they may alienate a bunch of current users, with the objective of making the app more amenable to the masses. This is a serious strategic issue. They might have gone about it somewhat differently but it's a difficult thing to do in any case, and they had to make changes.
The existential issue for Snap's problems is not this app change, it's the fact that all of Facebook's products are trying to eat them. Instagram, WhatsApp, Messenger etc ... these are the real threats.
If Evan can't show that he has the discipline to lead a company at this stage of it's life in the public market then the board should absolutely give him the boot in the next 24 months.
I think the narrative of "product visionary" has been spun a bit too hard by the tech media and it likely has gotten to his head.
He also took a $500mm bonus for successfully executing the IPO at a time when the company lost over $700mm in 2017. That's not a great look - but I digress.
So part of that $700mm loss was his bonus? Meaning if he hadn't taken a bonus the loss would "only" be $200mm?
He just received a massive bonus in $ value. It was massive because it was lots of Snapchat stock back when it was expensive.
Although it’s quite normal to sell such stock award as soon as they vest, in this case it looks bad.
Snap posted a $2.2B loss in Q1 of 2017, it's first quarter as a public company. A lot of that was one-time stock payout to various employees, including a massive bonus to Spiegel which was 3% of Snap worth roughly ~$550mm at the time. If you take out all the one time stock compensation from that quarter, the loss comes out to $188mm.
Here's a Recode article with some sources: https://www.recode.net/2017/5/10/15617740/snapchat-two-billi...
The $700mm loss figure I initially stated for 2017 is likely the loss figure with the one-time stock expenses deducted: https://investor.snap.com/news-releases/2018/02-06-2018-2116...
This stock award made Evan Spiegel the highest paid CEO in America in 2017, that's the kicker.
Edit, it's true the co-founders were in a dorm room and came up with an idea for girls to securely send nudes. There is a reason it is commonly referred to as snachchat.
It has, and not only for this guy. Like the GP says, success in these things is more luck than anything else, like "vision".
Very funny, Snapchat has two classes of stock and he owns enough of the kind that matters that no one can oust him. I looked through the S-1 when they were going public and decided owning the shares they were selling to the public was the equivalent of a "board observer" seat. You are free to watch him run his company, but it is still his company
https://www.recode.net/2017/2/21/14670314/snap-ipo-stock-vot...
Why do people buy common shares which give them no voting rights as a shareholder?
Sure while company is minting money (or debt and marketshare) you can find a greater fool to offload your shares.
However when things turn the Zynga way, what recourse do you have with these no vote shares?
At least Bond holders and Preferred Shareholders have certain rights.
PS Then there are the Chinese stocks such as BABA where you do not even own the assets of the main company but I digress..
Also why are there two kind of shares?
For many decades, the New York Stock Exchange refused to list stocks that had multiple classes of stock, except for a few companies such as Ford Motor that were grandfathered in. But they no longer have enough clout to make that stick.
Google and Facebook got away with it because they were highly profitable before the IPO. Snap was not like that.[1] They went public while still losing money, and with way too high a valuation. It's been all downhill since the IPO.
[1] https://www.forbes.com/sites/robertberger/2017/03/07/snapcha...
So basically, we'll see it with the companies that are profitable at the time of their ipo's, but we won't see it with the companies that are unprofitable, (and maybe even losing money), at the time of their ipo's.
Sounds to me like the future Facebooks and Googles of the world will continue to set up structures like these. Before anyone jumps down my throat, I'm not complaining. I know, it's the founder's company. I get that. I'm free not to invest if I don't like the terms. I just wanted to point out that HN User "Animats'" conclusion that founders will choose this structure less and less is flawed. It really does seem to me that this structure is just going to be more and more of a reality in the future for any of the startups that are actually worth buying into. (ie - Any of the startups that actually make money.)
In the end, the founders of the winning companies don't want their money or power diluted.
Because you believe in the people who have the voting rights?
Let's get real here: for those of us buying stock with voting rights, we don't really have voting rights. The proportion we have is so vanishingly small it's the same as not having voting rights in the first place.
A bicameral congress most certainly does not disqualify the entire system from being considered a democracy.
There are 700,000 people in Washington DC. They have zero senators. There are over 3 million people in Puerto Rico. They also have zero senators.
Because they trust the founders to protect the long-term interests of the company more than activist investors trying to maximize short-term profit?
I had to experience it and I think it's actually one of the greatest dangers in startups.
Most of Apple's biggest successes were had by coming up with something completely new and novel, not by ignoring user feedback when iterating on an existing product.
It was an iterative improvement on the Blackberry.
One could say the same about Snapchat's astronomical success in its early days...
Many possible changes have positive effects short term, but negative or even disastrous effects long term. A/B tests won't ever run long enough to discover these long term costs. When A/B facts displace common sense instead of it complementing it, you can a/b yourself into your own grave.
It's generally assumed that with advertising, more time == more money, but even that's somewhat questionable.
In a B2B context, time spent per day cut in half sounds like a huge productivity boost. Of course, it could also be that you've made it so difficult to use now that people do a little bit, export to CSV and then use some other tool. But the data won't tell you that.
Perfectly stated. "Pivoting from something shiny to an actual business plan" should be SV CEO's prime skill.
Perhaps Snapchat as it exists now would've taken off just the same, but because the new version represents such a jarring departure from the old, it flops.
A better example of this might be Microsoft keeping the Start Menu for over 20 years. While some cheered for its demise, most users decried the change at the time.
That said, the problems with Snapchat as it exists today run far deeper than merely disrupting people's existing habits, so it's not the best example. Personally I think the app is now poorly-engineered trash. Nonetheless, the notion is an interesting one to at least consider, if only in an abstract sense.
That's a strong lesson I've learned in life. Successful people _rarely_ know the precise reasons that they are successful, almost exactly for this reason.
You may be aware of many of the components of your success, but you won't be aware of all of them and it will be impossible for you to rank their importance correctly.
Keep this in mind when successful people talk about their success and offer suggestions on how to replicate it.
It is however still a merit that somebody raises it. It's probably the biggest Elephant in the room that there ever was. Especially if you are born in the third-world slums paying rent to the slumlord.
Reminiscent of Digg v4.
I genuinely believe the best path forward for Snapchat is to completely reset back to pre-redesign as a way of making amends to all the users that left, and then re-designing again from there with their new focus.
Everything that made Snapchat unique is something easily emulated in a myriad of other apps. When you strip away the interface, the only unique part of it was the network/aggregator-effect they have. However, they were much smaller than Instagram and as a result would be fighting an uphill battle with a product that already has the network and could easily duplicate the features.
The problem with Snap (as you pointed out) is that the network characteristics are similar to Facebook's or Instagram's....aka friends and family....aka people in your phone contacts. Facebook's fundamental value is that they were one of the first ones to capture the graph that already existed in your phone and brought it online at scale. However, the actual network they built isn't as novel or as difficult to build as something like Twitter which is a graph that existed nowhere else before.
LinkedIn is similar to Facebook in that the business contacts probably already existed in your phone or on a bunch of business cards. But because we don't want our professional lives and our personal lives to share the same spaces, LinkedIn was able to capture the professional opportunity by bringing business contacts online.
What does this all have to do with Snap? Well Snap has the unfortunate position of having similar network characteristics to Facebook's while also being in a similar social space albeit heavily skewed younger (I consider Instagram to be in a roughly similar social space). Snap probably felt like the demographic skew alone would be enough to balance out this weak position but I suspect they're finding out quickly that it is not since Instagram is proving to be a thriving space for young people too.
On the other hand, networks like Twitter, LinkedIn, and Nextdoor are all either unique networks underneath the primary interface or they share different social spaces that people usually don't want mixed. Anyone can make an interface but it's incredibly hard to grow a network in a particular social space. The latter almost always makes for a stronger moat. Snap needs to figure out how to make progress on the latter because I think many of their large problems stem from not having enough of a moat at the network level.
Snapchat, at least conceptually to me, is for more private, candid, or even meaningless conversations to close friends. I have very little of a filter on snapchat - and messages and snaps disappearing after a day certainly helps.
Whereas with Instagram, etc, it's about 'showing your best'. There's a layer of artificialness to it.
Unfortunately, literally 90% of my friends left Snapchat after the redesign. This blame can solely and directly be attributed to a brazen CEO.
In all seriousness, I understand your point, but what you’re referring to is a feature of a messaging/social product, not necessarily a product itself.
In Snapchat’ case, everything that makes it unique is easily duplicated by Instagram, outside of the people on it.
However, your comment on Instagram is actually about the marketing of the product, not necessarily the product itself.
Basically, if you take away the branding and the interface and distill down Instagram and Snapchat into the core functionality, there is little difference outside the network of users.
I would love a more legit chat feature. It’s great that you can keep messages around for longer now. A safer UI that prevented accidentally adding the wrong friend to an image share would be awesome, as would as unsends.
Unfortunate that their main revenue source seems to be really, really bad clickbait stories.
Changing the design language of our product and improving our marketing and communications around Snapchat will help users understand our value
Aging-up our community in core markets will also help the media, advertisers, and Wall Street understand Snapchat.
To be honest, this seems like wishful thinking to me. It's going to very hard for them to regain momentum in their current demographic. It's going to be close to impossible to create a network effect outside of their current demographic.
So... Snap basically wants to be Facebook?
Adults, messaging, developing world — Facebook is already enormously entrenched in the overlap of those markets thanks to Messenger and WhatsApp. FB has also shown the ability to clone Snap’s product innovations.
I have a feeling 2019 is the year when Snap is acquired. The market cap is already below $10 billion.
Facebook is not about regularly messaging your best friends, it is about messaging/stalking people you knew from school onwards up to now, including workmates, parents and other people you don't message important things to, such as plans for tonight.
Snap are pretending here that their 'besties' market isn't already consumed by WhatsApp!, which it is, so Facebook have already eaten their lunch there. They don't actually acknowledge their 'secret sauce' in this memo, which was the instantly deleting messages that appeal to teens.
I thought he hated developing markets?
Delicious irony.
https://variety.com/2017/biz/news/snapchat-evan-spiegel-only...
Now that I’m closing in on my 30th birthday, I realize I had it all wrong. I can use snapchat, I just don’t understand why I would want to use it.
I’m curious what Snapchat will do to try and entice people like me into using it. From where I sit, I’m having a very hard time imagining what they could possibly do.
It was walled version of Twitter with a focus on photo and video.
What made it really interesting for me is that, because it uses your phone book to gather your contacts, you end up with a somewhat different circle to who you might have on Facebook. There were some people I hadn't spoken to for years, or people who were in my friends circle that I didn't talk to much, that became some of my most-interacted with people on Snapchat.
I wish Google would pay attention to this. Especially Gmail. It's just unacceptably slow and there is just no excuse.
I assumed every one of the top apps/websites did this automatically, but I guess I was wrong.
The reality is that despite how seemingly old the internet is, we're still in the relatively early stages. There aren't that many companies globally building content systems at scale and working through the challenges of what that means - at scale. Those skills in an organization are extraordinary valuable as old media starts to crumble and information infrastructure on the internet becomes the new fundamental fabric of society - moreso than even today.
I know that sounds a bit grandoise but that's the thinking behind the big bets behind companies like this. If Snap can just get some experienced, less impulsive leadership in place - they can still build an extremely valuable global media property. 180mm daily actives is no joke.
As you can tell, I'm skeptical of Snap in it's current state of management but I'm bullish on social media overall.
Instagram Stories seem like they might've had a big impact on the popularity of the app as well.
Facebook's strategy of just buying what works and creating a media conglomerate for advertisers seems very smart to the casual observer.
If you're lucky, you might score a long shot at a moving target from very far away, but it will be hard to score a second one.
You have Facebook, which might not be as cool in all countries with younger users, and has had a lot of controversy surrounding fake news, election influence, and privacy, but it's doing well.
You have Instagram, which is doing very well, was a great Facebook acquisition, helping their parent company even more.
You have Twitter, which seems to be struggling by, and is still very relevant.
Reddit is doing very well if you can even call it social meddia.
Apps like Yik Yak, Whisper, Snapchat, and such all seem to have been going downhill or are gone for some time now. But I think the players we have are here to stay.
And Nextdoor which is much younger but cemented itself with steady growth and a unique network.
I don't think any of these companies will have trouble making substantial money at scale for the foreseeable future.
Snap's problems are unique to Snap.
https://cheddar.com/videos/snap-ceo-evan-spiegel-company-mem...
[1] https://www.fanboy.co.nz/fanboy-cookiemonster.txt
[2] https://raw.githubusercontent.com/liamja/Prebake/master/obtr...
I literally do not understand what they can be spending that much money on, can anyone clue me in? It can't be on infra and bandwidth.
So that’s $150mm per quarter, as a minimum (if their usage doesn’t meet that amount they have to pay the difference).
They are paying something like $200mm on R&D/quarter, and over $100mm on advertising and administrative each.
Their “cost of revenues” (I’m not exactly sure what this means for them...I wonder if it is discounts offered to advertisers) is another $190mm.
So a few hundred million here and a few hundred million there adds up to a $350mm quarterly loss.
What’s interesting is their R&D expenses have dropped 20% from the year ago quarter, while their sales and marketing have increased substantially. That does not bode well for the future either in my opinion (although it’s easily arguable that even $200mm per quarter on R&D seems excesssive for Snap).
Edit: I quickly compared them to Twitter, which isn’t known as the most leanest of run companies in the first place, but Twitter’s R&D costs are $139mm/quarter compared to over $200mm for SNAP. Their administraative costs are $74mm/quarter, compared to over $100mm for SNAP. How is SNAP spending so much more money than Twitter, and clearly producing a fraction of the output?
Q1 2018 financials here: https://investor.snap.com/news-releases/2018/05-01-2018-2115...
Hmmmmmmmmmm. The Google Mail redesign comes to mind. Gmail has 1.4 billion users. (April 2018 figure, Gmail's Wikipedia page.)
Google management, if you're listening: the writing is on the wall. You have it there black and white: "The biggest mistake we made with our redesign was compromising our core product value of being the fastest"
In this comment I outline some reach goals for you:
https://news.ycombinator.com/item?id=17873576
(That comment is written in a wishful style, what I know you can do and what I imagine you can do.)
You can do it! Just hire the best. Put the best on that team. 1.2 billion users mean you can afford it. You can do it.
Do it. You can do it. I believe in you with all my heart.