Snap lays off 20% of employees | Hacker News Reader

Snap lays off 20% of employees

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381 pointsno_wizard344 comments

Buried in the announcement is how Snap is shutting down Zenly and firing everyone who worked on it in Paris, France. Zenly is a location-based social application (think: you can see & connect with your friends on a map). Snap bought them in 2017 for a reported $250-350M when they had ~4M installs. Now Zenly is at 40M MAUs, growing strong as I heard from employees working there.

Zenly is (was?) popular in Japan, Southeast Asia, Eastern Europe and the Nordics. In Japan, it is head-on-head as the most used social app with Line.

I find it odd that Snap just shuts down an app that was so popular in regions that is hard to gain foothold for any social media team. They could have likely sold it or spun it out, but chose not do so.

It's also not like the app is a major cost to the company. Less than 100 people work on it across Snap, most based in Paris, France.

> They could have likely sold it or spun it out, but did not do so.

Doing either would have required de-acquiring the team that develops and runs it. Whereas I assume the whole point of acquiring Zenly was to acquihire those folks to work on Snap (and likely then lay off the now-redundant engineers previously working on Snap’s geo features.)

$300M is too much for an acquire unless they are super AI scientists who have know-how that's worth a few billion.

$30M - maybe. If they have 30 person team and they are really good.

I remember that deal and it stunk. It feels like one of those pilfering Private Equity deals where someone is getting payback for something or the other.

Divide that price by the # of users and the $300M can make sense...

They had 4M users, it's not enough unless it was growing hyperbolically, which it wasn't.

Or it was to kill off the competition intentionally. They may have seen Zenly as a major threat at some point.

Updated with how shutting down Zenly means firing the whole team. The Zenly engineers always worked on Zenly, and not on Snap. If the goal was to acquihire, they are letting their whole acquisition go.

It smells like a complete change in direction. I am just unsure why not sell an asset that seems pretty valuable, or spin out, keeping ownership stake.

Presumably they’re going to write off the cost of the acquisition for tax purposes. I suppose that doesn’t preclude selling the assets like the brand and the software, but since it looks like they’re in a hurry to reach profitability, the certainty of booking tens of millions of future tax offsets must have seemed appealing.

If you've never made any money - how much are you really thinking about taxes?

That’s the point: They’re clearly attempting a shift from growth to profitability. Those future profits look that much better to investors if they have (say) $50M in tax offsets already banked.

You know what looks better than $50M in tax offsets? $500M in cash

I don’t understand the point you’re making. Zenly could be readily sold for $500M?

There’s cost, time, and unknown returns in spinning it off.

And it would apparently give a geographically dominant 40 MAU to a competitor.

It’s an insult to users and team members for Snap to just shut it down, and it could become bad PR, but there’s a reasonable case to be made on near-term business strategy.

You don't actually know if it's valuable. Users = costs, they are only valuable if you can monetize somehow. Inability to develop a workable monetization strategy would lead to this sort of outcome.

Never heard of it which doesn’t seem like a particularly good thing for a social media app/product.

> Zenly is (was?) popular in Japan, Southeast Asia, Eastern Europe and the Nordics.

Would you clarify which of the above regions you're in? Personally I'm in the USA so I would not expect my not having heard of it to be in any way relevant.

I’m currently in Scandinavia and never heard of it

I’m in the US. If it’s only popular in a few regions and likely pulls very little ad revenue on its own then is it terribly surprising that they are shutting it down? Seems like a failed acquisition that they didn’t really do much with.

Was it profitable?

I don't see how those two ideas connect

> In Japan, it is head-on-head as the most used social app with Line.

How is that possible? A lot of people in Japan use Line (86M MAU in 2020). With 40M MAUs in the entire world, Zenly is much smaller than Line. Anecdotally, I've seen young people in Japan using Snap. Haven't seen any Zenly.

Exactly Line is like whatsapp and Zenly? Never heard any Japanese people mentions it or listed it along side their Line account

Apparently it was popular among middle & high schoolers back in 2018, but probably not among adults

https://twitter.com/livedoornews/status/1068834535838633986?...

right, also 2018 is already 4 years ago.

I was wondering about that, too. I straight up asked my students here in Japan (College, 1st year) what apps they couldn't live without, and it was almost completely YouTube, Line, and TikTok.

I've never even heard of Zenly... nor seen it in the wild.

“Class, today we are going to talk about how you can’t believe everything you read on the internet”.

I used Similiarweb.com to look up the top free social networking apps on Apple App Store in Japan:

- 1 LINE app

- 2 Discord

- 3 zenly

- 4 Mirrativ（ミラティブ）ゲーム配信のライブ配信アプリ

- 5 ＋メッセージ（プラスメッセージ）

- 6 Pairs(ペアーズ) 恋活・婚活のためのマッチングアプリ

- 7 Facebook

I think this is a ranking of new installs and not existing installs tho?

I’m from Southeast Asia, never heard of Zenly.

40M MAU globally is not head-to-head with Line (which way bigger), Line is also primarily a messaging app like Whatsapp, not sure if that commenter knows what they talking about

Whatever you think of it, there is probably good chance there was some reason for it. Companies rarely write off huge investment for no reason.

Just because you or I don't see it does not mean it does not exist. The owners are probably much better informed that we are.

More likely explanation is they did some kind of calculation and decided it is not worth it and very likely we will not get to know it.

I agree it probably made sense for Snap, but it is still a shame when a product people liked gets shut down when in a different context, their traction would have been considered a success.

   A: I don't understand why they did this. It makes no sense.
   B: Companies don't do things for no reason.
   A: What is the reason then?
   B: I don't know - most likely they did some sort of calculation.

FYI, this type of exchange is information-free.

Often it doesn't make sense. They need to cut, so they cut. They need to spend, so they spend. They need to hire, so they hire. Is this usually consistent? No. They acquire companies and later shut them down. They hire tons of people then fire them, then later have to hire back people and start up projects that duplicate what they bought but later killed and then realize that the competition is in that market so they start it up again, but in a worse way. They allocate time and money into major moonshot projects and internal efforts and later kill off those projects they invested tons of time and money into. Startups are sociopathic in many ways.

As I learned long ago, don't expect venture-backed and post-IPO startups to act "logically". It's all a big hustle and a scramble for market share and whatever other metrics. There's a lot of collateral damage along the way, employees and customers be damned.

Startups aren't a "meritocracy" and management teams don't operate by best ideas win. Markets are brutal, management teams are opportunistic and often self-serving, investors are focused on growth at all costs and hitting metrics, and companies don't operate in ways that suit logic. They suit the needs to capture markets or do whatever they do to get ahead. Sometimes ethically, sometimes not.

Most of HN is information free. Water cooler banter with 1:20 posts offering anything insightful.

And yet here you are

1:20 is better SNR than most interactions...

Don't forget, you're here forever

Oh, there's certainly information. It's conversation steering for some, mind expanding for others, and the hinting tasks the brain with reconciling this question with present understanding. Neurotransmitter flux is being steered one way or another.

It becomes information-full when you add:

C: The calculation that caused this was probably some black-box political battle that was won by Manager A, and lost by Manager B. It was probably decided based on personal preferences and biases of decisionmakers, as well as on who was friends with whom. Decisionmakers that run private corporations make these kinds of decisions all the time, and any attempts at reading the tea leaves, or the chicken entrails, to try to predict or explain these decisions is likely a waste of your time. If you'd like these decisions to be made in the open, you need democracy and transparency, which is not something that's is selected for in the modern business world. This is not a value judgement of the modern business world, it is just a descriptive statement about it.

The overlap between "people who know what's happening" and "people who post on HN" is not always as high as one might hope.

In my experience in the corporate world, the reason is often one that only makes sense for the person making the decision. Spinning it off right now would be a big investment in time, and thus attention from the higher up's. They have a lot else on their plate right now and would rather not think about that, and the amount of money they would make from spinning it off (in the current environment) is not enough to solve any of their other problems.

It doesn't necessarily mean it couldn't have survived on its own if it were spun off. It just may not be what the decision makers want to be thinking about right now. It's not always about what's important to the company (i.e. the company's money), sometimes it's about what's important to the CEO (who really wants to think about other things, and if they have a major distraction that maybe doesn't go well it could add to board pressure on him to step down).

> one that only makes sense for the person making the decision

And sometimes (often?) that reason is "I'll show him who's boss around here, don't care if it costs millions of dollars and tanks the stock price, I'm untouchable and they're not gonna forget it!"

Good point. Focus is a resource too. If your the world suddenly shifts and you need to focus on survival it might make sense to cut things that might or might not be profitable but are unlikely to carry your business to survival but will for sure require a lot of focus to succeed.

Of course, this is just pure speculation.

My guess for the reason is to make it possible to lay off people in france. Probably much easier to shut down the entire product than lay off part of the teAm

It's definitely not popular in the Nordics.

Wow, like when Google shut down Orkut despite it being huge in Brazil and India.

If Orkut got integrated into Google's ecosystem, spinning it out probably would've cost more money than they could've sold it for.

I imagine they factored this in before deciding to shut it down rather than sell it.

> If Orkut got integrated into Google's ecosystem

It would have met the same fate as if it hadn't - i.e., it would have been killed off.

And then all those Brazilians flocked to VKontakte because apparently VK groups were somehow similar to what Orkut offered. I remember the rush to translate everything into Portuguese.

Being big in one country is hardly a success, though. For a platform ideally you'd want to work across multiple regions.

If the country has 1 billion or 200 million people, as was the case, it's hard to argue your point

I mean, you have to have a pretty strict definition of success if, say, 100M daily active users does not qualify

(Disclaimer: last number made up)

They probably wanted to bring it to other countries, ie: USA, but couldn't figure a way to do it without getting sued. People here are different. They'll abuse the shit out of an app like that to do all sorts of nasty stuff.

Nah man as a heavy snap user i can tell you the bots and scammers are not native english speakers. Most of the abuse is targeted at America bc we have money but it's perpetrated out of brazil, bangladesh, india, etc.

I'm the CEO of Life360, another early and now at scale location app - I'm sad to see Zenly being shut down. The team there truly pioneered making rich map interfaces.

If the rumors are true (I hope they aren't - I agree with the comment this seems myopic) we might be a good home for members of the team who still want to stay in the mobile location space.

My email is chris at life360.com

For anyone unaware, Life 360 is largely used as surveillance technology so parents can monitor their children's locations. Hardly comparable to a social media app - it essentially desensitizes children to pervasive surveillance, and sends the message that their parents don't trust them. I'm obviously extremely biased, but I'd suggest anyone looking at this company consider the implications of location tracking children, teens and young adults.

https://www.washingtonpost.com/technology/2019/10/22/dont-le...

https://www.wired.com/story/life360-location-tracking-famili...

Yes, knowing where your children are is definitely surveillance. /s

No need to be sarcastic, both can be true. It's reasonable that you want to know where your children are, AND this desensitizes them to surveillance.

Knowing someone is "at school" or "at a friend's house" is qualitatively different from being fed their geographic coordinates in real time. Kind of like if you were in the bathroom when a guest arrived at your house - There's a being difference between your spouse telling your guest, "They're upstairs" vs. "They're upstairs in the bathroom pooping".

Neither Find My Phone or Life 360 doesn't tell you when someone is in the bathroom vs upstairs. It just gives you information like "at school" or "at a friend's house". Not sure what you are arguing here.

To me there is a big difference between parent's rights and the government's rights. In a lot of ways kids could get more freedom because their parents can verify that they are where they are supposed to be. However, I do appreciate the concern for conditioning children into surveillance. I hadn't considered things from that perspective.

Here's a thought experiment/rhetorical question - how much should kids (of various ages) have the freedom to do things their parents don't approve of? Taking into consideration the full range of parents (amazing to abusive) and full range of children (needing lots of vs little guidance). I think how one answers that question probably guides a lot of how one feels about this sort of tech.

Honestly… I just want to make sure my kid isn't getting forced into something that even they don't want to do. Or maybe they want to but they don't have the context to understand how much it will negatively effect their life from that point forward. Think like serious injury or death… I totally understand the push back against over protective parenting but the opposite side is pretty rough too. Also, every kid is different. You might have one kid that seems to be able to adapt and understand situations and another who is totally underdeveloped in that area. It's kind of complicated

To add on, Life 360 has gotten in hot water several times for selling the location data of the people who use their service to 3rd party data brokers.

I'll push back on this a bit - we have always been transparent about our business model. We have always clearly explained how we use data to monetize. We did not have a single incident of abuse of this platform. When we started monetizing this way, it was not considered controversial, and the world has obviously shifted and evolved.

That being said, it was a small portion of our revenue, and we decided to shut down this part of our business. Well intentioned people can disagree in good faith, and we decided the controversy wasn't worth it even though our practices were misunderstood and sensationalized. We shifted our strategy to using a purely aggregated model that does not use any type of device level identifier (e.g. no IDFA, no in-house work around identifiers), which should not be considered controversial.

Trust is paramount for us, so we decided to stick to our core, which is subscriptions and devices.

If you sell anonymized location data, it would be trivial for whoever has the data to figure out who the individuals are.

If you work for a high profile company, hedge funds will use this data to determine where you are traveling and who you are meeting with. Governments buy this data to track their enemies. This is not something you want to be a provider of.

Additionally this is not something you want to brush off as an "agree to disagree" sort of thing, you should try to understand that this sort of thing puts your customers at risk.

The claim that "We did not have a single incident of abuse" holds no water because you would have no way of knowing something like that.

Honestly, how would you know that some foreign government or hedge fund isn't buying your customers data from the 3rd party you are selling that data to?

Please check out this article published in the NYT some years back. It's a long multi-part series, but worth your time.

https://www.nytimes.com/interactive/2019/12/19/opinion/locat...

"Anonymized" is a controversial term. Let me be very clear about the model we are moving to.

We are going "aggregated" so there are no GPS lines or raw feeds as consumable outputs. It is instead counters on places...e.g. how many people went to Safeway? What was the average speed at this road segment? We will show big patterns, such as where did the people who went to Safeway come from, but that will be done in 50 user blocks with randomized locations within census zones. Even Apple, as ostensibly the most privacy conscious company out there, uses their aggregated location data in similar ways (see Apple Maps Mobility Trends Reports).

If using aggregated data is bad, that will mean that we will not have basic things we all rely on such as traffic ETAs in nav apps, because that data was ultimately from probes in the real world. Should we outlaw this? There is a ton of nuance.

Re your link to the NYTimes and that type of data feed, I still think there is a huge gap between perception and reality, and from what I know of the industry there are generally very strong contractual commitments by partners to limit how these databases are used. If a partner who has direct access to a location data feed that includes raw data and breaches a contract, yes, people could in theory be "de-identified." That would also apply to Amazon for your S3 storage, or your phone carrier. I don't know where the NYTimes data came from, but I can say that all of our prior partners had very strict limitations on how the data could be used.

I hope that one solution from all this is that there are much strong penalties, including criminal ones, for misuse of data. It isn't a data broker issue per se - employees at companies for example are probably a much more real risk vector because the tools to access the data on a user-level exist. People should go to jail if they abuse it, either in first party or third party form.

And, this is all for naught if some of the government rumors about direct taps into wireless carriers are true.... https://theintercept.com/2018/06/25/att-internet-nsa-spy-hub...

Hi, I appreciate the sentiment and agree that some small portion of our customers use the product for monitoring or tracking, but it is a minority.

We have been one of the few family focused location apps where parents and kids are treated as peers, anyone can pause location, and we have a "bubbles" feature where you can obfuscate your location to a 20 mile radius bubble.

When used properly, we empower parents to give their kids more freedom, not less.

And, our safety features, such as automatic crash detection, have literally saved thousands of lives. That is not hyperbolic. We run on over 10% of all iPhones in the US and have had a very positive impact on a large number of lives.

From the perspective of a teenager in the 1990s, I think you must be very young indeed if you think the product you describe represents 'more freedom rather than less'

I was a teenager in the 90s as well. And I was raised as a free range kid.

It is all in how it was used. People pushed back on cellphones for the same reasons people pushed back on location sharing apps today.

A big part of our fundraising pitch in the early days was to tell VCs to "try it yourself for two weeks and see if your perceptions change." 90%+ of people have the lightbulb go off after using it for a couple of weeks. We truly are not used as a "tracker" in the majority of cases.

We have had over 100 million downloads - I'm not saying outliers don't exist. Nor am I saying there isn't some meaningful (10%?) of the base who have parents who go a bit too far. But the average family is really not using it nefariously.

We're getting somewhere. People who oppose tracking are not thinking of a rosy family. They are thinking about what an abusive parent can do when you normalize location tracking for kids and it becomes the expectation. I would hate to be a kid now if what it meant would be that my parents would have my exact location 100% of the time. Kids are kids but they still have rights.

I have several children that walk home from school. Having an app like this would be really handy for us.

I have AirTags in my kids backpacks (also my father in laws pocket when on vacation).

I’m not trying to desensitize them to anything. It’s just handy to be sure they made it home, or that their bus is late and so on…

Intent and effect are different things. And certainly different ages call for different levels of freedom. My main critique was leveled at the company which directly facilitates the surveilance and not necessarily individual parents.

But I would hope that parents who do choose to monitor their kids in various ways also educate them (again age appropriately) on the importance (and potential safety tradeoffs) of privacy, as well as how to decide who to share their location data with (friends? internet friends? teachers? bosses? partners? police? corporations? governments?)

Again, not trying to criticize parenting decisions I have little context on, just trying to raise some discussion thoughts.

Hey Chris! Just wanted to say that my whole family uses Life360. It's my 58-year-old mother's favourite thing to watch since my brother and I flew the nest. But also super useful with my fiancee and I when sorting out who can look after our 1-year-old on short notice!

So do you and your extended family mostly know where each other is most of the time? What level of accuracy is involved?

Based on previous experience working with Life360 data, the accuracy is probably within 10 meters or less.

People in the Apple ecosystem use the Find My app. Tight knit groups of women, loose knit groups of guy friends, all the way to significant others, parents to children, children to parents, you name it.

Its gotten to the place where people don't even communicate addresses, and if you don't know to look at the stalker app to meet up with them, you'll just be left out. Its ironic that saying it that way still comes across as problematic (your boyfriend/parent asked you to share your location!??!?) but its very common and very benign.

You can stop sharing at any time and the recipients just shrug it off like "yeah that's understandable"

My whole nuclear family uses find my. More than once I’ve helped give my wife directions by watching her dot on the map (Apple Maps had some problem). I regularly use it to pickup the kids when they have been walking around town. Rather than texting me their location every time they move, I just get directions when I leave and let them know when I’m close. I mean, at least a dozen companies know my location at all times (Apple, Verizon, Weather.com, Google, Tile, etc) so hardly an issue for my family to know.

As far as stalking or surveillance, I mean most people live very boring lives so watching them go from home to work or school: you have to really have nothing going on.

Nothing to hide, boring, data already "public". Were you going for the highscore of "privacy doesn't matter" clichés?

Ironically we do a lot to defend our privacy, such as kids not having any social media. I just pick my battles and recognize those I have already forfeited (I mean we could just use get walkies and speak in code, which we did before kids had cell phones).

Thanks for your support. I appreciate it when people share stories that demonstrate we aren't a "tracker." I realize we are quite literally a tracker, but I think people who haven't used it misunderstand it.

Will Life360 ever add an option for consent to share like google's trusted contacts did? E.g. I'd like it if someone could ask for my location and give me 5 minutes to respond, and give me the chance to deny that request (sharing if I don't respond for safety reasons). Feels more respectful compared to the current state of Life360 where you can always see everyone's locations at all times.

We are largely focused on families vs the friends use case (which is why we were friends vs competitive with Zenly), and in the family context, always on makes sense. We are considering adding more features for close friends, which would include temporary location sharing as per your suggestion.

You should be ashamed of yourself. So many parents ruin their relationships with their children by aggressive over monitoring of their children. Your product is ruining privacy of the youth. Look on Reddit hundreds of stories of kids hating their parents cause they track their every moment even in college

How does Snap monetize it?

My understanding is that it can be extremely difficult to layoff individuals/teams inside of France. It might be easier to shut down an entire company/line of business.

It’s gonna cost them a lot anyway.

A judge can still refuse to shut down the company. If employees want to take action and protect their rights, they probably can. Especially if the company is profitable.

I'd be surprised if it is profitable. Depending on the way the acquisition was done, they could just cut ties and let it implode in short order.

Not a huge amount the judge could do, practically, if the parent doesn't have a lot of other ties to the country.

In civil court, you can typically register a judgement in another country, and use that to begin asset seizure and collection actions.

This is certainly true in common law courts. The judgement can be challenged locally though.

(My point is, there is recourse. Whether it succeeds??)

1) even in France, it’s hard to go after investors if a company fails, assuming the paperwork is done correctly.

2) it isn’t clear how the actual corporate structure was setup or how the acquisition occurred.

3) all of this of course depends on how it was structured, managed, etc.

But yeah, there is also the ‘go ahead, make me’ element, which even if it never comes to that, plays a part in all this. Some folks do dumb things with structuring, but I’m guessing there is at least 2 corp entity layers and a national border between any one of the French folks employed there and the decision makers and money.

If the other players know the person with the money can just walk away, it tends to make things more polite.

If the person with the money also makes folks comfortable before closing up shop (severance, for instance), it also smooths the way for an amicable resolution and reduces hurt feelings.

It's not that difficult. It's costly.

Often in these situations, there are a few reasons. Monetization of users isn't always as good as the MAU would make it seem, or those users have significant overlap with Snap and don't represent a net gain to the company. This is especially true if acquisitions are more of a defensive measure (buy a business so someone else can't gain access to the users you already have).

Finally, sometimes in a bad market a business can be worth more as a write-off than a sale. Depending on Snap's balance sheet, they may get more money back in tax breaks than they would if they sold it (and, again, giving a competitor access to users you already have).

This is all hypothetical, of course. I don't know anything about this specific situation, but it's why lots of seemingly successful products get killed.

How does the write off being more valuable than selling for parts work?

You have $100m in operating income, but you shutter a business unit and take a writeoff for $100m, you now have $0 profit and therefore 0 tax liability (you saved ~$37m assuming that’s the effective tax rate).

If you sold the business for parts, for $50m you end up with $150 in profit (technically could be less if you took an impairment (like a writeoff but not for the full amount since you clearly recouped some value). You pay taxes on your profits and end up net negative against the scenario where you just shut it down.

This is overly simplistic but the gist of it is directionally correct.

Got it. Not sure you’re supposed to write off a business for 100M that you can only shutter for parts for 50M.

According to an insider, they'd worried Zenly could be used by Snap's competitors https://twitter.com/GergelyOrosz/status/156499481770840883

> In Japan, it is head-on-head as the most used social app with Line.

This is my first time ever hearing of Zenly. Line is unavoidable. Instagram and Twitter trail it and Zenly is likely up there with AIM and ICQ. There’s no way this is is true lol

Same here, never heard of it until now.

To avoid laying off more Snap employees they're firing those weird Europeans working on an app most Americans haven't heard of. It's damage control.

Evan also released a report this morning. Some departments such as Snap Minis & games, snap originals, and a few other things like that pixy will be cut heavily/stopped entirely.

Team members in the U.S. are stated to receive at least 4 months of "compensation replacement". Those relying on work authorizations will receive additional support and flexibility according to the email.

Other notable pieces is that Jerry Hunter is being promoted from SVP of engineering to COO.

As a side note: I've had several recruiters reach out to me since yesterday. Yesterday (08/30, day of verge report release) I had 9 unprompted recruiters reach out. Door dash, 2 from Amazon, and a few from some lesser known companies as well. This is with my LinkedIn profile set to "not looking for a job".

sources:

[1] https://www.axios.com/2022/08/31/snap-restructuring-layoffs

[2] I'm a snap software engineer.

> Some departments such as Snap Minis & games, snap originals, and a few other things like that pixy will be cut heavily/stopped entirely.

I wonder how much fat is being debated to be trimmed at GOOG/AAPL.

The Google graveyard will probably double in size

I imagine their businesses are more resilient due to more income streams. Snap is pretty dependent on advertising income. I have no idea what Google's dependence on advertising income is, but I'd assume the ratio is less. Apple has multiple sources of income and I would be surprised to see them do layoffs.

I'm more curious about other companies such as Meta. Especially since Zuckerberg has openly stated there's probably people who shouldn't be there.

> I have no idea what Google's dependence on advertising income is

basically 100%. Cloud makes a little, but mostly it is all paid for by ads

Cloud has yet to turn a profit, but they are on the path to extract blood from stone.

Cloud is high margin, its just that the battle with Azure and AWS is really bloody

> I have no idea what Google's dependence on advertising income

Over 80% of Google's revenues are from advertising [0]

Also, I can't find a source for it now, but I remember reading from a trusted industry journalist that roughly 25% of this advertising revenue is from startups and high-growth businesses. Seems too high to me, but I would expect at least 10% to be from startups.

0: https://www.statista.com/statistics/1093781/distribution-of-...

Investing in stuff like self driving cars should be independent of current market conditions due to the size of their war chest.

The profitable parts of the business are so profitable that would would take massive drops in advertising to really impact the bottom line.

That's been true for every big company that faded away into obscurity. Or at least lost its erstwhile dominance. They usually have a product or division that does so well that it completely dominates the organization. Every part of the business becomes designed, organically or intentionally, to support this division. Innovation falters and new trends catch the incumbent off guard.

While its not even close to dire straits for Google yet, the Gen-Z shift away from search is clearly a red flag and a sign that there's an entirely new trend that has caught Google off guard. Luckily they have YouTube, otherwise I'd be way more bearish on Google's future. Text-based search isn't going to grow by leaps and bounds, at least not in developed markets.

Google seems fairly diversified compared to many large companies. At least if you separate Search, YouTube, and other web properties from AdWords. Android and Chromebook is largely self sufficient via the play store, it’s really just Chrome that’s designed to support the rest of the business.

https://fourweekmba.com/google-subsidiaries/

None of them really make any money. At least not anywhere close to the scale that could justify a $2T valuation.

It’s 1.4T with a 20.5 P/E ratio and 0.12T in just cash in hand. Considering their past growth curve that really looks undervalued. https://www.statista.com/statistics/266206/googles-annual-gl...

Anyway take away any single element and it’s still a 1T dollar company, it’s not like search needs Ad Words they could use a different advertising network.

Gen-Z doesn't use search is a weird argument to me. They are teenagers. Of course they won't do anything useful online. Their behavior should change once they enter adulthood.

They'll need plumbers too and no they won't hire them through TikTok.

I hypothesize that Google's Ad business is much less prone to fluctuation than Snap's as well as Meta's. With Google's ads targeted so heavily towards search and remarketing, there is significantly more purchase intent baked into the audience compared to social ads. It's also able to have more diversity since Facebook and Instagram are a lot more similar than Google Search and YouTube are. There's so much D2C on social and those types of businesses have really rode the COVID economy rollercoaster.

Would you agree that you and I are "aware" of growth projects Apple is working on, but not necessarily aware of what growth projects Google is working on?

As soon as they can quantify remote work as a metric that they can make personal decisions on.

I'm sorry, I don't understand, can you expand?

Snap and Meta are getting their lunch eaten by TikTok. Google Apple Amazon are fine.

Google still is an ads company. It’s not as well diversified as apple (hardware, services, ads) and amazon (cloud, retail, consumer electronics, logistics, healthcare,…etc)

iPhone hardware sales account for 50% of Apple's revenue, and that number goes up significantly when you allocate revenue from Apple Care, services, ads, App Store and more that are directly driven by iPhone. The entire company is reliant on that one device, so not quite as diversified as people think.

True. I think it's also fair to say it's more of an ecosystem than a single product. The switching costs to another similar ecosystem are high.

It's better to say Apple is becoming less reliant on selling every iPhone user a new iPhone every year.

Apple can deploy several levers to increase non-iPhone revenue which they haven't yet.

First party games. Ads. Increase first party paid app costs (final cut pro goes back to being a pro service). Developer services. All on the mac side. They also have cloud infrastructure they haven't focused on yet, but can potentially be a major source of revenue with the right hires and focus.

Is Google trying to be anything other than an ads company?

If so, what? I know they are famous for spinning up projects and killing them super quickly.

If not, what are they doing? They have 140k+ employees worldwide. Is that what is needed to maintain their core ad business without focusing on growth of any kind (ad related or not)? If not... how many engineers/managers/whatever positions could they afford to "layoff" if we were to see US recessionary pressures/consumer spending pullback?

Google is putting a lot of resources into enterprise productivity software with gsuite. Google's strategy there largely revolves around letting students use the software for free and giving away chromebooks to school districts so that ten years from now every college graduate will be more comfortable with gsuite than microsoft office, so a bit of a long game there. This is basically microsoft's entire business, so there's definitely a huge market there. They also have GCP which is chugging along I guess.

To some extent, that was Microsoft's strategy in the 90s and 00s.

They sure missed boat with Teams / Slack.

MS also famously has lots and lots of pretty decent re-sellers all around the world, which re-sellers have their own very deep lists of business contacts.

Afaik Google has tried to get something out of the enterprise space for a good 5 years now (I'd say), ever since they launched GCP, but it's just not in their DNA to do and especially to maintain business sales.

What enterprise would want to buy products from a company infamously known to cancel products left and right?

Google has tried at least since 2002. So it's been 20 years. https://en.wikipedia.org/wiki/Google_Search_Appliance

The Google Search Appliance was a respectable business in of itself. They deprecated it as it wasn't large enough for "Google". It would have been in the ranks of peer unicorn startups given the revenue prior to being killed off.

It was also a business for which the writing was very clearly on the wall. How many companies are left that still sell a SaaS/PaaS that requires you to install bespoke on-prem server hardware? I'm guessing its a much smaller list than it was 2002. For crawling/indexing, I can't even imagine convincing IT we need a dedicated appliance today! For the problem GSA solved, its just not needed anymore and subsumed by other google products/services that don't need me to install a rack-device like:

https://workspace.google.com/products/cloud-search/

As someone else has pointed out, GSuite has seen success in the enterprise space, so their enterprise efforts aren't a total write-off. With so many students now on GSuite at their school or colleges and a generation effectively raised on Google Docs... I certainly wouldn't bet against it today.

I can imagine on prem hw being a benefit if a company didn't want a 3rd party to index material. But yeah, I wouldn't want to manage an on-prem setup unless it was necessary.

GSuite (now Google Workspace) is actually chugging along nicely and continuously improved. I bet it becomes one of their reliable long term products.

I also see decent Google Workspace resellers.

1/3 of Microsoft's revenues and operating income come from their cloud business, which has done much better than Google's.

Azure has largely been propelled by microsoft's strong business relationships. I think it's likely that google sees gsuite and GCP as synergies given how successful msft has been at parlaying their office contracts into azure signups.

You assume that Google has any competencies in dealing with the enterprise or anything that requires high-touch.

And then they hired an Oracle veteran to head GCP. What could possibly go wrong?

https://www.crn.com/news/cloud/google-cloud-ceo-thomas-kuria...

Oracle is probably the most competent enterprise software sales organization other than microsoft, seems like that's a pretty reasonable decision if they focus on building out the sales team. And Google probably realizes enterprise sales is a huge problem for them which is why they're investing in these products to make it easier to grow the organization. Selling to enterprises is something Google needs to get good at if they want to grow long term, having strong products to sell helps attract talent and close sales which gives their team experience.

I have never in 25 years - most of that in the enterprise - has dealt with Oracle enterprise sales and came out feeling good about it.

The measure of success here isn't how good you feel. It's the amount of money they make relative to the quality of their product. Feels indisputable to me that oracle is at the top of the charts with respect to that ratio in enterprise software.

Companies are doing their best to get away from Oracle. I don’t see too many IT people who have been so scarred by MS like they have with Oracle.

That's because their software sucks and their sales team was amazing. Their software always sucked so the reason why companies are on Oracle to begin with is in large part due to very effective sales.

Another justification people give for Google staffing levels is keeping talent locked up/not competing with Google. To the extent that's the case, thinking wouldn't be along the lines of "could we get by with fewer workers?"

Google also makes the most popular mobile OS in the world, the most popular web browser in the world, runs a major cloud provider, runs an app store, and provides services in hundreds of countries which requires a large amount of employees to do all the legal, compliance, localization, and support work.

The most popular mobile OS in the world that according to evidence that came out in the Oracle trial, only made Google $27 billion in profit from inception until then.

For reference, Google pays Apple a reported $14 billion a year to be the default search engine on Apple devices. It’s highly likely that Apple makes more from Google in mobile than Google makes from Android.

Chrome is just another gateway to advertising.

Google’s Play store game revenue is $48 billion a year. But if they count revenue like Apple does, they are counting the gross amount people pay net after they give developers their cut is 30% of that excluding other expenses.

https://www.businessofapps.com/data/app-revenues/

Those things are why Google has a lot of employees. It doesn't mean they are successful business ideas.

>the most popular mobile OS in the world

... which is free for consumers, and also for manufacturers to license ...

>the most popular web browser in the world

... which is free ...

>runs a major cloud provider

... which is unprofitable ...

Android Open Source Project may be free but check out any Android phone sold in the west at least and it will be loaded with closed source Google software.

What about the google play store? Don’t they get x% of every in-app purchase?

That is a good business. But the point is still pretty clear that Google seems to make very large investments into products that are then given away for free to many/most users (Search, Chrome, Gmail, the whole Google Workspace product suite, YouTube) with the no obvious business plan other than to drive ad revenue, sometimes in ways as indirect as just having people spend more time on the Internet.

Google Cloud by now brings in almost as much as YouTube ads.[1] Notably up 39.4% year-on-year for 6 months ending 2022-06-30.

Google Advertising is up "only" 15% the same period.

Assuming consistent growth rate (big BIG assumption, but Google has not reported a broken out Cloud revenue forever) then Google Cloud revenue will exceed their ads revenue in ~11 years.

And I believe that the market is there for the trend to continue, even if AWS and Azure continue taking most of the pie. In fact it's possible that ads revenue could decrease.

[1] https://abc.xyz/investor/static/pdf/20220726_alphabet_10Q.pd..., page 11.

Google is in all of those areas as well, they're just minor plays.

Last quarter, ~10% of Google's revenue came from non-advertising Services and ~7% came from Google Cloud. The ~82% that comes from ads is split between Search, YouTube, and the Network.

Amazon by comparison is 83% dependent on Amazon retail. Cloud fills the remaining 17%. They're not any better diversified, by revenue.

I don't think you can look at Amazon's "dependency" on revenue through that simplistic of a lens. AWS is purported to be much more profitable than their retail operations.

What are the margins on Amazon's retail revenue after all logistics costs versus the margins on Google's advertising?

I'm going to take a guess and say retail probably breaks even (almost by design by Amazon but not sure if it'll ever be more than a 10-20% margin business because by design they are offering traditionally expensive services like fast shipping, very lenient returns at very low cost/price to the end user) whereas advertising is probably... 80% margin?

I know there are server costs, engineers to maintain them, but if Google stopped investing in growth as far as diversifying/expanding advertising services goes engineer/developer/management wise... how lean could they run?

Could they support Google's current ad offerings with a core team of... 1000 engineers? 500? 200?

Amazon doesn't want to show profit in retail. It instead re-invents much of the profit into their logistics and technology. Buying all those 747s for prime air these past few years wasn't cheap. Amazon go wasn't cheap. Alexa sure ain't cheap. That all comes out of the margin of retail.

Amazon retail isn't just getting revenue from e-commerce sales. There's multiple diversified business units part of that division. For example people pay for amazon logistics, amazon warehousing, etc.

This completely misses the importance of the cloud to Amazon.

AWS profit margin is around 30% whereas retail is probably hovering in the low to high single digits (5-8%). AWS makes profit for Amazon, and retail offers free cash flow to Amazon. Both are important and to say Amazon isn’t diversified due to revenue is simplistic.

Just yesterday I got contacted by a Google recruiter through LinkedIn asking me whether I was "interested in discussing our current remote opportunities!" .

Given the infamous Google 5-7 stages interview process I promptly rejected the offer. IMHO It's just not worth it for an employed person to go through that hell...

I applied at google the last time I looked for a job (dec2020-jan 2021). The 5-7 stages interview process isn't even the worst thing about it. Unless you disagree in principle, it's basically a day's worth of time.

After confirming that the hiring committee had said yes, and a level, the recruiter found some teams that were atrocious (either they were looking for a completely different skillset, or so far out from my stated preferences). We then did a 2nd round of interviews and did a level jump (mid Feb-2021), and found a team in mid-March. After okay-s from both sides, it took them till mid-April to come up with an offer.

My entire h1 transfer for the company I chose took less than how long google took for the last step.

The top-end players operate way outside the norms for mid-market (as in, the "trimodal" software developer comp graph). Among the 8 or so software job offers I've accepted in my career, I don't think I've ever had one take more than 7 calendar days from initial contact to an offer.

I do see some paying mid-market rates and taking a month or more for their process. I bet they believe it's very hard to find software developers.

I had a thought around those lines. I am sure Peter Norvig didn't have to go through 7 asinine whiteboard coding questions to get hired into Google.

Now, I am way way way far away from being Peter Norving, but in my 15 years career, I have found companies that value my experience enough so that they treat me well during the hiring process. In my last 3 jobs (10 years) I didn't even have to do "interviews" for the places I got into. I have been spoiled...

I won't really trash on google here, the recruiter gave me a _lot_ of useful tips/tricks that were generally helpful. But what made me sort of resentful was that the offer was (IMO) quite weak.

> Among the 8 or so software job offers I've accepted in my career, I don't think I've ever had one take more than 7 calendar days from initial contact to an offer.

same for me, it's usually <10 days from onsite->offer, then about 2months for h1 transfer and notice at current job.

Amazon's gonna bleed the quarter after they introduce ads.

Amazon already has ads.

Amazon is massive in ads. I believe they are 3rd now. Even ahead of Microsoft+LinkedIn

According to the Amazon recruiter that reached out to me for Amazon Ads, their growth has been significant and they're now one of the largest sources of income for Amazon at $30B+ a year in income.

All the Amazon devices are likely whats being targeted for Ads. Kindles, Amazon Prime, Audible, alexa, firestick, and now that Prime has access to Thursday night football they'll get some of that ad revenue too.

TLDR: Amazon is going big on advertising.

Also notice when you search anything in the store you always get a bunch of Sponsored results at the top. This is almost exactly like AdWords for search

Amazon was hurt deeply by TikTok. TikTok pushed Shein which is now the top shopping app. shein is direct from china sales and is now insanely popular for cheap fashionable clothes. TikTok is eating many.

https://techcrunch.com/2021/05/18/shein-overtakes-amazon/

Also I read that Tiktok e-commerce is now home to brands that were delisted from Amazon.

So aliexpress garbage? Wow they must be scared

It's interesting but App store ranking for shopping app isn't good metrics.

Anecdotally as the target demographic of short video, i'm starting to have friends send around the occasional insta reel not just tiktoks. I think they're making up some ground.

TikTok had $4.6 billion revenue in 2021, Meta had $117 billion. TikTok has stolen some fries but Meta still has a huge juicy steak.

Based on the increase in daily recruiting attempts I receive from those companies, I would guess that they are not looking to trim fat.

I can't predict the future, but there is one big difference between Snap and the FAANG companies. Snap hasn't been profitable for the last 5 years.

I wonder how much fat is being debated to be trimmed at GOOG/AAPL

I bet Apple is going to let the mini-revolt over the return to office policy naturally thin its herd.

Google were around in the Great Recession of 2009 so you can look there to see how they may react to a slowdown/recession. I recall at the time there were reports of something like 200 job cuts at each, <1% of their workforces at the time.

I think both will have hiring slowdowns/freezes and of course Google will continue to shutter loved projects, but I'll be surprised if we see any significant (>1%) job cuts from either.

Sorry to hear this; It is tough to lose jobs when there is a fear of recession. I hope everyone will land on their feet. The package seems to be generous, I am glad that Snap is considerate to people on visas.

According to the historically accepted definition the US is already in a recession.

I appreciate the condolences. I have no idea if I'm affected or not, but I don't expect to be since I work in payments. I'm waiting to see who will be affected and how I can help them.

edit: I've received notification that I'm not affected by the layoffs. Part of me thinks having 4 months full compensation would've been nice to have. Part of me is glad to not need to do the interview process again (at least not immediately).

Do you know if the PlayCanvas game engine will be affected?

No idea. That's not my area of expertise/work. Sorry about that.

Prior to these layoffs, Evan recently pushed a change to do a Founder Stock Split that would benefit him materially without losing his voting power:

https://www.marketwatch.com/story/as-snap-melts-down-its-fou...

Snap stock to fell ~25% the next day.

How do Snap engineers feel about all this? Are they so into the product and their work that they just don’t care? Or rather, are they also deeply supportive of Evan’s stewardship? (ignore the non-believers)

<not a snap employee> I'd bet most of them just want to work, get paid enough, and left alone to do other things with their lives.

Strong opinions about what a founder does to their comp package is something people who are either close to the top or in an early stage company would worry about.

“Spiegel and Murphy [CEO&CTO] own a whopping 99.5% voting control of the company.”

Why would anyone expect their Class A shares to be treated “fairly”?

I'll never understand the reasoning for social media platforms to get into the hardware business.

SNAP getting into drones and phones - you might as well just light stacks of money on fire, which is what happened here.

Whatever happened to just doing what you are good at? Or is the end result for every startup global world domination?

The answer is lock-in. Once someone has spent $100s on some hardware that only works with your network it’s less likely they’ll switch.

Also control of the market. Some people said Google was insane to buy Android when they did but now they’re one of two players in the smartphone market. Meta would dearly, dearly like to have that kind of control (hence, IMO, the oversize focus on the metaverse)

What is snap good at? What is their moat? Hardware is a logical step for companies looking to not put their eggs all in one basket. Amazon has Kindles, Echo, Ring etc. Google has Nest, Pixel Phone. Microsoft has their laptops

Their moat is Apple/Google promotion while they are the only Meta alternative.

TikTok eats into that but not much because of the geopolitical issues surrounding it.

I think hardware is not a reason for their current downfall. Going into hardware is away to diversify and avoid the problems they are facing right now: TikTok.

Growth must be eternal, regardless of how unsustainable, or Wall Street will decapitate you. The bankers thirst for profit must be slaked.

If this means burning giant piles of (other people's) money to maybe have a 2% better rate of return next year then you do it.

> Growth must be eternal, regardless of how unsustainable, or Wall Street will decapitate you

Note this is only for publicly traded companies. If you don't want your company to be like this, don't go public and you won't have to answer to shareholders and have to produce eternal growth.

This would require that the company is owned by itself or its founders. Startup companies like Snapchat have raised capital from external sources and need to pay it back which is a bit hard with no meaningful profit. The founders probably don't even have a say in this, these companies usually have a board of investors which will force the IPO or sale of the company.

Choosing to give up control of your startup to investors is also a business decision.

This is backwards.

Companies that cannot survive without massive infusions of cash go to Wall Street asking for money while promising growth.

So if there's anyone to blame, it's companies who are unable to sustain businesses without raising massive sums of other people's cash.

Look there is a reason Wall Street focuses on growth: the thing (company, organism, population, whatever) that does not grow will (eventually) be overtaken by that which does, no matter how small the latter's growth rate is. So when the "market" is composed of 1000s of companies, one of the easiest ways to differentiate the good from the bad is to filter by PROFITABLE growth. Now here is the rub... "PROFITABLE" often becomes hard to define so we have long periods of time where just "growth" is used as a proxy... and at the ends of bubbles you typically have lots of companies with unsustainable growth trends being valued at assinine multiples. But again... there is a (good?) reason the heuristic exists.

SNAP couldn't make any money just being snap chat, so they had to at least look like they were going to make money with some new avenue when they IPO'd. During that time period, it was 'spectacles' and everyone around here was shilling hard for them.

> I'll never understand the reasoning for social media platforms to get into the hardware business.

They probably felt like their primary revenue stream was built on a pretty flimsy, easily-copyable foundation that might crumble at any time due to social trends (i.e.: TikTok). Hence, they are desperately trying to diversify their business model using the cash they have before it's too late.

They should've embraced Snapcash and there wouldn't be an OnlyFans.

Snap will continue having an existential crisis as long as their platform is dependent on companies like Apple and Google. They are a camera company, and they need to use their expertise to beat Apple at the camera game, which is no easy task.

Underrated comment in my opinion. Snap's long term potential lies in differentiating themselves with their hardware and UX like Apple did with the iPod /iPhone in the 2000s. An extremely hard task, but a more visible direction than a trench war with TikTok and Meta over generic social communications.

How’s differentiating on cameras working out for Sony smartphones?

Considering they sell that investment to the other big companies that put their cameras in their phones… probably good. Do you know otherwise about their financials?

I meant market and mind share wise.

Sony camera hardware has massive marketshare on phones. Sony hasn't particularly invested much in the phone camera hardware space, instead they basically ported the software of their full cameras on it, targeting the professional and prosumer market with features beyond easy good looking pictures for more demanding applications, and seem to be fairly successful for the fairly small niche they're going for.

46% market share. Largest chunk of the market.

https://www.diyphotography.net/sony-dominated-the-smartphone...

>They are a camera company...

Huh? Forgive my ignorance, and perhaps this speaks more broadly to a failure on Snap's own part to accurately convey that image, but the last thing that ever comes to my mind would be calling Snap a camera company. What makes them a camera company as opposed to a social media company?

It’s their own self-definition. They call themselves a camera company.

That’s the justification for the investment in hardware, in AR filters, etc. They do “camera stuff”. To be fair, their camera stuff is good… their attempts to increase ad inventory (in app professional content etc) are not so good.

look social media and all that online stuff is waaayy too saturated. nobody needs another useless app. people need real things that do real stuff. it may be hard, really hard, nearly impossible even. but, it's infinitely better for companies to start getting in on real world products, even if success is difficult, rather than keep producing the same useless apps.

Humanity needs innovation and progress in the primary areas of living: housing, transportation, water, food, and health insurance. am i asking for the impossible? yes. but, do take those moonshots, otherwise, the next 50 years will just be more of the same nonsense.

Happily surprised by your comment. It's not expressed often enough that the vast majority of what we call "tech" today is frivolous entertainment in the leisure domain. Almost none of it actually improves lives or addresses very pressing common needs.

Apps that are just database front-ends are eventually going to get less and less money. Even I would rather have more "things that are useful" than just another database schema surrounding my email address. Yes there can be room for some iteration of it, but increasingly investors want something more than database + react + app

Meta using the same playbook with their glasses and VR headsets and portal. Not owning the railways (the device) is a strategic risk and makes you always at the mercy of the device owners (eg. Apple cutting tracking for meta). So it’s just like every other business, vertical integration, reduce risks and improve the “moat”

That kind of device is very different from a drone camera though.

Content is king, and one of the primary objectives of this hardware is to capture more & unique content.

Lays off 20% of employees and the stock jumps 9% immediately. Really drives home a good message to all CEO's out there /s

Taking your comment in good faith. Snap has a lot of fluff around it that has questionable value (TV Shows, Games). In a recession the investors like to see that fluff gone because it's harder to raise money.

Snap with 20% of its employees gone is more valuable because it focuses on the business that actually makes money instead of hopeful moonshots. You most likely wouldn't see a large uptick in value if this was an industrial "value" company.

Cost centers vs revenue centers

Layoffs suck but they're done to preserve the value of the overall entity, which includes the benefit of all remaining employees. You cut some jobs but it allows you to keep others.

Its still trading a tiny fraction of what it was a year ago. I dont think anyone would look to SNAP as a good way to run a company.

The message is not (necessarily) lay off 20%.

The message can be "we should not have hired so fast"

Or perhaps "take decisive action to respond to market conditions". O

Or any number of other messages.

It's common for stocks to rise after layoffs. Investors already know the company is in bad shape, and the layoffs signal things might be changing.

But why in the world is the comment currently being downvoted?

Anyone in tech, working for a non-profitable publicly traded company should be ready for layoffs. This will typically happen after earnings (otherwise you signal there is a problem before your investors know the current state of the company which is bad).

This is clearly the message being sent by this stock price rise. Everyone can pretend it's just a snap specific problem but this is coming to everyone.

edit: to add, if you look at Wayfair stock the day they announced only 5% layoffs, 8/19, their stock dropped considerably. The message from wall street is not "layoffs" but "serious layoffs"

Interesting. Snap is one of the few along with TikTok and Instagram, that are still heavily used by teens, according to recent Pew research.

https://www.pewresearch.org/internet/2022/08/10/teens-social...

A couple days ago they also got Protocol to reprint their press release about cutting cloud expenses:

https://www.protocol.com/enterprise/snap-microservices-aws-g...

Sounds like they are moving decisively toward profitability instead of growth for growth's sake.

Anecdotal obviously, but I’m barely outside this demographic at 22. I can tell you that nobody around my age in NYC uses snap anymore. In fact, it’s looked at with shock or disdain if someone mentions that they opened it for one reason or another.

Anecdotally, what is the app of choice for this cohort if they've moved away from Snap?

TikTok, presumably?

TikTok isn’t a messaging app, though.

Based on my kids' usage, TikTok is for passive consumption, whereas Snapchat seems to be primarily a messaging service with content as a sideshow.

So if Snapchat stopped existing tomorrow they'd probably move to iMessage. Until one of their friends gets an Android.

I know people in high school and early college who are using Snap heavily, even over Instagram. In fact, many of them have zero Instagram posts and simply use it as a group messenger.

I have relatives in age 17-20 and they use snapchat a lot, and have not abandoned it for something newer and cooler. Some use tiktok, but I think it's more for entertainment. Snap is for connecting with their real life friends. In fact, I wouldn't be surprised if it has the least churn in its category.

Social media company perceptions are skewed by hype cycles. For instance, snap has more DAUs than Twitter (plus bots likely inflate Twitters numbers more), but everyone talks about Twitter as if it's a giant that everyone uses. It's important to look at the data sometimes, and not just high profile drama.

I do not see the same behavior among this age group/younger, I see many people give out their snap in lieu of giving out their phone number to strangers, I've seen snap become more of a non-committal peer-to-peer temporary messaging app with people met in a casual setting (ie dating apps)

Anecdotal as well. Also 22.

Moved from PR to WA for a couple months to intern alongside others my age. Everybody used Snapchat. It was the group message app of choice.

Back home, people still use it for keeping up with close friends via stories and whatnot. And, y’know, the other stuff Snapchat is great for.

I have a high school aged daughter and Snapchat is the messaging platform of choice among the kids at her school. It is not just a local thing. She also participates in a sport which has her travel across the US frequently for competitions. All the teens at these competitions also seem to use Snapchat as their primary messaging app. When she meets competitors from other places that she wants to stay in touch with it is Snapchat ids that they exchange.

Dupe from 20 hours ago, 114 points, same article: https://news.ycombinator.com/item?id=32654226

Maybe this one can be updated with the axios article?

https://www.axios.com/2022/08/31/snap-restructuring-layoffs

Hmm, believe it or not that one only made the front page for 1 minute. Given that the submission didn't get frontpage attention and that the thread there is rather poor, I think we can let the current post escape the fate of dupeage.

I've been working on software to detect such threads (i.e. highly active discussions that are 'underwater') but it's not hooked up yet.

Just wondering behind-the-scenes, is a thread like that flagged or something... or did it just not hit the right metrics at the right time to float up on the front page?

Not flagged, but that domain is downweighted, as are most major media/web sites on HN. The downweight is pretty carefully calibrated to allow the (hopefully) most interesting (or at least most upvoted) articles through, but then we get these weird outliers that stay underwater.

I'm not so worried about a major news piece (someone else will just repost a different version of the story, as happened here), but sometimes there are really cool and interesting posts that get lots of upvotes and even comments without ever reaching escape velocity.

It's a bit Rube Goldbergian but my thought is to have separate software watching for those, and maybe plugging them into the second-chance pool or something (https://news.ycombinator.com/item?id=26998308).

HN has an "active" view which shows threads with lots of discussion, regardless of their front page status. I find it's a much better way to browse HN: https://news.ycombinator.com/active

EDIT: LOL, looking at the parent, I'm replying to dang about his own site. I'm an idiot sometimes. Feel free to nuke this.

You're replying to the (as far as I know) solo mod of HN. I suspect he knows about the active view ;) though that's new info to me.

HN comments are typically best considered "to the field" rather than to the parent commenter alone.

I'm pretty sure dang's familiar with the feature. You're better considered the intended audience.

Wonder why that's isn't in the nav - to cool down active discussions?

Yes, they generate enough heat as it is.

I basically do the same. My primary interface is https://www.hckrnews.com which shows active/popular stories in chronological order. Makes it much easier and faster to tell what I've already seen.

That's no problem! Lots of people probably don't know about it. But it would be good to link to https://news.ycombinator.com/lists (also linked in the footer of every HN page) since there are other obscure things there too.

It's crazy to me that they pretty much doubled their headcount over the pandemic, I know there are economic reasons for some of the recent layoffs but the hiring sprees some companies went out seem crazy to me

Normally they hired talent to prevent talents join competitive companies ?

I think it may just be taking advantage of the lose monetary policy of the last decade plus. It's easier to justify one-shots, experiments, or new product searches when loans are cheap and aplenty. The money spigot has dried up and you either adapt or die.

Just curious, are companies like Snap going out an getting massive loans to facilitate hiring?

Looks like snap has $4b in debt, up from around 1 before the pandemic.

I mean they initially raised ~$5 billion in multiple rounds when first started in 2011. [1]

I doubt they could raised an equivalent amount if they started in say 2018 in the current environment.

[1] https://www.crunchbase.com/organization/snapchat

Snapchat just recently had its first ever profitable quarter, 2021Q4, since going public. That's a bad look, I also doubt this story will hardly be unique in the upcoming year (more tech layoffs from "unicorns").

> It's crazy to me that they pretty much doubled their headcount over the pandemic

Dunno, my impression was that selling stuff online (and thus adverts) went gangbusters over the pandemic, as did social media in general.

Cheap money and tons of new opportunities with everyone stuck inside. Social media companies realize how huge the first mover advantage is so they scaled as quickly as possible to take advantage of the pandemic.

It was a bet that the world had changed forever and they didn't want to be left behind, if they were wrong they'd just fire some people and course correct. All in the game.

It's never surprising when companies try to capitalize on opportunities. The shock seems to be when they then trim back when those opportunities no longer exist.

There was an enormous amount of liquidity pumped into the system by fiscal and monetary authorities. That all these companies massively increased headcount is entirely rational. Wealthy people and companies did very well during the pandemic because they were direct beneficiaries of the fiscal and monetary support.

Snapchat had their own TV shows!?

Yeah I saw ads for that recently, a Snap documentary of the life of Bhad Bharbie or something (a female rapper I believe). I don't believe we're talking about TV shows that rival Apple TVs exclusives

Not sure if this is the same kind of content you are talking about, but I rather enjoyed Ryan Reynolds Doesn't Know Anything... though I was in a pretty dark place when it came out so it was probably ironic :(. The issue for Snap, of course, is that I only watched it on YouTube ;P. Here is a link to the first episode:

https://youtu.be/MnR4P7205dc

I do not understand how people can stand this type of quick cut content.

I can. There's plenty of videos on YouTube that end up tiring by the end of ten minutes, even if they contain informative or entertaining content. What I do not understand is how they expect whatever revenue they can get from a 6-7 minute video can pay off the cost of bringing in celebrities to star in them.

Everyone is producing TV shows now. There are 'Amazon Mini Shorts' on my Amazon app, Swiggy and Zomato - two food delivery apps - also have their own shows. It's an explosion of content and I can't fathom who in the world is watching all of it. Or any of it.

https://www.theonion.com/overstock-com-announces-plans-to-de...

Behold Salesforce+ https://www.salesforce.com/plus/

They should hire these guys

https://www.youtube.com/watch?v=duJwGSUhRQA

I'm not sure why your first example of Amazon producing TV shows is Amazon mini shorts.

They've been making Amazon originals for years, including an upcoming TV series on this little franchise called Lord of the Rings which was the most expensive TV series ever made with a $1 billion budget.

I know. But these mini shorts are placed right inside Amazon's app and you're encouraged to view them while you're shopping. Which makes absolutely no sense.

Prime Videos is its own standalone product. But these mini shorts are weirdly spliced in with Amazon's primary product.

Yeah, even I am making TV shows.

Google Drive Deluxe streaming original series and anti-originals

https://twitter.com/nickciarelli/status/1337205352027181056

There was that 7 minute video start up that raised a ton of money and had a bunch of big names produce short videos. IIRC the answer to your question was "hardly anyone" and they shut down quickly after burning a bunch of money.

Quibi

Calling them "TV shows" is pushing it. They are badly produced ~5 minute sponsored clips by a bunch of internet celebrities, barely more than random stories that they would otherwise post.

They were making quick bites before Quibi.

Every tech company has their own TV shows. Here's some other example:

https://www.shopify.com/studios

https://en.wikipedia.org/wiki/List_of_YouTube_Premium_origin...

Every time I go to a theater I see pre-trailer ads for Indeed presents Rising Voices films.

https://www.hillmangrad.com/indeed-rising-voices

Interestingly NFLX is up today on this news, partly because one piece of this is two of SNAPs ad execs are moving to NFLX.

and some amount less competition for original content

Does cutting "Games" mean PlayCanvas too? That would be a shame.

For those who haven't heard of it, PlayCanvas is a game engine and editor akin to Unity, but web-based (both editor and games). Acquired by Snap a few years ago. Here's an example game: https://venge.io/

Spreadsheet warrior kinda shit. CFO needed 500M for a stock-buyback. CFO wrote down some napkin math, let go 1/5 of the team. Murdered all innovation into the ground. Wallstreet loved it. Snapchat is a cashcow on a spreadsheet. CFO knows he needs another 20% layoff in Q1 of 2023 to drive his cost of capital down further. Expect more pain from the suits.

Are they doing a buy back? Didn’t Steve Jobs say trading cash by buying back stock the worst idea ever?

https://techstory.in/snapchat-announces-a-new-500-million-sh...

Both of these take a few months to plan, so from the timing of that story they must have been planning them simultaniously.

For Snap? Probably. For Apple? Steve Jobs was never sitting on $100+ billion in cash. Though, Apple's buy backs + dividends made more sense given how profitable they were and how much cash they had on hand. Snap has never had positive operating income.

Depends on when the options of the executive team were issued..... and whether a buyback gets them back into the money?

I think it's just really hard for a company to keep innovating like that. Once you get to a certain size about the best you can do is refinement on your existing product or muscle into adjacent products.

but the stock jumped 9% so wouldnt that be counter productive for buyback? (ie now you get less consolidation of ownership than before)

They don’t need more ownership: “The result is that Spiegel and Murphy own a whopping 99.5% voting control of the company.” - https://www.marketwatch.com/story/as-snap-melts-down-its-fou...

my point is if the stock price jumps then the buyback occurs at a greater price per share, making the effect of the buyback less effective (fewer shares are eliminated)

Looked at SNAP stock market analysis..

Net Income: -487.96M

Public companies that cannot turn profitability will be under microscope during the 'current/coming' recession. Yanking 20% staff is not going to turn SNAP profitable.

If they actually save a net $500 million annually, as they are claiming, then this move will absolutely turn SNAP profitable.

They don't only reduce cost, but by shutting down products also lose revenue.

Those products don't make any meaningful amounts of revenue. That's going to be a rounding error.

Still the maths not necessarily goes the way the GP posted. They won't necessarily become net positive.

It's more likely they won't become profitable because they overestimated how much they'll save - not because they underestimated how much they'll lose.

Well, they have the financials but the products that were shut down were the most unprofitable ventures?

But how much revenue do they actually make from games and drones?

But products cost money to run and maintain - isn't it perfectly plausible they were able to identify 20% of the people worked on a set of products that were in totality not profitable or even costing money?

Given the nature of branching from your core competencies into dice rolls, that sounds not just plausible to me, but even probable. Maybe I am missing something though.

But look at their stock price today, up nearly 10% on the news of layoffs.

I've been saying this a lot but nobody really want to hear it: unprofitable tech companies only make sense when money is cheap and consumer spending is high. Both of these preconditions are changing at the same time.

Wall street is going to continually put pressure on unprofitable companies to rapidly reduce costs, and reward those that do.

You are correct that this huge cut is not enough, but it's enough for wall street to gain more confidence in snap for now.

If you work at an unprofitable (or even rapidly decreasing in profits) tech company, especially one that's IPO'd, expect layoffs.

This is the case for me and I am very seriously expecting massive layoffs coming in October, I have been since May, hoping to dodge the bullet but not optimistic.

And this is not going to be like the pandemic where you can be laid off from a negatively impacted company and quickly get rehired by a positively impacted company because this time there are no positively impacted companies.

> Yanking 20% staff is not going to turn SNAP profitable

I'm not sure I follow your logic. SNAP claims they'll save $500M per year by laying off 20%, which I'm sure you can see the reasoning behind given the only number you've posted...

Anecdotally I'm -61% on SNAP in my portfolio, great investment on my side..

When I read the headline I thought "Wait, Snap is developed by an own company and not canonical? I'm glad it's not that snap thats downsizing :D

A lot of people would like to see snap downsized entirely

Obviously I cannot be familiar with every app under the sun but Snapchat, given its size and brand struck me as one of those companies that should be used all around the world. But I have not seen anyone using it or talking about it in Europe. Always thought it's mostly a US thing.

Snapchat has 86m DAU in Europe vs 99m in North America. Definitely big in many demos in Europe.

> Spiegel said the company’s revenue growth had reaccelerated to 8 percent from being flat in late July, suggesting its ads business is starting to rebound. Still, that is a far cry from the more than 40 percent revenue growth Snap was seeing before Russia invaded Ukraine, which it blamed for a slowdown in marketing spend, and the digital ads market started to contract earlier this year. In a filing with the SEC, Snap said it expects the layoffs, which were first reported by The Verge on Tuesday, to save it $500 million in costs annually.

I get that Putin is to blame for everything, but this seems a bit of a stretch.

I don’t think it’s that far fetched. Because of the war, many if not most international western HQd companies pulled out of Russia - that’s a loss in revenue from that region for all of them. The first thing that goes is marketing spend when you need to reallocate your budget.

I think the bigger culprit would be the massive inflation shock to consumer confidence.

Less people buying things equals ads chasing fewer dollars.

You really think the war has more to do with it than global governments NOT handing out 50% of global GDP in free money anymore?

20% of their employees had salary + benefits of 500 million?

Edit: Snapchat has 32k employees!? :o

How does Snapchat have 4x the employees that twitter has?

It’s not just employees that contribute to the cost. They’re essentially shutting down entire businesses, which also come with a lot of operating expenses.

The very first line of the article includes Snap's headcount:

"Snap is laying off around 20 percent of its more than 6,400 employees"

Original number of employees: 6,400

Approximate number getting laid off: 1,280

> 20 percent of its more than 6,400 employees

So ~1280 employees laid off

> Snap said it expects the layoffs, which were first reported by The Verge on Tuesday, to save it $500 million in costs annually.

So $500M / 1280 = $390,625 per employee per year, ~$32,552 per month, wow.

That’s the cost of an employee, not their salary.

Snap had very high salaries for engineers. On Blind, many times I saw TC offers of $500K-700k.

Snap definitely pays on the mid-to-high end of base salary, but TC numbers are always inflated 100-300% by RSUs, so I don't see how TC is relevant.

> How does Snapchat have 4x the employees that twitter has?

This seems absurd for the size of snap, they are involved with hardware so theres headcount there for that, twitter is all software. $500M seems about right, given that that would amount to 6400 employees getting cut thats an average of $78,125 per employee which seems a bit low but they are based in socal and engineer salaries are lower there than the bay area. I hope these folks find new jobs quickly thats alot of people out of work all at once.

SNAP has one of the highest TC for engineers. FB/SNAP ect set a new standard of comp of software engineers. Sad to see these companies biting dust.

they are not biting the dust, at least for now, they're just going lean and shedding few pounds to weather the storm.

They have to offer more compensation to offset the higher volatility of their businesses, as evidenced by these layoffs.

Mission creep but taken to a whole new level

They hired like crazy during Covid.

Looking at the posters of the shows I can't see how canceling those is a bad thing for anyone except people who's salaries depended on it

It was about time they started thinking as a public company. Looking after shareholders value (s)

That letter sounds like something you’d read to a group of market analysts—not employees

Would you rather some "Unfortunately, due to market conditions..." fluff like the rest of them?

That _is_ what is sounds like...

Snap!

TikTok and Instagram are the hip internet properties where young people share stuff. Snap Chat is essentially a dying service. Evan Spiegel is not a visionary like Zuckerberg, Gates, Bezos, Brin and Page. That said he is smart enough to run Snap which in my opinion is a boutique web site some people find interesting. Snap won’t matter in a few years, it is better to sell it to a bigger social media network.

I've seen this happening for the last couple years, which is disappointing. It's always been the only social platform I use with frequency, but that's becoming harder with fewer of my peers using it.

> Evan Spiegel is not a visionary like Zuckerberg

I'm not here to defend Spiegel, but this sentence kind of reads as a joke based on the amount of "copying Snapchat to put into Instagram" that Facebook spent years doing.

ok, fair. Spiegel came up with some new features for his app which people found interesting, and maybe even copied. That will make him an above average Product Manager, not a visionary leader in the caliber of Zuckerberg, Gates, Bezos, or the Google Duo; all these people are empire builders, they used their initial success acquire/build multiple billion dollar conglomerates that own multiple internet properties.

Granted, Spiegel has kept snap some what relevant all these years, but he is not an empire builder, and to be a big player in the social media space you need a leader who is an empire builder.

> they used their initial success acquire/build multiple billion dollar conglomerates

Snapchat currently has a market cap of $18B. Snapchat has acquired (at least, from my basic google search) 12 different companies.

Your measuring stick here is so extremely off.

I not-so-secretly hope Spiegel sees this, has a laugh, and updates his LinkedIn position to "above average Product Manager @ Snapchat"

According to my teenage relatives, Instagram is out, TikTok and Snap are in. Instagram is just to keep up appearances.

India banning TikTok has really helped Instagram in India. Instagram is the top player for short form video there. India will give instagram a large user base to test out new features and keep their expansionist vision going for the rest of the world.

not according to Pew - Instagram is still strong amongst teens https://www.pewresearch.org/internet/2022/08/10/teens-social...

> Instagram is still strong amongst teens

Yes, see "Instagram is just to keep up appearances." Still in use but out. As in out of style, not cool, for the parents, etc. Teens are using it to keep the parents at bay for what they are doing on TikTok/Snap.

as reluctant as I am to trust this kind of anecdata, for the sake of argument let's assume it's true. What matters is usage, not the reason for the usage

That is what I see with my teen daughter too.

Zuckerberg is no visionary. He didn't create Instagram, he bought it.

No one prevented Spiegel from buying Musical.ly and turning it to TikTok.

What a silly take.

Instagram was barely anything when Facebook acquired it - there was only an iOS app, barely 27m users and 0 revenue. It was a hugely controversial move to buy it for $1B and there were countless articles about how the acquisition made no sense and how Zuckerberg is making a huge mistake.

It's one of the greatest acquisitions of all time and a masterclass in strategy and execution.

Psssssssssh

All they've done since they acquired it is CLONE SNAP (aka stories) and add it to IG, and now they're just cloning TikTok because Facebook hasn't ever had an original idea.

That's not true. Frankly, it's clear you simply don't know what you're talking about.

They've built an entire monetization engine around it, made a TON of improvements around how media works, added several new formats, built a ton of anti-spam detection/eradication/moderation that works at scale and makes the product actually usable, launched in so many countries with language/accessibility support, and so much more that Instagram couldn't have done as a standalone company.

When Facebook bought Instagram, it was just a speck - it wasn't even a business. It's not even close to the juggernaut it is today.

There's a ton of stuff that goes into scaling products like this. If you want to have a rational conversation about this you have to go deeper than using all caps CLONE. You don't go from 27M to >2B users and from $0 to >$25B in revenue just...randomly.

Certainly not at all what I'm witnessing.

Instagram seems to still be used by teens, but slowly fizzling out. Tiktok is popular. Snap seems the preferred chat app for most.

You're joking right? Zuckerberg a visionary? In what world?

As far as I can tell the man has never had an original thought. All he knows how to do is see what some other company is doing and have his team clone it and/or buy it.

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