Snap shutters its enterprise services division after less than a year
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Some other large companies (can't mention names) have also done layoffs targetting genAI recently. I was surprised by this.
Is it really startups eating their lunch???
Meta's open source play I think comes back to regaining public sentiment about them after scandals/metaverse, and also making it difficult for established competitors to have much moat.
Given how much Snap pays their employees it was probably the right call.
Will be interested to see down the line how any startups nowadays will fare with Meta.
> The company made the decision that building up ARES would take “significant” investment and it couldn’t continue to fund those efforts.
Well, which is it? Is it so trivial that anyone can compete, or is it too costly to build it?
I think that's the wrong "either/or" framing in this case. It's not that building competing tech would be trivially cheap, but it's something around which Snap would not likely have a moat or any sort of competitive advantage. It's also in a business area that's pretty unrelated to their core offering.
The CEO's exact quote was "Leading in augmented reality means that sometimes we will fail, and I am proud that our team dared to build this business even if we did not succeed." So I'm not sure why you think "they don't want to say that."
> And they didn't know these things six months ago?
Given that the initiative was originally announced in March, I'm assuming the whole project was greenlit at least 3-6 months prior to that. And ChatGPT was only just released on Nov 30, 2022, and since then it hardly feels like a week goes by where I'm not mindblown by some new AI announcement. So yeah, I think it's entirely reasonable to think that the landscape when this ARES project was first started is very different than the one we find ourselves in today.
It's not really just startups - honestly I think 99% of those startups will fail.
The problem with generative AI as a business is basically what that leaked Google memo said, which was something along the lines of: "OpenAI doesn't really have a moat, but neither do we."
There are a few large companies who are creating these successful models (OpenAI, Microsoft, Google, Meta, perhaps Amazon with their Anthropic investment), but there are tons of other startups that are trying to come up with "individual products around AI", and I think it will be incredibly hard for them to differentiate. That is, for a lot of the "dedicated" early-stage products I've seen, I've thought "I can pretty much do this all with ChatGPT, maybe ChatGPT with plugins - why would I want to download your special app?"
I don't think all of these companies are doomed to fail (for example, I think Harvey AI was smart to focus on a very specific, profitable niche: lawyers have a lot of money to spend on this stuff, and they have specific needs e.g. around compliance, auditability, privacy, etc. that you could see a specific legal-focused AI tool addressing), but I think a lot of them are.
Even more fundamentally, they're putting the cart before the horse. They're making the classic mistake: Taking a tool/technology, and then searching for a problem to solve with it, rather than starting with the problem. I agree a lot of these companies are doomed to fail for the same reason companies founded to "Figure out what to do with blockchain" were doomed to fail. They'll no doubt suck down plenty of funding while failing though.
Snap’s biggest problem is it’s a crummy place to work with too many… let’s say personalities that are not commensurate to what they deliver. Same could be said of Amazon, though they have a far higher revenue ad product than Snap ever had, so shows how much those two are related.
To this specific quote: Generative AI meaning image generators are anticipated to replace creative agencies for display ads.
They are not good ads right now. Mondelez and Unilever who are trying this for example have not found a big breakthrough. Part of this is that neither of the two latent diffusion models create sufficiently creative creatives. You need programmers with art backgrounds to master these and the brands have neither of these. They’re super rare generally, you cannot just pull them out of the professional recruiting pool, and they most definitely do not want to work for brands or Snap.
However the appeal is in the race to the bottom costs. Hard to compete with “free.”
These AR experiences still require opinionated creative development which Snap, its agencies and the brands lack. So that’s really what ARES in particular failed.
The product people want is “Ads people like.” That’s expensive to make, which is the opposite of the incentives for creative production in the ecosystem.
That said I have found success creating and supporting interactive, instant streaming games as branded destinations for Meta and TikTok. Try the one I made for Hyundai: https://appmana.com/watch/virtualtestdrive - tap drive and see for yourself. This isn’t meant to be self promotion so much to prove that I dogfood my opinions into a proven, factual reality. You can see more at AppMana.com for huge brands like Nike, VISA, etc.
The AR experiences people make are too “2D” IMO; also they are not that fun. They might hit 15s of engagement on average, and most of that is spent loading, so it’s kind of a fake number compared to that virtual test drive which has instant loading and average engagement measure in minutes at million-visitor scales. Video ads have a median zero watch time and mean of 2.1s so there’s lot of opportunities for “marginally” better. Ultimately it comes down to costs.
It's worth pointing out that, historically speaking [0], we're not an in era of particularly high interest rates yet, just not absurdly low ones.
The question is what is the right level of interest rate in 2023 as compared to say 1960.
19060s were boom time with GI bills, lots of new industries started by veterans, a booming suburban household, booming number of children. People and companies of the time had very low debt aka there was room for them to take on more debt. All of this leads to rising credit, which requires a higher interest rates to keep inflation low.
2023 is an anomalous post-pandemic boom coming from trillions added to US government debt. There is no population boom, no business boom, no new tech boom (excluding the AI stuff going on now). Nobody can take on more debt as most people/companies are completely tapped out. This actually requires lower interest rates but we have high inflation so the FED is keeping interest rates artificially high.
This is to say, that companies like SNAP just cannot continue to exist in a higher interest rate environment. Neither can companies like Meta, Uber, Google, Microsoft without cutting costs somewhere or without letting the stock collapse.
A recession is the only way out because companies will NEVER let the stock collapse in favor of saving their employees.
Only as stock in this case is a useful proxy for the finances of the business. It would be better to say that, outside of ridiculously comfortable and easy financial environments, companies will prioritise investing in activities that make money (directly, such as making products, or indirectly, such as security) over activities that don't.
And these activities are designed to increase the stock price. Everything they do is for the price of stocks. That's how the system is.
All I said was their activities are designed to boost stock prices, given the prevailing economic conditions. Stock prices may be related to business value or financial engineering or whatever. Doesn't matter how they get there. Their goal is to just keep stock prices rising.
With this in mind, if it ever comes to choosing between employees, customers, product, or anything versus the stock price, they will choose the stock price.
And there are plenty of companies that aren't public companies with any stock to buy.
It just seems far too simplistic. You seem to be critiquing the times that some company use slightly dodgy financial engineering to boost their stock price. But that's not many companies, and not all the time - it's never a permanent fix. There's certainly no need to attach stock price reason to these layoffs, which are much more likely just cost-cutting measures designed to save the company a load of money it thinks is more valuable than the work of those people.
Since 2008, the interest rate was much lower and nobody _quite_ cared, now both inflation and interest rate are higher and the ECB widened the window they consider for their average substantially to straighten things out even though they're way about 2% now.
Still, there has been a shift in the finance world, and the target seems to be 2%. Having interest rates and/or inflation at twice that (or more!) seems to justify the label "high" to me.
So the central bank interest rate isn't targeted to be 2%, but it will be somewhere close to it: too high, and they drive inflation well above 2% all on their own. They can stay lower for quite a while (see the past ~15 years) but that was already considered an emergency situation.
Before 2008, the ECB moved between 1.5% and 3.75% (https://www.ecb.europa.eu/stats/policy_and_exchange_rates/ke...) with at most 16 months at a time above 3% which was followed by a bump down to 1%.
We'll have to see where things go from now, but the recent shift of their language towards "2% in the _medium_ term" indicates to me that we'll stay in the higher end of the spectrum for a while instead of quickly trending down again.
Isn't it the reverse relationship? Increased rate decrease the velocity of money and decrease inflation?
(At the risk of causing a recession)
Central banks have been raising interests to fight inflation so far.
This was valued at nearly $10B at the peak.
and yes I realize the majority of SPACs were pre-product scams.
I think they will stick around and go back to their previous volume. Grift-o-currency is a scam and I hope it dies soon.
As I was looking at the chart, I noticed there was a big bump from 1994 to 1995 (like from 3% to 6%). What happened then? Was it inflation? I recall rates were about 6ish since when I was in undergrad. I guess Greenspan/Y2K/dot com days.
Edited: found the answer and it is intriguing: https://markets.businessinsider.com/news/bonds/federal-reser....
The stock market craziness continued even with high rates .. wow .. didn't expect that.
The million dollar compensations (when counting stock growth) and intensity/stress around interviews and promotions is what ZIRP wrought for the elite in tech.
Would be interested if people who were mid-career in the mid 90s can comment on their perspective.
Would that mean it was the era of "Why are manhole covers round?"
I don't want to sound like someone who supports leetcode (mostly because I don't), but it seems like it's at least an attempt at measuring something related to programming skills.
Leetcode is FizzBuzz on steroids, but IMHO is not on its own likely to be more predictive of success at a company than the old MSFT way.
"how many balloons can you fit under this table"
I think it might also end up being important to remain competitive in a global market where the other economic superpower's government is willing to invest trillions into building whatever it wants and needs despite profitability[1].
Some things we want/need won't be immediately profitable, or even profitable in the long run. They might not even be things we realize we need until something unprofitable is researched and developed.
Not saying that Snap is something we need, but if the US is forced to strictly rely on market forces to compete, "free" capital via low/no interest rates is a way to kind of do it.
[1] https://tnsr.org/2022/12/chinas-brute-force-economics-waking...
In the old days, these investments were tiny compared to what is being currently spent on the chips act. I think for STEM a better approach would be a govt sponsored entrepreneurship thing .. imagine the same YC deal but we give this to any PhDs (or maybe even Masters) once in their career. I'm from Canada and when I see the cash wasted on other initiatives, I can't help but wonder why this is done. Not to say Masters or PhDs are geniuses. It is just the current system means only the well-to-do or well-pedigreed can get into places like YC (and maybe elite schools like Berkeley) while intelligence, grit and ambition are more widely distributed.
So the current hike shouldn’t have been surprising at all.
By that point you already had: 1. Facebook, obviously 2. Google+ 3. Twitter 4. Tumblr 5. Foursquare/Swarm 6. MySpace 7. Friendster 8. Orkut etc
The only real innovation they brought was the ability to parlay teens sending each other legally dubious dick pics by deleting them almost immediately into venture funding and then an IPO.
https://help.snapchat.com/hc/en-us/articles/7012318024852-I-...
It also acted as an overt anti-Facebook, in an era where that was a growing trend: No, and then limited, broadcast communication versus FB's "tell everyone everything" defaults, ephemeral messages in stark contrast to FB's "hey, remember this inane thing you said 3 years ago", and a culture of communicating asynchronously with a face attached.
This (perceived) lack of a panopticon made Snapchat a much more appealing form of social media. IMO, it's still one of the better ones.
Snap (and others) just continue to bet on the wrong things
Their cloud commits from their S-1 is still an all timer for me. Billions of dollars.
People think Zucc just acquired his way to the top when Meta has probably been the top 3, if not best, run company in the past decade.
Had Evan sold Snap to Facebook back in the day, I'm fairly confident it would be valued at least 10x what it is now.
Instagram and Snapchat today are two fundamentally different products, and Snapchat is estimated to capture more of the younger demographics in more markets.
Sure, you can say that Instagram today has about 100 billion valuation compared to 15 billion for Snapchat, but the race is far from over. Snap recently exceeded a 100 billion valuation as recently as 2021.
Also X is now worth 4 billion so apparently it's at the very least, not a growth industry.
I don't think it's so much that Snap hasn't figured out a business model - they make a billion dollars in revenue per quarter, how many companies can claim that? - it's that Snap hasn't developed a rational balance sheet due to excessive SBC. If it wasn't for SBC, they would be making money hand over fist.
Snap & PINS are two interesting case studies in how companies in a similarly challenging ad market can have potentially different strategies and outcomes. Both have very depressed stock prices, but both have a clear path to having a sustainable and highly profitable business.
Again, interest rates seem pretty irrelevant to the fate of both companies, only as much as low interest rates encourage economic investment and can fuel the digital ad market.
Of course it's mostly gone. My mother is a painter so I always appreciated the artform, but I found a new way to appreciate it that day.
https://investor.snap.com/news/news-details/2023/Snap-Inc.-A...