Evan Spiegel And The Future Of Snapchat
Snapchat was once on top of the world. Now they’re on a trajectory to bankruptcy. Q3 2017 results revealed $40 million lost on Spectacles, $30 million short on projected revenue targets, user growth has slowed to 2.9% and their share price is down 18%. In Snaps own words they have no idea if they will ever reach profitability and that’s not what you want to be telling your investors. Spiegel told investors earlier this year to bet on him as being able to save the fate of the company. But now Spiegel’s doing nothing but admitting that Snapchat’s made some wrong decisions.
If you haven’t followed this downturn for Snapchat let me bring you up to speed quickly. Whilst the company IPO’d earlier this year at a crazy high valuation of $28.3 billion, Snap has failed to both innovate within their Snapchat application and, in areas where they have made attempts to make changes they’ve placed their bets incorrectly. Instagram ‘copied’ a great deal of Snapchat’s features, but I put that word in quotes because you can’t really say it’s copying. This is business and features are not intellectual property. Snap also released their Spectacles product last year, but it didn’t sell very well and all of these things have led Snap into a state of decline.
Image Credit: Tech Crunch
In Evan Spiegel’s address alongside the release of Snap Inc’s Q3 2017 results, he provided some insight into the company’s plans for the next year. I thought I’d note some of the more promising as I think these give Snapchat the most potential in pulling themselves out of this mess. Regardless I think Snapchat’s biggest issue will be the issue maintaining relevancy as time moves on. I definitely think that Spiegel is their best shot at doing so. But clearly, there’s tension within the company on the longevity of what their building as seen with the departure of their head of engineering.
Snapchat’s 2018 Strategy
First is influencers, Snapchat historically has tried to be a user based platform. They’ve neglected influencers by not providing them with methods of monetizing their content and providing incentives for influencers to use their product. Since influencers drive mass attention to a platform, in 2018 Snapchat will attempt to give influencers incentives to make better use of their product.
Second is a design overhaul. One of the biggest struggling points for Snapchat has been a user-unfriendly interface. If you’ve used any other social media application the interface comes naturally, however with Snapchat it takes the average user at least double the time to understand how to use the app. Snapchat’s theory in the past was that this would make their app more sought after as kids would have to show each other how to use and understand the app before they began using it regularly. 2018 will see a redesign in hopes that it will draw a larger crowd, potentially even an adult crowd to be drawn to get to know the app.
The third is Android. It’s no secret Android is winning in the mobile market at the moment. Snapchat’s app has reportedly been extremely clunky as of late on Android and Spiegel’s promise is that the company is rebuilding the app from the ground up for the Android operating system. They will reportedly start with a limited release in certain markets before rolling it out to everyone.
Image Credit: Business Insider
So can all of this come together to save the fate of Snapchat? In the short term potentially. And look I’m no fortune teller so I can’t say what the guys over at Snap might have up their sleeves. But with what they’re currently offering and with them still not at a point of profitability whilst I think they can survive today. Tomorrow is a different story. I happen to know Zuckerberg’s got a group of incredible people working on Instagram. And what if the market went sour, would investors be so willing to throw their money at a company that in their own words isn’t sure they will ever become profitable? I’m not so sure. One thing I’m certain of though is this, by the end of 2018 we’re going to have a better understanding of the future fate of Snap. I hope for their sake it’s a positive future.
