In an internal memo to Snap Inc. employees earlier this month, Evan Spiegel commented on the past year within the company and outlined his plans for Snap’s future. He started his memo by outlining what Snap is and what it is not:
7 Years at Snap, Inc.
We are a camera company.
We contribute to human progress by empowering people to express themselves, live in the moment, learn about the world, and have fun together.
We are kind, smart, and creative.
Spiegel then progressed on to break down the last year for the company. He highlights mostly the positive though, electing to note only select failures. Spending some time on what internally was known as ‘Cheetah’ (the controversial redesign Snapchat underwent in the last year).
There were, of course, some downsides to moving as quickly as a cheetah. We rushed our redesign, solving one problem but creating many others.
Profitability by 2019?
Spiegel went on to address Snap’s strategy for 2019. And this is where the memo gets interesting, mostly because you get a sense that Evan is perhaps still a bit unsure himself of what Snap needs to be focusing its energy on to save themselves. Spiegel notes the stretch goal of breaking even by Q4 2018 and ultimately profitability in 2019. But he only gives a vague rundown on how he plans on achieving this goal.
The Facebook Problem
Many have noted that Facebook has progressively (and very effectively) been suffocating the life out of Snapchat over the past 18 months or so. There’s this saying in business when it comes to acquisitions, either you fuck us or we fuck you. Mark Zuckerberg boldly offered Evan Spiegel $3 billion to buy Snapchat in its infancy and Spiegel turned him down. So Facebook bought Instagram and copied everything uniquely Snapchat. Spiegel got Zucked.
So in looking at Snapchat’s daily active user growth over the past two years, it’s slowed substantially. That’s since Instagram implemented stories. But the situation is worse than just a decline in growth, it’s that Snapchat’s actually began to decline in DAUs now. So how does Snap plan to tackle this problem? I’m actually not sure that they know the answer to that question…
Last year Snap went all in on a redesign which was supposed to streamline the user experience and make Snapchat an app that didn’t have much of a learning curve, or that was the original pitch at least. Needless to say the redesign was a flop, and it forced the company to re-redesign to fix the problems it had created.
They’ve also invested heavily in Spectacles. Admittedly (due to some fantastic marketing) these were a hot commodity when they made their debut back in 2016. But the hype didn’t last long and the company soon found themselves with a great deal of unsold stock. Despite this, a second version of the Spectacles were released earlier this year and I still have no idea why they chose to do that and moreover I don’t know anybody that bought a pair.
The thing to note about Snapchat though is that apparently the issue of finances appears to be an afterthought in all that they do. But then again, the argument can be made that this is silicon valley so why have a business that’s sustainable when you can raise another round of funding and cross your fingers that the bubble never pops, right?
Which brings us to their scripted originals, an area that Snap is clearly very interested in cashing in on. They announced them to the public on Wednesday; 12 brand new original series will debut on the platform (some of which are already live). The content is short and in true Snapchat form is vertical. Vertical video is an area that Instagram has also been trying tap into recently with the launch of IGTV.
In my opinion video is going to become a very competitive market over the next few years. YouTube for a long time has reigned king, but in the last few years has successfully annoyed a lot of loyal creators on their platform. Mark Zuckerberg and ultimately Facebook wants to further invest in this medium and so they’re pushing hard through Instagram to compete, but perhaps Snap is starting to spitball ideas on how they might also compete further with video.
Regardless the thing that we can be certain of about Snap is that the company has yet to find the thing to pull them out of their somewhat dire circumstances. But I’d like to pose a question to anybody that may still be reading (and if you are thank you), if Snapchat wishes to remain relevant what should they be focusing their attention on at the moment?