Snap suffers from a fundamental paradox, one that is difficult for me to imagine an easy way to solve.
They've made their bones by being a uniquely fun and social way of a certain subset of the population to share their lives without parents dipping their head in and seeing what they're doing, ala Facebook. The UI is designed to generally support this; it is confusing and messy and understandable only by someone who is innately familiar with the app, or unfamiliar with the general conventions of UX.
But what happens when that user base isn't big enough and you have to expand? What happens when you need to figure out how to sell ads in an environment when you have next to no demographic information to target against? You'd have to fundamentally change the business: algorithmic timelines, a more sensible UI, more chipping away at the anonymity - all of which will turn off their core users in droves.
It's not about the size of the userbase; it's about business models. They burned cash to acquire users, but once they wanted income they too have gone the advertising route. This leads to the dilution of the core experience as you've pointed out: fudged timelines [1], denser advertising, backporting of missing social networking features, leading to networks that are largely interchangeable [2].
Snapchat can't really afford to be interchangeable with Instagram, because Facebook actually knows how to persuade advertisers to keep selling ads, while Snapchat just relies on its perceived clout among a coveted demographic, providing very few mechanisms for advertisers to gauge their ROI [3]. Sooner or later, advertisers will wisen up and pull out of Snapchat, making their business model crisis all the more acute.
Snapchat is one of the best-positioned companies to actually trial different business models for their app: they have a respectable install base, their platform is still sticky and desirable enough to maintain a sizeable userbase for some time, and their preexisting userbase is aging into being able to spend some money. Defection to Instagram isn't nearly as much of a threat as many make it seem: most Snapchat users are already on Instagram as well, so as long as they continue to engage with Snapchat, all is not lost.
Their map purchase was an effort to pivot the product's monetization back to hyperlocal factors, and solidify the idea that your Snapchat friends are part of your close-knit circle. Snapchat could be a better Foursquare, but it's not quite there yet.
Why are we so obsessed with the ads model. Why not start charging?
This is not a web app, where you have to take out your wallet and enter your CC info; all it takes is the scan of your fingerprint. I am sure people wouldn't mind paying a certain amount per year to keep using the app without creepy apps.
Sure, the revenue will be capped by the amount per year a user is willing to pay, but maybe the days of the fat cows are over?
UX in the context of their target audience is simple, elegant and concise. Young people have an easy time getting used to different gestures and their respective actions. And once you get used to it (it took me a while cause I’m a bit old), it’s super convenient.
There seems to be a natural arc to the process we keep reading about: Get investors & users with your cool design. Burn cash. Have an IPO. Flail as you try to monetize.
But, they're at least succeeding at something that Google couldn't do if their life depended on it, which is make a social thing people want to use.
What I don't get is why Google doesn't just swoop in either at the early stage or at flailing-and-monetization stage, buy them and stick them in their back pocket.
That means that FB was probably the last "web" or "app" big IPO. Now it's Amazon, Google or Facebook. Even Yelp is withering. Just like it has been impossible to start a new car or airliner manufacturer since the 1920s (except for Tesla), the opportunity for creating new large web companies has been shut by the entrenched trio.
Yelp? I don't see how that's a particularly good example. Priceline is 27 times their size in market cap.
Let's examine that withering though. Yelp sales by year:
2014: $377 million
2015: $549 million
2016: $713 million
2017: likely ~$850 million
Is that massive growth what qualifies as withering these days?
How about Zillow? Tracking to $1 billion in sales, growing very nicely still. Expedia also has a very good business, they just printed a huge quarter ($481m in operating income).
How about Uber and Airbnb? $100 billion in market cap, both fast growing businesses.
Netflix, $83 billion market cap, 100 million paying subscribers, still growing nicely.
How about Spotify? Over 60 million subscribers. Beating Apple, Amazon, Pandora and Google at streaming music.
How about Pinterest? They've just begun the process of making money with their platform. Things are looking just fine for them. Neither Facebook nor Google have been able to harm them in any meaningful way.
Since we're talking about Google and Amazon, let's switch gears into payments.
PayPal is a monster.
Stripe and Square are killing it.
How about in code, given we're talking about Google. Github? Google is a non-issue. Stackoverflow? No threats on the horizon, they have a serious, viable long-term business.
eBay and Craigslist are doing just fine. Amazon hasn't so much as dented either of them. eBay is printing $2 billion annually in net income and has an extremely healthy business. Even lowly Groupon is planning to stick around, they're doing $3b in sales and are now break-even.
Shopify is also killing it right now. $10 billion market cap, with a business that has grown by ~5 fold in four years (72% sales growth in their most recent quarter).
Then we get into dozens of other major web businesses, like LegalZoom, Coinbase, Redfin, DraftKings, GoDaddy, Shutterstock, Automattic, SoFi, Houzz, Lyft, Slack, Dropbox, Etsy, GrubHub, Credit Karma, SurveyMonkey, Reddit, Shutterfly and so on.
And that's while ignoring the vast array of major cloud businesses and enterprise companies, many of which compete with Google and Amazon (or will soon). Companies like Oracle, Microsoft, Cloudflare, Akamai, Digital Ocean and dozens more.
I do not think it is shut, but new entrants must offer something significantly better (or new and useful) than what is available from big 3. I am not sure what exactly Snaps value was beyond some funny face transforms. If nothing, it is not surprising if it fails once the novelty wears off.
I thought many times about world domination of these companies in each of these 4 areas which started their significant presence from year 2000 onwards .
Search - Google
Shopping - Amazon
Social - Facebook
Mobile - Apple ( Apple mobile journey started only after year 2000)
>The opportunity for creating "new large web companies" has been shut by the entrenched TRIO.
> Now it's Amazon, Google or Facebook.
> That means that FB was probably the last "web" or "app" big IPO.
> Even Yelp is withering.
> Just like it has been impossible to start a new car or airliner manufacturer since the 1920s (except for Tesla), the opportunity for creating new large web companies has been shut by the entrenched trio.
I just went long on snap after saying for years it's a shitty facebook and if you like social media or online ads then you should just invest in facebook. The latest conference call was very enlightening in that it showed me how much snapchat was doing wrong and what they can do to fix it. I think there's a real opportunity here. It's one thing if snap just can't outcompete facebook, and a whole other thing if the problem is simply snap's simple and easily fixable mistakes. I believe it's the latter and I think snap will at least 2x in 2 years.
I didn't dig into the financials all that much, or even listen to call so I'm approaching this from a place of ignorance, but I do happen to have five or six family members between the ages of 13 and 18 and all of them have unanimously reported to me that Snapchat is unequivocally over.
That's as anecdotal as it gets, but I'm also hard pressed to believe that they're all simultaneously unique. And as we've seen elsewhere in tech, once the "cool" vibe is gone (Yahoo, AOL, etc.), it's a long spiral to irrelevance.
I'm also very optimistic about Snap - it's one of the only social networks I use regularly.
That said, Snap could fix a lot of things and grow revenue and the stock could still not move - they're at about the same market cap of Twitter with a fraction of the revenue and user growth that is similarly stalling
There seems to be a hard boundary with reaching the demographic of users in developed nations and both Snap and Twitter are there
There's a third possibility that you should be cognizant of: Snap runs out of money.
If they have ~3 more quarters like the last one then they're insolvent. There may be a real opportunity here but not enough time to execute on it (especially given that every early employee can walk away now)
It took Facebook and Google a while to nail their advertising strategies. FB shares dropped down from an IPO price of $38 to less than $20 at one point.
Its a very competitive climate and Snapchat needs to keep innovating, but I wouldn't write Snapchat off too early.
I remember the analysts opinion on Facebook pre-IPO. Virtually no revenue. One year later Facebook presented their first gains. While I was sure Facebook would be able to do it back then, I don't see it with Snap.
They could profit from Snapcash though. How about integrating some Patreon-esque function where you can unlock private feeds by payment/subscription? For some art-forms that could really work out well.
I would say Snapchat is more similar to Twitter than it is to Google or to Facebook. Question is, what is there to incentivize a user to stay on the platform for a couple extra of minutes? I personally have no clue why Snapchat the company is so large — does it really need that many engineers or marketers to maintain an app that is essentially a messenger? The failed Spectacles experiment just seems to scream that this is a company with a lot of money and no clue what to do with it.
"[Evan Spiegel] has dismissed ideas that rely heavily on data, according to people who have worked with him. He prefers to study the experience of users for cues on revisions and new features, some of the people said.
...
One banker involved in the IPO said he thought the lack of voting shares and other decisions could imperil the company’s standing with investors, possibly hurting its stock price. But he said he didn’t articulate that to Snap’s executives for fear of jeopardizing his spot on the prized deal."
Matt Levine had a good take on the second point (as always): an underwriter used to lend its name and authority to an IPO as a gatekeeper, back when IPOs were rarer. Now they will sign onto just about any deal, and while they still do some due diligence, it means very little to investors that Morgan Stanley or UBS is underwriting.
“Nobody bought Snap because of Morgan Stanley's imprimatur. In this world, the underwriters are mostly just service providers. Certainly they have due-diligence obligations -- they really aren't supposed to take companies public if their financials are fraudulent -- but they don't have much leverage to insist on things like voting stock or forward-looking earnings guidance. The market decides stuff like that, not the underwriters. The underwriters just shut up and execute.”
Snapchat is a tabloid. The professionally made content is pure trash. I have Snap opened right now. Here is the top 5 pieces of Featured content it shows to me, a 25-yo male:
1) DailyMail: "Khloe [Kardashian] shocks with new FACE".
2) BROTHER: "Do You Actually Know The Right Way To Eat THIS?" (pictures of pizza)
3) FRIYAY: "Watch This to Start Your Weekend"
4) MTV: "These Rapper Names are SO Cringey"
5) NOW THIS: "CAUGHT ON TAPE: Drunk driver tries to trick police"
If Snap can corner the tabloid market, it could be a profitable business one day. But Facebook is on another level. Facebook has the low brow covered, but it also aggregates news. Indeed, Facebook's news sharing is so important that Facebook is a propaganda platform. Nothing on Snapchat matters. Spiegel seems to be a Steve Jobs devotee. The Jobs I imagine rolls in his grave every time he's compared to purveyors of digital junk-food and softcore porn.
Maybe the tabloids are to build the infrastructure and they plan to move upmarket quickly? Maybe Facebook courted users to share news while Snap is trying to court journalists? I googled "journalism at snapchat" and it looks like a lot of results trying to court young journalists.
Anecdotally, I've heard a lot of other journalists talk about Snap hiring good journalists. Separately, I swear yesterday I heard an article introduced something like; "So and so, from the NYT, currently at Snap, wrote this article for the Atlantic" which seems to reinforce that idea.
I don't use Snapchat and don't follow tabloids, but I feel like Snap has popped up on my radar occasionally with actual journalism.
I think Snap is doing the best pure "Social Media" experience of any service right now. Whether or not that can really be monetized without becoming another Facebook is a different story.
except snapchat has been effectively locking out and leading on android users. they're making a whole new app just to get some android users back because instagram is absolutely murdering them
I still think Snap is a good long play because so far they are the only social network to "get" Augmented Reality. Google has already had multiple AR missteps (Glass, Tango, Pokemon Go via Niantic), Facebook is playing AR copycat, Microsoft's AR is targeting big industry.
Snap's entertainment experience puts the viewer in the center of the action, similar to VR 360° experiences and Spectacles is a direct expression of that understanding. Snap's AR advertising (sponsored filters) has been an overwhelming success. I don't think a real competitor has emerged for Snap yet, as long as they stay the course.
Second, there's no barrier to entry there. Facebook's ~10000 engineers can recreate features with amazing swiftness, do it better than the first movers, then spread the feature quickly through its 1 billion+ user social network. If Facebook wants to beat snapchat at the AR game, they will do it when they feel like it.
Pokemon Go probably shouldn't be considered a misstep given it surpassed $1.2b in revenue and over 750 million downloads earlier this summer. Also as another poster notes below, AR is pretty wide open with both Instagram (FB) finding success with the exact same AR features/lenses as Snap, as well as apple integrating AI in to their most recent iOS release.
SNAP has already lost $40 mn on Spectacles, because they don't sell. This does not seem to be a strategy that is actually going to work. Meanwhile, Instagram Stories now has more users than Snap, and Snap's user growth has stalled, coming in below expectations for the second quarter in a row. So far they have also failed to improve their Android experience, which is not helping. At this point, SNAP seems more like TWTR than FB, except they don't have the kind of relevance, and therefore staying power, that the former has. Unless they can come up with a strategy for a turnaround, they may be dead in five years.
Looking at their most recent quarter (Q3) growth has slowed down to 80% YoY.
YTD revenue: $538MM
Q4 should be their best quarter but look at last year we see that Q3 was $128MM, followed by $165MM in Q4 and then $149MM in Q1. Using Q3 as a proxy with $208MM that would imply around $265–270MM in Q4.
Taking even the higher range at $270MM that would mean full 2017 year revenue: $808MM
With revenue growth slowing, user acquisition slowing, and monetization on a per user basis only increasing around 15–20% per quarter that would imply a difficult and challenging 2018.
Most likely full year revenue growth will be around 60% on the high end implying:
2018 full year revenue: $1,292MM
Keep in mind that losses are also growing this entire period so they are treading into Twitter territory of slowing growth and increasing costs.
Taking an 8x revenue multiple on next year’s revenue that would imply a value of: $10.3B today.
However, by Q1 2018 earnings reality will set in. Either Snap will be able to reinvigorate their growth, or with full year 2018 revenue projections it will be quite clear that people are continuing to pay a significant premium for future revenue that is quite possibly 2–4 years ahead of where the company is today.
What's important to understand is that Facebook as a platform is designed for advertising. It's an entertainment platform, people are wasting time so ads fill into that gap nicely and FB has been tweaking everything from how your news feed operates to forcing brands to pay to reach their followers all geared towards increasing revenue.
Twitter is also a good platform for advertising but again look at the frequency of ads that you see, notice that they don't charge to reach followers, and so forth.
Snap is in a worse position because primarily it's a messaging platform which doesn't lend itself well to ads and video ads always under perform because there isn't as much of a driver to interact like click through text or visual ads.
Snap will not get their growth rate next year will decrease, the only question is how much.
Stock-underwriting activity was in the doldrums in 2016— money raised by U.S. IPOs was the lowest since 2003, according to Dealogic—and banks were hungry for fees.
And goes on to describe how they set aside all of the signs that underwriting the offering was a bad deal. (Well good for them, they would make money regardless but the retail investors would not get a clear picture of the challenges in SNAP's business model until it was too late.
This was exactly the sort of activity that defrauded retail investors in the dot com bust. "What do you mean they don't have a business model? Look here, Morgan Stanley is underwriting their offering, don't you trust these guys to know what they are doing?"
I only used SnapChat a few times. From what I saw, it is a virtual message channel to make funny/silly face style communication with others, which is what many 10-19 yo need. And I actually did a simple analysis to explore some fundamental needs for that age group based on where their activities happens. And the communication method SnapChat and similar services offer fit what they want perfectly when being used as a massager. As long as they can hold that ground tight, they still have chances.
Also, Tencent just acquired some portion of SnapChat's equities. It has very strong and long track record and experience to make a lot of money from that age group, though in a different culture settings. It might be a 50/50 bet. Unfortunately, I'm too poor to buy in their stocks now and bet on the mid term.
People need to separate the product from the company. The product may be great, hot with the kids, whatever but at the end of the day Snap is a business.
Snap the company is in terrible shape and poorly run. Their last financials were, in a word, horrifying.
I think Snap is an interesting company. I'm very curious to see where it'll be in 3-5 years.
I wonder if kids not yet on Snap (because they're too young), will go directly to Instagram for its stories feature in addition to pictures, etc., or if it'll still acquire those future social media users. I think it's unlikely to grab many new adult users who are only now getting into social media.
If I were the head of Snap, I'd scrap the spectacles operation and spend time thinking about, and experimenting with, the future of media and social media.
Perhaps there's an iPhone-like opportunity.
I also think it needs to make its product way faster and more intuitive to use.
Snapchat is very confusing and poorly designed. 100% agree with you on the intuition part.
But I don't think spectacles really has much influence on future of company; that is, Snapchat will fail or succeed for other reasons entirely. It might look expensive on paper, but the glasses project is more of a marketing stunt than a mass market product. If people don't want to use Snapchat, they won't use a device that is designed for it. So problems with the platform will make people not buy them.
The app is being copied by others, and their app also is getting worse. More features, more bugs, more ads. People promote their image and show off happiness and wealth on their stories. It has all of the negative experiences of other social networks, and it's got the sexual harassment aspect, too. Many many female friends of mine receive unwanted dick pics.
It's easy to see why they're struggling to grow. My first impression was that it was a messaging solution. Then it morphed into a social network, and some people expect to add you as a friend as casually as they would on Facebook.
In my opinion, Snapchat was more intimate and not something you just add everyone.
As a result of people adding hundreds of low-intimacy relationships to an app that was intended to be a 1-to-1 messaging solution, they are becoming disenchanted with the novelty. It's no longer fun to use Snapchat like it used to be.
Looking back, if paying $5 for the app would have kept Snapchat from doing their media stuff and led to making it a secure, encrypted platform, I would've gladly bought it. Just sad that it's become Facebook.
Snap is extremely valuable, it has the customers everyone wants - it simply doesn't know how to monetize them. Give it time, if someone like me can figure out how to monetize this user base, I am sure, snap can, in time.
I think SNAP could benefit from being a content creation hub like YouTube. It's great for spontaneous content creation, even more than Instagram, and a ton of people already use it for that purpose.
Right now the app is mostly messenger focused. People with interesting, creative snap stories aren't advertised at all.
Snapchat could accomplish this with a "discovery" feature that shows snap stories a user might be interested in. It would also get users spending more time in the app and watching more ads.
Despite what other people think Snap suffers from, I see their stock as a great investment. It has the ability to gain quite well over the short term, regardless on how they turn out in the long term. Also, there is no denying they have a good grasp on the younger generation who doesn’t like fb or Instagram.
Snapchat always seemed like a one trick pony that anyone could easily replicate, which Instagram went and did. Not sure how this wasn't obvious to people.
[+] [-] exogeny|8 years ago|reply
They've made their bones by being a uniquely fun and social way of a certain subset of the population to share their lives without parents dipping their head in and seeing what they're doing, ala Facebook. The UI is designed to generally support this; it is confusing and messy and understandable only by someone who is innately familiar with the app, or unfamiliar with the general conventions of UX.
But what happens when that user base isn't big enough and you have to expand? What happens when you need to figure out how to sell ads in an environment when you have next to no demographic information to target against? You'd have to fundamentally change the business: algorithmic timelines, a more sensible UI, more chipping away at the anonymity - all of which will turn off their core users in droves.
[+] [-] niftich|8 years ago|reply
Snapchat can't really afford to be interchangeable with Instagram, because Facebook actually knows how to persuade advertisers to keep selling ads, while Snapchat just relies on its perceived clout among a coveted demographic, providing very few mechanisms for advertisers to gauge their ROI [3]. Sooner or later, advertisers will wisen up and pull out of Snapchat, making their business model crisis all the more acute.
Snapchat is one of the best-positioned companies to actually trial different business models for their app: they have a respectable install base, their platform is still sticky and desirable enough to maintain a sizeable userbase for some time, and their preexisting userbase is aging into being able to spend some money. Defection to Instagram isn't nearly as much of a threat as many make it seem: most Snapchat users are already on Instagram as well, so as long as they continue to engage with Snapchat, all is not lost.
Their map purchase was an effort to pivot the product's monetization back to hyperlocal factors, and solidify the idea that your Snapchat friends are part of your close-knit circle. Snapchat could be a better Foursquare, but it's not quite there yet.
[1] https://news.ycombinator.com/item?id=12191435 [2] https://news.ycombinator.com/item?id=13168804 [3] https://news.ycombinator.com/item?id=15050410
[+] [-] noncoml|8 years ago|reply
Why are we so obsessed with the ads model. Why not start charging?
This is not a web app, where you have to take out your wallet and enter your CC info; all it takes is the scan of your fingerprint. I am sure people wouldn't mind paying a certain amount per year to keep using the app without creepy apps.
Sure, the revenue will be capped by the amount per year a user is willing to pay, but maybe the days of the fat cows are over?
[+] [-] jehlakj|8 years ago|reply
[+] [-] glenstein|8 years ago|reply
But, they're at least succeeding at something that Google couldn't do if their life depended on it, which is make a social thing people want to use.
What I don't get is why Google doesn't just swoop in either at the early stage or at flailing-and-monetization stage, buy them and stick them in their back pocket.
[+] [-] mwcampbell|8 years ago|reply
[+] [-] warent|8 years ago|reply
[+] [-] cft|8 years ago|reply
[+] [-] TylerE|8 years ago|reply
[+] [-] adventured|8 years ago|reply
Yelp? I don't see how that's a particularly good example. Priceline is 27 times their size in market cap.
Let's examine that withering though. Yelp sales by year:
2014: $377 million
2015: $549 million
2016: $713 million
2017: likely ~$850 million
Is that massive growth what qualifies as withering these days?
How about Zillow? Tracking to $1 billion in sales, growing very nicely still. Expedia also has a very good business, they just printed a huge quarter ($481m in operating income).
How about Uber and Airbnb? $100 billion in market cap, both fast growing businesses.
Netflix, $83 billion market cap, 100 million paying subscribers, still growing nicely.
How about Spotify? Over 60 million subscribers. Beating Apple, Amazon, Pandora and Google at streaming music.
How about Pinterest? They've just begun the process of making money with their platform. Things are looking just fine for them. Neither Facebook nor Google have been able to harm them in any meaningful way.
Since we're talking about Google and Amazon, let's switch gears into payments.
PayPal is a monster.
Stripe and Square are killing it.
How about in code, given we're talking about Google. Github? Google is a non-issue. Stackoverflow? No threats on the horizon, they have a serious, viable long-term business.
eBay and Craigslist are doing just fine. Amazon hasn't so much as dented either of them. eBay is printing $2 billion annually in net income and has an extremely healthy business. Even lowly Groupon is planning to stick around, they're doing $3b in sales and are now break-even.
Shopify is also killing it right now. $10 billion market cap, with a business that has grown by ~5 fold in four years (72% sales growth in their most recent quarter).
Then we get into dozens of other major web businesses, like LegalZoom, Coinbase, Redfin, DraftKings, GoDaddy, Shutterstock, Automattic, SoFi, Houzz, Lyft, Slack, Dropbox, Etsy, GrubHub, Credit Karma, SurveyMonkey, Reddit, Shutterfly and so on.
And that's while ignoring the vast array of major cloud businesses and enterprise companies, many of which compete with Google and Amazon (or will soon). Companies like Oracle, Microsoft, Cloudflare, Akamai, Digital Ocean and dozens more.
[+] [-] ptero|8 years ago|reply
[+] [-] QML|8 years ago|reply
Only thing holding those trio up is a self sustaining loop of VC money and ad revenue.
[+] [-] fullshark|8 years ago|reply
[+] [-] LrnByTeach|8 years ago|reply
Search - Google
Shopping - Amazon
Social - Facebook
Mobile - Apple ( Apple mobile journey started only after year 2000)
>The opportunity for creating "new large web companies" has been shut by the entrenched TRIO.
> Now it's Amazon, Google or Facebook.
> That means that FB was probably the last "web" or "app" big IPO.
> Even Yelp is withering.
> Just like it has been impossible to start a new car or airliner manufacturer since the 1920s (except for Tesla), the opportunity for creating new large web companies has been shut by the entrenched trio.
[+] [-] KaoruAoiShiho|8 years ago|reply
[+] [-] exogeny|8 years ago|reply
I didn't dig into the financials all that much, or even listen to call so I'm approaching this from a place of ignorance, but I do happen to have five or six family members between the ages of 13 and 18 and all of them have unanimously reported to me that Snapchat is unequivocally over.
That's as anecdotal as it gets, but I'm also hard pressed to believe that they're all simultaneously unique. And as we've seen elsewhere in tech, once the "cool" vibe is gone (Yahoo, AOL, etc.), it's a long spiral to irrelevance.
[+] [-] nikcub|8 years ago|reply
That said, Snap could fix a lot of things and grow revenue and the stock could still not move - they're at about the same market cap of Twitter with a fraction of the revenue and user growth that is similarly stalling
There seems to be a hard boundary with reaching the demographic of users in developed nations and both Snap and Twitter are there
[+] [-] iaw|8 years ago|reply
If they have ~3 more quarters like the last one then they're insolvent. There may be a real opportunity here but not enough time to execute on it (especially given that every early employee can walk away now)
[+] [-] anindha|8 years ago|reply
Its a very competitive climate and Snapchat needs to keep innovating, but I wouldn't write Snapchat off too early.
[+] [-] dna_polymerase|8 years ago|reply
They could profit from Snapcash though. How about integrating some Patreon-esque function where you can unlock private feeds by payment/subscription? For some art-forms that could really work out well.
[+] [-] QML|8 years ago|reply
[+] [-] sjg007|8 years ago|reply
[+] [-] JumpCrisscross|8 years ago|reply
"[Evan Spiegel] has dismissed ideas that rely heavily on data, according to people who have worked with him. He prefers to study the experience of users for cues on revisions and new features, some of the people said.
...
One banker involved in the IPO said he thought the lack of voting shares and other decisions could imperil the company’s standing with investors, possibly hurting its stock price. But he said he didn’t articulate that to Snap’s executives for fear of jeopardizing his spot on the prized deal."
[+] [-] roymurdock|8 years ago|reply
“Nobody bought Snap because of Morgan Stanley's imprimatur. In this world, the underwriters are mostly just service providers. Certainly they have due-diligence obligations -- they really aren't supposed to take companies public if their financials are fraudulent -- but they don't have much leverage to insist on things like voting stock or forward-looking earnings guidance. The market decides stuff like that, not the underwriters. The underwriters just shut up and execute.”
[+] [-] econner|8 years ago|reply
Google: "Test 36 shades of blue and choose the one that performs best"
Apple: "Create beautiful product based on user experience and then convince you that you like it."
I don't think making all product decisions based on data is necessarily good, nor is designing in a vacuum.
[+] [-] yusee|8 years ago|reply
1) DailyMail: "Khloe [Kardashian] shocks with new FACE". 2) BROTHER: "Do You Actually Know The Right Way To Eat THIS?" (pictures of pizza) 3) FRIYAY: "Watch This to Start Your Weekend" 4) MTV: "These Rapper Names are SO Cringey" 5) NOW THIS: "CAUGHT ON TAPE: Drunk driver tries to trick police"
If Snap can corner the tabloid market, it could be a profitable business one day. But Facebook is on another level. Facebook has the low brow covered, but it also aggregates news. Indeed, Facebook's news sharing is so important that Facebook is a propaganda platform. Nothing on Snapchat matters. Spiegel seems to be a Steve Jobs devotee. The Jobs I imagine rolls in his grave every time he's compared to purveyors of digital junk-food and softcore porn.
[+] [-] godzillabrennus|8 years ago|reply
[+] [-] pfranz|8 years ago|reply
Anecdotally, I've heard a lot of other journalists talk about Snap hiring good journalists. Separately, I swear yesterday I heard an article introduced something like; "So and so, from the NYT, currently at Snap, wrote this article for the Atlantic" which seems to reinforce that idea.
I don't use Snapchat and don't follow tabloids, but I feel like Snap has popped up on my radar occasionally with actual journalism.
[+] [-] aphextron|8 years ago|reply
[+] [-] hi5eyes|8 years ago|reply
[+] [-] doublerebel|8 years ago|reply
Snap's entertainment experience puts the viewer in the center of the action, similar to VR 360° experiences and Spectacles is a direct expression of that understanding. Snap's AR advertising (sponsored filters) has been an overwhelming success. I don't think a real competitor has emerged for Snap yet, as long as they stay the course.
[+] [-] rm999|8 years ago|reply
Second, there's no barrier to entry there. Facebook's ~10000 engineers can recreate features with amazing swiftness, do it better than the first movers, then spread the feature quickly through its 1 billion+ user social network. If Facebook wants to beat snapchat at the AR game, they will do it when they feel like it.
https://techcrunch.com/2017/04/13/instagram-stories-bigger-t...
[+] [-] willmw101|8 years ago|reply
[+] [-] this_user|8 years ago|reply
[+] [-] Analemma_|8 years ago|reply
[+] [-] raiyu|8 years ago|reply
YTD revenue: $538MM
Q4 should be their best quarter but look at last year we see that Q3 was $128MM, followed by $165MM in Q4 and then $149MM in Q1. Using Q3 as a proxy with $208MM that would imply around $265–270MM in Q4.
Taking even the higher range at $270MM that would mean full 2017 year revenue: $808MM
With revenue growth slowing, user acquisition slowing, and monetization on a per user basis only increasing around 15–20% per quarter that would imply a difficult and challenging 2018.
Most likely full year revenue growth will be around 60% on the high end implying:
2018 full year revenue: $1,292MM
Keep in mind that losses are also growing this entire period so they are treading into Twitter territory of slowing growth and increasing costs.
Taking an 8x revenue multiple on next year’s revenue that would imply a value of: $10.3B today.
However, by Q1 2018 earnings reality will set in. Either Snap will be able to reinvigorate their growth, or with full year 2018 revenue projections it will be quite clear that people are continuing to pay a significant premium for future revenue that is quite possibly 2–4 years ahead of where the company is today.
What's important to understand is that Facebook as a platform is designed for advertising. It's an entertainment platform, people are wasting time so ads fill into that gap nicely and FB has been tweaking everything from how your news feed operates to forcing brands to pay to reach their followers all geared towards increasing revenue.
Twitter is also a good platform for advertising but again look at the frequency of ads that you see, notice that they don't charge to reach followers, and so forth.
Snap is in a worse position because primarily it's a messaging platform which doesn't lend itself well to ads and video ads always under perform because there isn't as much of a driver to interact like click through text or visual ads.
Snap will not get their growth rate next year will decrease, the only question is how much.
[+] [-] ChuckMcM|8 years ago|reply
EDIT: From the article:
Stock-underwriting activity was in the doldrums in 2016— money raised by U.S. IPOs was the lowest since 2003, according to Dealogic—and banks were hungry for fees.
And goes on to describe how they set aside all of the signs that underwriting the offering was a bad deal. (Well good for them, they would make money regardless but the retail investors would not get a clear picture of the challenges in SNAP's business model until it was too late.
This was exactly the sort of activity that defrauded retail investors in the dot com bust. "What do you mean they don't have a business model? Look here, Morgan Stanley is underwriting their offering, don't you trust these guys to know what they are doing?"
[+] [-] LiweiZ|8 years ago|reply
Also, Tencent just acquired some portion of SnapChat's equities. It has very strong and long track record and experience to make a lot of money from that age group, though in a different culture settings. It might be a 50/50 bet. Unfortunately, I'm too poor to buy in their stocks now and bet on the mid term.
[+] [-] hkmurakami|8 years ago|reply
[+] [-] nojvek|8 years ago|reply
https://www.google.com/amp/s/m.economictimes.com/small-biz/s...
After this came out, all my Indian friends around the world instantly boycotted snapchat and moved to whatsapp
In a way I'm glad snapchat is suffering. The CEO has done a number of cringeworthy things.
[+] [-] code4tee|8 years ago|reply
Snap the company is in terrible shape and poorly run. Their last financials were, in a word, horrifying.
[+] [-] stevenj|8 years ago|reply
I wonder if kids not yet on Snap (because they're too young), will go directly to Instagram for its stories feature in addition to pictures, etc., or if it'll still acquire those future social media users. I think it's unlikely to grab many new adult users who are only now getting into social media.
If I were the head of Snap, I'd scrap the spectacles operation and spend time thinking about, and experimenting with, the future of media and social media.
Perhaps there's an iPhone-like opportunity.
I also think it needs to make its product way faster and more intuitive to use.
[+] [-] deftturtle|8 years ago|reply
But I don't think spectacles really has much influence on future of company; that is, Snapchat will fail or succeed for other reasons entirely. It might look expensive on paper, but the glasses project is more of a marketing stunt than a mass market product. If people don't want to use Snapchat, they won't use a device that is designed for it. So problems with the platform will make people not buy them.
The app is being copied by others, and their app also is getting worse. More features, more bugs, more ads. People promote their image and show off happiness and wealth on their stories. It has all of the negative experiences of other social networks, and it's got the sexual harassment aspect, too. Many many female friends of mine receive unwanted dick pics.
It's easy to see why they're struggling to grow. My first impression was that it was a messaging solution. Then it morphed into a social network, and some people expect to add you as a friend as casually as they would on Facebook.
In my opinion, Snapchat was more intimate and not something you just add everyone.
As a result of people adding hundreds of low-intimacy relationships to an app that was intended to be a 1-to-1 messaging solution, they are becoming disenchanted with the novelty. It's no longer fun to use Snapchat like it used to be.
Looking back, if paying $5 for the app would have kept Snapchat from doing their media stuff and led to making it a secure, encrypted platform, I would've gladly bought it. Just sad that it's become Facebook.
[+] [-] farazbabar|8 years ago|reply
[+] [-] yalph|8 years ago|reply
[+] [-] klondike_|8 years ago|reply
Right now the app is mostly messenger focused. People with interesting, creative snap stories aren't advertised at all.
Snapchat could accomplish this with a "discovery" feature that shows snap stories a user might be interested in. It would also get users spending more time in the app and watching more ads.
[+] [-] eyeareque|8 years ago|reply
[+] [-] RandomInteger4|8 years ago|reply
[+] [-] gaius|8 years ago|reply
[+] [-] kurusii|8 years ago|reply
https://pbs.twimg.com/media/CWhO2jIUYAAbuiK.png