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Given the product and strategic path they're on the only thing they can do to create value is restart user growth. Their business model depends on them becomi
by skewart 9y ago
Given the product and strategic path they're on the only thing they can do to create value is restart user growth. Their business model depends on them becoming a powerful brand advertising platform (brand advertising is when companies want to spread general awareness of their brands and influence the public's overall impressions of what a company stands for, even if it is far removed from any actual moment of purchase; TV has traditionally been the dominant brand advertising platform, but as cable TV is beginning its decline into irrelevance the top spot is up for grabs). They're not into collecting super detailed info on users, so advertising can't be too targeted, and they're not pushing a shopping angle either.
And in order to become a compelling brand advertising platform they need massive reach (i.e. at least a billion users).
How can they restart user growth? Well, that's probably going to be pretty hard at this point. I suspect they'll need to broaden their appeal from their initial teens/college/just-out-of-college user base to an older and more diverse crowd (just like Facebook and Instagram did). That will probably require some UI redesign to make things a bit more intuitive to navigate, and perhaps other feature changes that make it a more attractive destination.
However, I think it's basically all but impossible for them to restart the growth engine at this point. A lot of people have heard of Snapchat, tried it, and decided they don't like or just don't see the point when they already use Instagram.
Making matters worse is the fact that their initial market is incredibly hard to hold on to. Things almost never stay super popular across multiple "generations" of high school and college kids (except for default utilities that everyone at every age uses). In other words, it's unlikely that Snapchat will be popular with high school and college kids in five years.
So, I suspect that as their metrics stagnate and decline over the next few years they will increasingly focus on a series of moonshot new product ideas (like Specs) and hope that something sticks. But there's little reason to suspect that they'll be any better at building a random new product than any other start-up or big company out there (and, in fact, I'd argue there are some good reasons to think they'll be worse).
As is probably pretty obvious, I'm quite bearish on Snap these days. I was extremely bullish a year and a half ago, but they've just been so slow to execute when it mattered. They lost their wave of growth. At this point, I'd be surprised if they can catch another.
- Inconel 9y agoYour comment seems very well thought out. Can you expand a bit on why you think Snap would actually be worse at building a random new product than any other startup or big company?
- skewart 9y agoThanks! That's nice to hear. From what I can see, there are three reasons why they are in a worse position to create a new, successful product than any other startup or big company. 1. They are already pretty big and successful. It's extremely hard for companies to really shift focus unless they're truly desperate. Opportunities that are great in the long term usually seem painfully small, or impossibly distant, in the short term, and it's hard to attract and motivate talent internally to these projects. 2. They seem overly confident. This is annecdotal, but they do seem to have a culture that breeds and rewards a bit of cockiness. That doesn't bode well for them rewarding people who push a humbler view of the company and empathize deeply with new kinds of users. 3. Their grand vision isn't very good, and that likely reveals a deeper lack of understanding about life and human nature. From what I understand, their guiding mission is roughly to help people share experiences in real time and more or less live in the moment. The thing is, most people don't want to share all that much of their lives with many people - most people want to escape their own lives most of the time. And for those who do want to share, there are many different more or less equally good ways to do it. Snapchat's core functionality is easily comoditized. There's no benefit to scale for Snap's users, given the company's vision. Yet they don't seem to realize that or care. And that's a critical mistake. It doesn't exactly build confidence in their ability to execute. That said, the fact that they see themselves as a camera company does bode well. I suspect we will be a much more camera-centric culture in five or twenty years than most people think. And their playfulness is a great way to overcome the creepiness of cameras. They may end up in the right place at the right time to ride that wave.
- kinsho 9y agoRegarding your third point....are you sure about that? I feel that many people do want to share the interesting moments (more or less) of their life online. If this wasn't true, Instagram wouldn't be such a popular platform and a threat to Snapchat. That being said, I'm bearish on Snapchat, at least in the short term. I don't see much opportunity for growth, not unless it manages to capture the hearts and minds of the next budding wave of teens.