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Snap went from an incredible growth rate to a terrible growth rate because of a few simple (and sadly, quite common) strategic mistakes: 1. Underestimating the
by Devolver 9y ago
Snap went from an incredible growth rate to a terrible growth rate because of a few simple (and sadly, quite common) strategic mistakes:
1. Underestimating the competition.
Evan Spiegel clearly believed that Zuckerberg would never figure out how to beat him. He seems to have concluded that he was smarter, more creative, and more agile than Zuck. He profoundly miscalculated Zuck's relentlessness and is now losing badly as a result.
Takeaway Lesson: Hubris kills.
2. Attacking a market where you have few/zero major advantages.
Evan seems to have concluded that the only scaleable way to monetize a social app is with digital advertising.
The problem?
With <10% of Facebook/Instagram's user base, a tiny fraction of Facebook's ad targeting data, and a set of ad products that were 4-5 years behind Facebooks, why would any advertiser ever dedicate more than their 1-5% "experimental" budget to Snapchat?
Answer: They wouldn't, and likely never will.
Takeaway lesson: Don't take a juggernaut head on. You will get crushed every time.
3. Misunderstanding your own advantages.
Snapchat originally took off because it offered an underserved segment of the market (young people) something Facebook and Instagram did not: a relatively safe, low-judgment place to express themselves.
By focusing on the advertising market (and inevitably turning to privacy-destroying data aggregators like Experian to buy ad targeting data on its users), Evan threw that away.
Takeaway lesson: Never lose sight of the needs and desires that led your users to choose you.
More here: https://exponents.co/snap-facebook-key-competitive-strategy/ https://exponents.co/snap-facebook-key-competitive-strategy/
- mrkurt 9y agoI think the simpler explanation is: a social media monopoly replicated a smaller competitor's best features and let their dominance do the rest. Let's not pretend it's possible to compete with Facebook on a level playing field.
- RandallBrown 9y agoFacebook recreated snapchat mere months after it launched with an app called Poke. It was literally the exact same app, but people didn't use it. It's more than just recreating the best feature.
- dsacco 9y agoAnd then Facebook tried again last year and succeeded with Instagram Stories, passing SnapChat in users as of August: https://techcrunch.com/2017/08/02/instagram-stories-anniversary/ https://techcrunch.com/2017/08/02/instagram-stories-annivers...
- abalos 9y agoAs much as it pains me to say it, I stopped using Snapchat because my experience with Instagram Stories + Messaging in Instagram is simply better. Especially on Android. The Snapchat Android app is completely garbage. :|
- giobox 9y agoI think most people think of "Instagram Stories" when discussing how Facebook copied Snapchat, rather than Poke. In a very short amount of time Facebook where able to clone one of Snapchat's signature features AND gain large numbers of new users in the process (as of March 2017 they reported Instagram stories having 200 million users per day, overtaking Snapchat in the process).
- tqkxzugoaupvwqr 9y agoFacebook replicated Snapchat’s story feature in all three of its major brands: Facebook, Instagram and WhatsApp. Instagram is also relentless in adding new filters (filters people put on their face while recording themselves) and is Snapchat’s most fierce competitor from what I can tell.
- DrJid 9y agoThen there's also SlingShot back in 2014. Which went nowhere
- aylmao 9y agoI mean, yeah. A lot of startups could replicate Snapchat in that sense. It's the market dominance that really did it. Instagram already had the attention, brand, and network.
- SomeStupidPoint 9y agoI think it's perfectly possible to compete with Facebook business to business (if you have SNAP levels of funding, at least). You just can't beat them at being Facebook.
- marcell 9y agoFrom the article: > But it did not work with Snapchat and Evan Spiegel, who seems to have turned down Facebook’s $3,000,000,000 without hesitation or second thought. I think it did work out pretty well for Evan Spiegel and Snap Inc., since they're trading at around $18B on the stock market despite lots of concerns around their business...
- milkshakes 9y agocloser to $16B in after hours action, who knows what tomorrow will bring?
- brianwawok 9y agoYou are comparing 3 billion cash in pocket vs 18 billion paper money. How much stock has he sold so far?
- nrhk 9y agoHe's made more than he would've gotten. Insiders sold way ahead of the game, though not all their shares.
- lefstathiou 9y agoI am fascinated by Facebook. It is one of the most valuable companies in the world but if you took it away from me (and I would argue most people) tomorrow morning it would have almost no impact on our day to day lives. I actively use it and my girlfriend is obsessed with Instagram but if she didnt have it she would just go back to reading blogs on Tumblr or wherever. I would hate to live in a world without Google or its ecosystem of applications (like Maps) or a world without Microsoft Excel/PowerPoint but I believe a world without Facebook would look almost identical to the world we have today.
- willitpamp573 9y agoYou don't run a business, I can tell.
- deleted 9y ago[deleted]
- enjo 9y agoReally? It'd have a HUGE impact on my life. Nearly every aspect of my social life is planned on Facebook. It's the one place where nearly everyone I know are. Facebook, for me, is really just the best event planning tool in existence. I'd also instantly lose contact with a bunch of acquaintances and friends. I've moved around quite a bit in my life and Facebook connects me with those people. When I travel it's the platform I use to reach out to the people I want to catch-up with. It'd be a real bummer to lose that. It's true that the news feed aspect of Facebook is something I wouldn't miss. It's something I never use anymore, politics has taken care of that. But all of the features around it ARE things I deeply care about.
- trhaynes 9y agoI use a browser extension to display:none; the news feed section. I still get notifications (if I want to click the badge) and can browse/search, but don't get random content shoved in my face. It works well for me.
- 9y ago
- immad 9y agoYou make it sound like Snap is a failure. It is worth $16b even after the affect of this earnings report. Facebook might have slowed their growth but they did make a huge company before they were slowed down.
- blackflame7000 9y agoBut what is Snap really worth? They don't have assets and don't make a product but rather provide a service. A service is only as valuable as the number of people who use it. If Facebook continues to steal users away from Snap at the current rate, it will go they way of myspace before long.
- immad 9y agoIts a liquid stock with volume of $10m+/day. It seems like its worth what other people are willing to pay for it.
- blackflame7000 9y agoVery true, but just like bitcoin was once 5$ and now 5000$ nothing of substance is preventing it from returning to 5$ once again other than "investors" (more like speculators). As Rupert Murdoch learned the hard way, what was worth 580 Million in 2005 was worth $35 Million by 2011 once the users left.