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Snap, and also Twitter, are in a bit of a bind. They can't change anything without alienating some of their most passionate users, but if they change nothing th

Snap, and also Twitter, are in a bit of a bind. They can't change anything without alienating some of their most passionate users, but if they change nothing they will stagnate and cede all of the possible benefits of innovation to their competitors. A company that lets its competitors come up with all the new ideas is probably not going to survive very long. It's understandable that Snap wanted to improve its design. On principle there is nothing wrong with that, but that's not what they actually did because the CEO ignored a lot of warnings that the changes were not improvements.

manigandham 8y ago
> A company that lets its competitors come up with all the new ideas is probably not going to survive very long. They can just acquire those companies, which is the strategy used by Google, Facebook, Microsoft and other giants that are moving faster than startups now by deploying capital faster and better than ever before.
- adventured 8y ago
  They can't easily afford to splurge on the best acquisitions at this point. Instagram cost $1 billion. YouTube cost $1.65 billion. Snapchat is heading toward bankruptcy or a forced sale if they don't dramatically cut costs. They're down to $1.4b in cash (from $2b three quarters prior). They can't safely buy an Instagram at this point. Pretty soon they're going to be the $1-$2 billion acquisition. Twitter is in much better financial condition of course, although a $1-$2 billion acquisition is still a huge chunk of change for their business ($6b in cash, ~$300m-$400m per year in profit). Twitter's problem is that their cash is precious, because their business doesn't generate a ton of it (they've been persistently hauling billions of cash around from their past funding days). That cash is a big safety buffer that they can't easily replace if they burn it. They can use their market cap of course, and shareholders will only tolerate so much of that at their size and given their non-growth context. Twitter needs to figure out what it wants to do before the market 'realizes' what they're actually worth (zero growth gets you an optimistic ~20 PE * $350m profit = $7 billion; a further 2/3 drop from here); it's similar to the old Yahoo scenario pre Alibaba (no growth, the market temporarily giving you an abnormally high valuation, a trapped product). The giants are seemingly moving fast because they have comically obscene amounts of cash pouring in and can't figure out what to do with it (other than share buybacks ala Facebook, or other capital return programs; in Google's case, they're just piling it up or buying real estate). So they spray it all around. A billion dollar acquisition mistake is meaningless if you're Microsoft and generating ~$40b in operating income (next four quarters). For Snapchat, it'd be fatal. Google's net tangible assets are up to $149 billion now. They're starting to look more like a financial company than a tech company. Like a private equity company that happens to own a lucrative search engine monopoly and a media company (YouTube). JP Morgan's net tangible assets by contrast are $182b and Bank of America is $170b.
  - manigandham 8y ago
    Sure, but I'm talking about buy competitors before they get to the 1B acq price, otherwise they're already close to Snap's size. Agree with the rest. It's both interesting and troubling that the giants have so much cashflow that they continue consuming new companies for a long time without worry. All companies die eventually but we're in a whole new world with 1T market caps.
    - adventured 8y ago
      Instagram had 30 million monthly active users when they were acquired. Roughly 1/10th the size of Snapchat today. It was the growth curve that caught Facebook's attention of course. YouTube was a bleeding disaster of a business when Google scooped them up, for a price that was universally mocked as outrageously high. I'm skeptical even Twitter with their $6b in cash could absorb that type of mess and see it through. The problem you run into, in trying to buy interesting competitors, is they're not for sale for cheap if they're actually any good. That's the specific reason Instagram went for what was considered a very high price. When growth looks that good, the VCs will fund you indefinitely, so the acquirer has to pay a massive premium. In the post Flickr era you can't buy Instagrams for $50m.
    - nradov 8y ago
      You mean competitors like WhatsApp? The price can go from 0 to $1B awfully fast.
  - subsaharancoder 8y ago
    Might be in Google's best interests to keep Snapchat running, for the simple fact that Snapchat is Google's largest customer (>50% of App Engine annual revenue) of App Engine.
teen 8y ago
pretty sure the design changes were to monetize it, not improve it.
- kkarakk 8y ago
  All of snapchat's changes felt like a game transitioning from paid to free to play. similar levels of confusion and forum visits required to navigate the UX changes and how i would now "pay" by viewing ads to view the content i had before.
aaronbrethorst 8y ago
Twitter’s problems aren’t confusing: fix the abuse problem and add an edit button.
- icelancer 8y ago
  > fix the abuse problem This has been a problem for about 30 years online, so good luck with all that. > add an edit button User tweets out something nice. 10k retweets. Then changes it to something political.
  - xref 8y ago
    HN both has an edit button and is not susceptible to your hypothetical. these are solvable problems.
    - icelancer 8y ago
      HN is, how should I say, not Twitter in any sense of the platform. At all.
    - zapzupnz 8y ago
      HN also has a stricter set of community guidelines (which aren't in themselves all that strict to start with), more heavily moderated, and a generally well-educated, mature-minded user base that is generally appreciative of these two elements.
      - dgellow 8y ago
        And way less users.
        zapzupnz 8y ago
        Yep, way fewer users. And what spam accounts exist get squashed pretty quickly. If HN ever releases statistics on the number of users, I'm sure they have more dignity than to include spam and bot accounts — which is, I'm sure, the majority of Twitter accounts.

manigandham 8y ago

> A company that lets its competitors come up with all the new ideas is probably not going to survive very long. They can just acquire those companies, which is the strategy used by Google, Facebook, Microsoft and other giants that are moving faster than startups now by deploying capital faster and better than ever before.

adventured 8y ago
They can't easily afford to splurge on the best acquisitions at this point. Instagram cost $1 billion. YouTube cost $1.65 billion. Snapchat is heading toward bankruptcy or a forced sale if they don't dramatically cut costs. They're down to $1.4b in cash (from $2b three quarters prior). They can't safely buy an Instagram at this point. Pretty soon they're going to be the $1-$2 billion acquisition. Twitter is in much better financial condition of course, although a $1-$2 billion acquisition is still a huge chunk of change for their business ($6b in cash, ~$300m-$400m per year in profit). Twitter's problem is that their cash is precious, because their business doesn't generate a ton of it (they've been persistently hauling billions of cash around from their past funding days). That cash is a big safety buffer that they can't easily replace if they burn it. They can use their market cap of course, and shareholders will only tolerate so much of that at their size and given their non-growth context. Twitter needs to figure out what it wants to do before the market 'realizes' what they're actually worth (zero growth gets you an optimistic ~20 PE * $350m profit = $7 billion; a further 2/3 drop from here); it's similar to the old Yahoo scenario pre Alibaba (no growth, the market temporarily giving you an abnormally high valuation, a trapped product). The giants are seemingly moving fast because they have comically obscene amounts of cash pouring in and can't figure out what to do with it (other than share buybacks ala Facebook, or other capital return programs; in Google's case, they're just piling it up or buying real estate). So they spray it all around. A billion dollar acquisition mistake is meaningless if you're Microsoft and generating ~$40b in operating income (next four quarters). For Snapchat, it'd be fatal. Google's net tangible assets are up to $149 billion now. They're starting to look more like a financial company than a tech company. Like a private equity company that happens to own a lucrative search engine monopoly and a media company (YouTube). JP Morgan's net tangible assets by contrast are $182b and Bank of America is $170b.
- manigandham 8y ago
  Sure, but I'm talking about buy competitors before they get to the 1B acq price, otherwise they're already close to Snap's size. Agree with the rest. It's both interesting and troubling that the giants have so much cashflow that they continue consuming new companies for a long time without worry. All companies die eventually but we're in a whole new world with 1T market caps.
  - adventured 8y ago
    Instagram had 30 million monthly active users when they were acquired. Roughly 1/10th the size of Snapchat today. It was the growth curve that caught Facebook's attention of course. YouTube was a bleeding disaster of a business when Google scooped them up, for a price that was universally mocked as outrageously high. I'm skeptical even Twitter with their $6b in cash could absorb that type of mess and see it through. The problem you run into, in trying to buy interesting competitors, is they're not for sale for cheap if they're actually any good. That's the specific reason Instagram went for what was considered a very high price. When growth looks that good, the VCs will fund you indefinitely, so the acquirer has to pay a massive premium. In the post Flickr era you can't buy Instagrams for $50m.
  - nradov 8y ago
    You mean competitors like WhatsApp? The price can go from 0 to $1B awfully fast.
- subsaharancoder 8y ago
  Might be in Google's best interests to keep Snapchat running, for the simple fact that Snapchat is Google's largest customer (>50% of App Engine annual revenue) of App Engine.

teen 8y ago

pretty sure the design changes were to monetize it, not improve it.

kkarakk 8y ago
All of snapchat's changes felt like a game transitioning from paid to free to play. similar levels of confusion and forum visits required to navigate the UX changes and how i would now "pay" by viewing ads to view the content i had before.

aaronbrethorst 8y ago

Twitter’s problems aren’t confusing: fix the abuse problem and add an edit button.

icelancer 8y ago
> fix the abuse problem This has been a problem for about 30 years online, so good luck with all that. > add an edit button User tweets out something nice. 10k retweets. Then changes it to something political.
- xref 8y ago
  HN both has an edit button and is not susceptible to your hypothetical. these are solvable problems.
  - icelancer 8y ago
    HN is, how should I say, not Twitter in any sense of the platform. At all.
  - zapzupnz 8y ago
    HN also has a stricter set of community guidelines (which aren't in themselves all that strict to start with), more heavily moderated, and a generally well-educated, mature-minded user base that is generally appreciative of these two elements.
    - dgellow 8y ago
      And way less users.
      - zapzupnz 8y ago
        Yep, way fewer users. And what spam accounts exist get squashed pretty quickly. If HN ever releases statistics on the number of users, I'm sure they have more dignity than to include spam and bot accounts — which is, I'm sure, the majority of Twitter accounts.