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Buried in the announcement is how Snap is shutting down Zenly and firing everyone who worked on it in Paris, France. Zenly is a location-based social applicatio
by gregdoesit 4y ago
Buried in the announcement is how Snap is shutting down Zenly and firing everyone who worked on it in Paris, France. Zenly is a location-based social application (think: you can see & connect with your friends on a map). Snap bought them in 2017 for a reported $250-350M when they had ~4M installs. Now Zenly is at 40M MAUs, growing strong as I heard from employees working there.
Zenly is (was?) popular in Japan, Southeast Asia, Eastern Europe and the Nordics. In Japan, it is head-on-head as the most used social app with Line.
I find it odd that Snap just shuts down an app that was so popular in regions that is hard to gain foothold for any social media team. They could have likely sold it or spun it out, but chose not do so.
It's also not like the app is a major cost to the company. Less than 100 people work on it across Snap, most based in Paris, France.
- derefr 4y ago> They could have likely sold it or spun it out, but did not do so. Doing either would have required de-acquiring the team that develops and runs it. Whereas I assume the whole point of acquiring Zenly was to acquihire those folks to work on Snap (and likely then lay off the now-redundant engineers previously working on Snap’s geo features.)
- jollybean 4y ago$300M is too much for an acquire unless they are super AI scientists who have know-how that's worth a few billion. $30M - maybe. If they have 30 person team and they are really good. I remember that deal and it stunk. It feels like one of those pilfering Private Equity deals where someone is getting payback for something or the other.
- aabhay 4y agoDivide that price by the # of users and the $300M can make sense...
- jollybean 4y agoThey had 4M users, it's not enough unless it was growing hyperbolically, which it wasn't.
- Melatonic 4y agoOr it was to kill off the competition intentionally. They may have seen Zenly as a major threat at some point.
- gregdoesit 4y agoUpdated with how shutting down Zenly means firing the whole team. The Zenly engineers always worked on Zenly, and not on Snap. If the goal was to acquihire, they are letting their whole acquisition go. It smells like a complete change in direction. I am just unsure why not sell an asset that seems pretty valuable, or spin out, keeping ownership stake.
- twoodfin 4y agoPresumably they’re going to write off the cost of the acquisition for tax purposes. I suppose that doesn’t preclude selling the assets like the brand and the software, but since it looks like they’re in a hurry to reach profitability, the certainty of booking tens of millions of future tax offsets must have seemed appealing.
- onlyrealcuzzo 4y agoIf you've never made any money - how much are you really thinking about taxes?
- twoodfin 4y agoThat’s the point: They’re clearly attempting a shift from growth to profitability. Those future profits look that much better to investors if they have (say) $50M in tax offsets already banked.
- 4y ago
- tempsy 4y agoNever heard of it which doesn’t seem like a particularly good thing for a social media app/product.
- galdosdi 4y ago> Zenly is (was?) popular in Japan, Southeast Asia, Eastern Europe and the Nordics. Would you clarify which of the above regions you're in? Personally I'm in the USA so I would not expect my not having heard of it to be in any way relevant.
- nikanj 4y agoI’m currently in Scandinavia and never heard of it
- tempsy 4y agoI’m in the US. If it’s only popular in a few regions and likely pulls very little ad revenue on its own then is it terribly surprising that they are shutting it down? Seems like a failed acquisition that they didn’t really do much with.
- deleted 4y ago[deleted]
- kevinventullo 4y agoWas it profitable?
- rhacker 4y agod
- sashahrzg 4y agoI don't see how those two ideas connect
- zibby8 4y ago> In Japan, it is head-on-head as the most used social app with Line. How is that possible? A lot of people in Japan use Line (86M MAU in 2020). With 40M MAUs in the entire world, Zenly is much smaller than Line. Anecdotally, I've seen young people in Japan using Snap. Haven't seen any Zenly.
- karmasimida 4y agoExactly Line is like whatsapp and Zenly? Never heard any Japanese people mentions it or listed it along side their Line account
- redthrow 4y agoApparently it was popular among middle & high schoolers back in 2018, but probably not among adults https://twitter.com/livedoornews/status/1068834535838633986?s=20&t=MGapVp1rSJgsMza-22ZdMg https://twitter.com/livedoornews/status/1068834535838633986?...
- karmasimida 4y agoright, also 2018 is already 4 years ago.
- jdshaffer 4y agoI was wondering about that, too. I straight up asked my students here in Japan (College, 1st year) what apps they couldn't live without, and it was almost completely YouTube, Line, and TikTok. I've never even heard of Zenly... nor seen it in the wild.
- ec109685 4y ago“Class, today we are going to talk about how you can’t believe everything you read on the internet”.
- acchow 4y agoI used Similiarweb.com to look up the top free social networking apps on Apple App Store in Japan: - 1 LINE app - 2 Discord - 3 zenly - 4 Mirrativ（ミラティブ）ゲーム配信のライブ配信アプリ - 5 ＋メッセージ（プラスメッセージ） - 6 Pairs(ペアーズ) 恋活・婚活のためのマッチングアプリ - 7 Facebook https://www.similarweb.com/apps/top/apple/store-rank/jp/social-networking/top-free/iphone/ https://www.similarweb.com/apps/top/apple/store-rank/jp/soci... I think this is a ranking of new installs and not existing installs tho?
- lawgimenez 4y agoI’m from Southeast Asia, never heard of Zenly.
- Rastonbury 4y ago40M MAU globally is not head-to-head with Line (which way bigger), Line is also primarily a messaging app like Whatsapp, not sure if that commenter knows what they talking about
- twawaaay 4y agoWhatever you think of it, there is probably good chance there was some reason for it. Companies rarely write off huge investment for no reason. Just because you or I don't see it does not mean it does not exist. The owners are probably much better informed that we are. More likely explanation is they did some kind of calculation and decided it is not worth it and very likely we will not get to know it.
- enumjorge 4y agoI agree it probably made sense for Snap, but it is still a shame when a product people liked gets shut down when in a different context, their traction would have been considered a success.
- javajosh 4y agoA: I don't understand why they did this. It makes no sense. B: Companies don't do things for no reason. A: What is the reason then? B: I don't know - most likely they did some sort of calculation. FYI, this type of exchange is information-free.
- deleted 4y ago[deleted]
- rexreed 4y agoOften it doesn't make sense. They need to cut, so they cut. They need to spend, so they spend. They need to hire, so they hire. Is this usually consistent? No. They acquire companies and later shut them down. They hire tons of people then fire them, then later have to hire back people and start up projects that duplicate what they bought but later killed and then realize that the competition is in that market so they start it up again, but in a worse way. They allocate time and money into major moonshot projects and internal efforts and later kill off those projects they invested tons of time and money into. Startups are sociopathic in many ways. As I learned long ago, don't expect venture-backed and post-IPO startups to act "logically". It's all a big hustle and a scramble for market share and whatever other metrics. There's a lot of collateral damage along the way, employees and customers be damned. Startups aren't a "meritocracy" and management teams don't operate by best ideas win. Markets are brutal, management teams are opportunistic and often self-serving, investors are focused on growth at all costs and hitting metrics, and companies don't operate in ways that suit logic. They suit the needs to capture markets or do whatever they do to get ahead. Sometimes ethically, sometimes not.
- Kiro 4y agoIt's definitely not popular in the Nordics.
- cheriot 4y agoWow, like when Google shut down Orkut despite it being huge in Brazil and India.
- onlyrealcuzzo 4y agoIf Orkut got integrated into Google's ecosystem, spinning it out probably would've cost more money than they could've sold it for. I imagine they factored this in before deciding to shut it down rather than sell it.
- randoglando 4y ago> If Orkut got integrated into Google's ecosystem It would have met the same fate as if it hadn't - i.e., it would have been killed off.
- grishka 4y agoAnd then all those Brazilians flocked to VKontakte because apparently VK groups were somehow similar to what Orkut offered. I remember the rush to translate everything into Portuguese.
- ekianjo 4y agoBeing big in one country is hardly a success, though. For a platform ideally you'd want to work across multiple regions.
- gota 4y agoIf the country has 1 billion or 200 million people, as was the case, it's hard to argue your point I mean, you have to have a pretty strict definition of success if, say, 100M daily active users does not qualify (Disclaimer: last number made up)
- JustSomeNobody 4y agoThey probably wanted to bring it to other countries, ie: USA, but couldn't figure a way to do it without getting sued. People here are different. They'll abuse the shit out of an app like that to do all sorts of nasty stuff.
- collegeburner 4y agoNah man as a heavy snap user i can tell you the bots and scammers are not native english speakers. Most of the abuse is targeted at America bc we have money but it's perpetrated out of brazil, bangladesh, india, etc.
- crhulls 4y agoI'm the CEO of Life360, another early and now at scale location app - I'm sad to see Zenly being shut down. The team there truly pioneered making rich map interfaces. If the rumors are true (I hope they aren't - I agree with the comment this seems myopic) we might be a good home for members of the team who still want to stay in the mobile location space. My email is chris at life360.com
- automatoney 4y agoFor anyone unaware, Life 360 is largely used as surveillance technology so parents can monitor their children's locations. Hardly comparable to a social media app - it essentially desensitizes children to pervasive surveillance, and sends the message that their parents don't trust them. I'm obviously extremely biased, but I'd suggest anyone looking at this company consider the implications of location tracking children, teens and young adults. https://www.washingtonpost.com/technology/2019/10/22/dont-leave-campus-parents-are-now-using-tracking-apps-watch-their-kids-college/ https://www.washingtonpost.com/technology/2019/10/22/dont-le... https://www.wired.com/story/life360-location-tracking-families/ https://www.wired.com/story/life360-location-tracking-famili...
- DerArzt 4y agoTo add on, Life 360 has gotten in hot water several times for selling the location data of the people who use their service to 3rd party data brokers.
- crhulls 4y agoI'll push back on this a bit - we have always been transparent about our business model. We have always clearly explained how we use data to monetize. We did not have a single incident of abuse of this platform. When we started monetizing this way, it was not considered controversial, and the world has obviously shifted and evolved. That being said, it was a small portion of our revenue, and we decided to shut down this part of our business. Well intentioned people can disagree in good faith, and we decided the controversy wasn't worth it even though our practices were misunderstood and sensationalized. We shifted our strategy to using a purely aggregated model that does not use any type of device level identifier (e.g. no IDFA, no in-house work around identifiers), which should not be considered controversial. Trust is paramount for us, so we decided to stick to our core, which is subscriptions and devices.
- scarface74 4y agoHow does Snap monetize it?
- jpollock 4y agoMy understanding is that it can be extremely difficult to layoff individuals/teams inside of France. It might be easier to shut down an entire company/line of business.
- diligiant 4y agoIt’s gonna cost them a lot anyway.
- nerbert 4y agoA judge can still refuse to shut down the company. If employees want to take action and protect their rights, they probably can. Especially if the company is profitable.
- lazide 4y agoI'd be surprised if it is profitable. Depending on the way the acquisition was done, they could just cut ties and let it implode in short order. Not a huge amount the judge could do, practically, if the parent doesn't have a lot of other ties to the country.
- b112 4y agoIn civil court, you can typically register a judgement in another country, and use that to begin asset seizure and collection actions. This is certainly true in common law courts. The judgement can be challenged locally though. (My point is, there is recourse. Whether it succeeds??)
- lazide 4y ago1) even in France, it’s hard to go after investors if a company fails, assuming the paperwork is done correctly. 2) it isn’t clear how the actual corporate structure was setup or how the acquisition occurred. 3) all of this of course depends on how it was structured, managed, etc. But yeah, there is also the ‘go ahead, make me’ element, which even if it never comes to that, plays a part in all this. Some folks do dumb things with structuring, but I’m guessing there is at least 2 corp entity layers and a national border between any one of the French folks employed there and the decision makers and money. If the other players know the person with the money can just walk away, it tends to make things more polite. If the person with the money also makes folks comfortable before closing up shop (severance, for instance), it also smooths the way for an amicable resolution and reduces hurt feelings.
- madrox 4y agoOften in these situations, there are a few reasons. Monetization of users isn't always as good as the MAU would make it seem, or those users have significant overlap with Snap and don't represent a net gain to the company. This is especially true if acquisitions are more of a defensive measure (buy a business so someone else can't gain access to the users you already have). Finally, sometimes in a bad market a business can be worth more as a write-off than a sale. Depending on Snap's balance sheet, they may get more money back in tax breaks than they would if they sold it (and, again, giving a competitor access to users you already have). This is all hypothetical, of course. I don't know anything about this specific situation, but it's why lots of seemingly successful products get killed.
- ec109685 4y agoHow does the write off being more valuable than selling for parts work?
- mguerville 4y agoYou have $100m in operating income, but you shutter a business unit and take a writeoff for $100m, you now have $0 profit and therefore 0 tax liability (you saved ~$37m assuming that’s the effective tax rate). If you sold the business for parts, for $50m you end up with $150 in profit (technically could be less if you took an impairment (like a writeoff but not for the full amount since you clearly recouped some value). You pay taxes on your profits and end up net negative against the scenario where you just shut it down. This is overly simplistic but the gist of it is directionally correct.
- ec109685 4y agoGot it. Not sure you’re supposed to write off a business for 100M that you can only shutter for parts for 50M.
- eunos 4y agoAccording to an insider, they'd worried Zenly could be used by Snap's competitors https://twitter.com/GergelyOrosz/status/156499481770840883 https://twitter.com/GergelyOrosz/status/156499481770840883
- grapeskin 4y ago> In Japan, it is head-on-head as the most used social app with Line. This is my first time ever hearing of Zenly. Line is unavoidable. Instagram and Twitter trail it and Zenly is likely up there with AIM and ICQ. There’s no way this is is true lol
- ekianjo 4y agoSame here, never heard of it until now.
- ravenstine 4y agoTo avoid laying off more Snap employees they're firing those weird Europeans working on an app most Americans haven't heard of. It's damage control.