In need of adult su­per­vi­sion

Financial Mail - - DIAMONDS & DOGS -

The grow­ing pains of the uni­corn tend to fol­low a fairly recog­nis­able path. The founder and a few mates have the ini­tial in­spi­ra­tion in a haze of Canopy Growth’s finest, they drop out of Stan­ford and move into a garage, sleep goes out of the win­dow and they bang out the ini­tial prod­uct pow­ered largely by pizza and ex­otic phar­ma­ceu­ti­cals.

Traf­fic takes off, the ven­ture cap­i­tal­ists hurl money in their di­rec­tion, they hire ev­ery­body in sight, move into a fancy of­fice — and sud­denly some­body has to take con­trol of what has rapidly be­come a size­able busi­ness.

This is the prob­lem that is writ large at Snap, where 28-year-old founder Evan Spiegel ap­pears to be in dire need of adult su­per­vi­sion if he is to make a long-term suc­cess of his wildly pop­u­lar dis­ap­pear­ing mes­sage app. Snapchat still has 188-mil­lion daily users, which goes a long way to ex­plain­ing Spiegel’s “billionaire vi­sion­ary” sta­tus, but it des­per­ately needs to make progress on mon­etis­ing that traf­fic.

It has missed four of its last six earn­ings tar­gets, and pushed out a re­design, at Spiegel’s in­sis­tence, that users greeted with a loud rasp­berry.

There’s a strong sus­pi­cion that In­sta­gram is eat­ing its lunch, and ex­ec­u­tives are leav­ing fast, with only four left of the nine who pitched Snap’s road­show to in­vestors a cou­ple of years ago.

The share price tells the story in bold, tank­ing from a high of $27 about 18 months ago to its cur­rent $9. Spiegel has hired an Ama­zon vet­eran as CFO, but the mo­men­tum had bet­ter swing fast.

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