Struggling Snap plans an overhaul
“Call it the corporate equivalent of a Hail Mary pass,” said in .com. Just eight months after Snap, the parent of the disappearing-messages app Snapchat, raised billions of dollars in an initial public offering, the company is “planning a massive overhaul of its core product” to fend off rivals and rev up its user growth. After the company announced “dismal” thirdquarter results, with losses totaling more than $3 billion since March and audience growth flatlining, 27-year-old CEO Evan Spiegel “acknowledged a series of mistakes and shortcomings.” The app is too difficult and confusing to use, Spiegel said, and the company hasn’t done enough to attract users on Android, the dominant operating system in most overseas markets. On the money side, a new automated advertising system has confounded marketers, and Spectacles, the smart sunglasses that marked Snap’s first foray into hardware, have been a flop. Spiegel has for years been hailed as “a visionary” in tech circles. Now he’s admitting there were “significant flaws in his vision.”
“Things are bleak,” said Rhett Jones in Gizmodo.com. Wall Street investors swarmed to Snap this spring because of its youthful user base, ignoring that it had always lost money and that archrival Facebook regularly obliterates its social media adversaries. Four years ago, Mark Zuckerberg tried to buy Snap for $3 billion. When Spiegel turned him down, Facebook responded by “tacking just about every feature Snapchat has to offer” onto its own Instagram platform. Today, the Snapchat clone Instagram Stories has 300 million daily users. Snapchat has just 178 million. Spiegel is right: Snapchat “is quite hard to use,” said Mike Murphy in Qz.com, and that’s its biggest impediment to growth. It needs to stop being an “exclusive, insidery app that’s beloved by teens and flabbergasts their parents,” and follow Facebook’s path to profits: Become a place “where bored middle-aged people can catch up with friends and relatives while also seeing some ads.”
“Spiegel’s strategy has always been to go with his instincts over data,” said Josh Constine in TechCrunch.com. When Snap launched, that served him well. He understood his small audience. “But as Snap scales, that strategy is wearing thin.” Spiegel needs to be willing to test products before they launch, and “learn to trust the data” that emerges. The challenge now is to attract new people without “alienating the users Snap already has,” said Hayley Tsukayama in The Washington Post. Snap’s young fans are a “notoriously fickle cohort of tech users” and resistant to changes, such as more-visible ads. Spiegel doesn’t know if they’ll embrace the redesigned app. “We’re willing to take that risk for what we believe are substantial long-term benefits to our business,” the CEO said last week. Unfortunately, that isn’t exactly “the kind of talk that inspires confidence.”