The Fall Of Snapchat

And the perils of ignoring the data

13Dec

When I first heard of Snapchat, like many people, I thought it was another stupid fad. I couldn’t see the appeal of a social media platform which deleted my stuff 24 hours later. It seemed like it had been created for one very specific purpose…

Yet, before I knew it, Snapchat had become one of my favorite apps and by far the social media platform I used most often, and the numbers reflected this. Snapchat doubled its users in 12 months between 2015 and 2016 to 200 million users, faster than any of other social media site.Even more impressive, an astonishing 75% of those users were on it daily.

They even started to successfully monetize the app in really creative ways. They maximized on the appeal of vertical video early and eventually garnered enough clout to convince larger brands to reimagine their approach to advertising solely for their platform. Between 'geofilters' and sponsored stories, they found exciting ways around the ‘banner blindness’ most of their predominantly young users had long developed. Snapchat was actually making money at a time when even Twitter couldn’t figure out how to convert users into sales (and it still can’t). The users were happy, advertisers were happy and Snapchats value skyrocketed.

Skip forward another 12 months and Snapchat is in a state of crisis. They are no longer being hailed as the harbingers of the future and instead, being examined as a cautionary tale. And while significant moves are being made to save the company, the question remains…

What happened?

The Rise of Snapchat

A year ago, Snapchat was the hottest app in the market, it was even slated to replace Facebook messenger as our main messaging platform, and people were far from scoffing at the idea. It had managed to approach social media with new levels of originality at a time when most people had concluded that between the big three, Facebook, Twitter and Instagram, every base had been covered. Following his instincts, CEO Evan Spiegel had a very clear idea of what he wanted for his app, despite conventional wisdom pointing otherwise.

The most obvious way Spiegel went against the grain was his wholehearted adoption of the ephemerality of content. With Facebook already the world’s photo album, the permanence of shared photos was one of the oldest cautionary lessons we had all learned about the internet. Flipping this on its head was an insane gamble. And not only did it pay off, it became one of the most appealing features of the app with 35% of users saying it was their favorite feature according to Variety.

This had the added benefit of boosting engagement. If your friend’s story was going to disappear in 24 hours never to be seen again, it created a sense of urgency embedded in the app's fundamental design. Users on average found themselves on the app for 25 - 30 mins, daily. With an emphasis on local events, it strived to create smaller communities all around the world and reinvented the way we share information.

Each person on the app was able to take a photo, record a video, edit and publish it within seconds. Peoples stories became a new favourite way to witness world events, big and small. If Twitter had turned their users into citizen journalists, Snapchat had turned their users into amateur filmmakers.

However, the real key to its success was Spiegel’s focus on one segment of society; young people. According to the U.S census, in 2015, 60% of U.S 13 to 34 years old's with a smartphone were Snapchat users. This did not happen by accident. Everything Snapchat did in its early days was geared towards making it appealing to kids. They understood before anyone else that ephemeral content would appeal to this generation and that kids would get a kick out of figuring out the secret features and sharing it with their friends in school.

This is why they intentionally made the app’s interface confusing, knowing it would also have the added effect of scaring off adults who typically have less patience with new tech. This was a premise Spiegel based on his experiences with his gran that he recalled in a Q1 earnings call: ‘We do tend to market our products directly to younger people because, frankly, they are more interested in learning how to use new technology products. And that’s sort of — is partly inspired by trying to teach my grandma how to use email, and she’d really prefer to just talk on the phone . . . And so I think, over time, that strategy has worked for us.'

The common theme linking all these innovations was Spiegel and his affinity for going with his gut over data or the general opinion of the market. He understood his core audience and did everything one could do right when it came to establishing a new tech company.

So how did he mess up?

A Rocky Transition

The problem with instincts is, when proven right, it just deepens your resolve. This seems to be what happened to Spiegel. His vision for Snapchat had been proven right in a big way and all of the ‘haters’ were wrong.

However, this also led to an element of stubbornness.

Even before Snapchat’s parent company, Snap Inc filed the paperwork for their IPO in February 2017, Snapchat’s growth had begun to slow down. It fell under its already very conservative IPO value of $17 for the first time just 4 months after they had gone public. Yet, even though they were struggling to add new users, Spiegel refused to adjust some pivotal elements of the app. His tactics had worked well when all he had to focus on were young users.They still loved the app. But as the company grew, his ideas remained focused on that small subset to the exclusion of everyone else.

He refused to listen to advice, ideas and most importantly, the data. Snapchat had built itself up through grassroots techniques but had become too big for this model. Contrast that with Facebook which made a point of switching to the Timeline format before anyone really wanted it to. They just banked on the data being right and the hope that people would eventually stop whining and just get used to it. Which they all did.

Snapchat instead approached the issue with a ‘this is how we made it here so this is how we will continue’ mentality. So its primary audience were young people? That meant those were the only people who mattered and everyone else would just have to figure out the app eventually. Most of the early adopters were iOS users? Then only focus on developing the Apple interface and ignore Android users pleas for a better interface. People mostly use it to connect with their personal friends? Then ignore algorithmic feeds and all the data that clearly pointed to the fact that people wanted a more intuitive feed not only prioritizing their closest friends but also featuring snappers they might be interested in.

And the deeper you get, the more mistakes you see, all of which seem, at least in retrospect, completely avoidable. They even refused to help their budding influencers monetize their stories or publicize them to a wider audience. And from the get-go Spiegel had refused to even examine the possibility of incorporating targeted ad’s, labeling them ‘creepy’ which, fair a point as it is, certainly did nothing to encourage investors. Snapchat went from the pinnacle of originality to a stubborn old unchanging corporation in no time at all.

The Price of Obstinacy

Today, Snapchat is in a bad place.

According to it latest earnings report, Its share price went down 18% in Q3 and its user growth has all but stagnated. Every single company which essentially cloned Snapchat (Facebook, Instagram, and WhatsApp) are doing exceptionally better than them at what they created; stories. WhatsApp statuses now have 300 million daily users which is almost double Snapchats entire user base. And they all did it by simply listening to what the data said users wanted.

Even Snapchats quirky side project, their spectacles with camera’s embedded in them, created all the buzz they could have hoped for when it was announced. The Venice beach location had hour-long queues when they dropped their fun little Snapbot vending machines. Now, $40 million worth of unassembled glasses sits unsold because they didn’t exploit all that buzz. The spectacles didn’t enter the open market for over 5 months after they were announced (it took 8 months for them to reach Europe) and by the time they had, no one really cared anymore.

It also had problems drawing in emerging markets the way Facebook eventually did. Due to the high bandwidth needed to use the app and the company’s refusal to adjust to those markets. The CEO allegedly claimed he ‘didn’t want poor people using his app from Spain and India’, a statement he currently being sued for.

The Lesson?

Snapchat is trying to make a comeback. Spiegel, in a move of apparent desperation, is going back on almost every single stance he once held.

He has since announced that they have started looking into new ways to help influencers monetize their stories to try and plug the stream of deserters for more financially beneficial platforms like Youtube and Patreon. They are finally trying to prioritize Android users and people in areas with lower bandwidth, leading them to completely revamp the app's interface in recent weeks. They have also adjusted the feed layout so it no longer just goes by who most recently uploaded but instead adopting an algorithmic feed which lays out stories by your favorites and now even recommends popular snappers.

Most controversially yet, they are looking at ways to start appealing to people over the age of 34 for the first time, which means they have started making the layout more intuitive. This risks alienating their core demographic who have a penchant for deserting app’s the second their parents join them out.

Whether these techniques work or not, only time will tell. Maybe there is something to be said for Spiegel's about-turn in the face of extinction. Maybe. Until then, however, there is an important lesson for other companies inside and outside of the tech industry; the limitations of one's instinct. Spiegel vision for Snapchat took them right to the top, but he was unable to accept and bend to other paths at a pivotal time in the company’s growth and now they are suffering the consequences.

We live in an age of very rapid shifts in taste and fads. The hottest thing today might be the lamest thing tomorrow and your never too young to become outdated. Businesses need to understand that no matter how clever or original they are, there is always benefit in taking into consideration what the data says. In my opinion, there was no real reason for Snapchats decline other than this inability to embrace change. They prioritized their ‘cool company’ designation over the need to grow or make money and now, they are failing on all fronts.

Sunset

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