Touted as the ‘biggest IPO since Facebook,’ Snapchat was the belle of the ball on Wall St. in March of 2017. The stock surged almost 60% within its first 48 hours as a public company.
But a stormy cloud loomed over Snap Inc., one that had followed it almost since inception. Just two months earlier, a menacing Silicon Valley adversary crossed an ominous milestone. Theirs was a rivalry that Mike Judge could have based Silicon Valley’s Pied Piper-Hooli rivalry on. (The timeline checks out…just saying).
Who could fault the debutantes for wanting to celebrate their IPO? The platform they had spent six years developing touted over 160 million daily active users, the lion’s share from the historically tough-to-reach (but trendsetting) high school and college age demographic.
Turns out, younger Millennials and Gen Z had learned from the cringe mistakes of older siblings and parents who martyred their reputations pioneering the media’s new world order.
Snapchat’s unique format was promising and responded to pervasive cultural criticism of social media at large.
SOCIAL MEDIA 2.0
“[Snapchat] has an underlying philosophy that runs directly counter to traditional social media,” CEO Evan Spiegel said at a 2018 Code Conference. “People realize competing with their friends for likes and attention is kind of unpleasant.”
Originally a sexting app, ‘Snaps’ between users were encrypted and ephemeral, a refreshing measure during a decade peppered with years-old posts coming back to destroy careers and haunt relationships.
Snapchat doesn’t even have profile pictures, but rather, wildly popular Bitmojis created in the user’s likeness.
With content mostly being shared among close friends, Snapchat doesn’t face nearly as many content moderation issues that plague Facebook, YouTube, and Twitter.
Snapchat had something authentic, original, trendy, valuable — enough to draw the attention of the Gavin Belsons across the Valley.
ZUCKERBERG’S GREEN EYES
Notably, Snapchat found itself in the crosshairs of heavyweight incumbent Facebook CEO, Mark Zuckerberg.
Less than 18 months after Spiegel sent the first Snap from his dad’s living room, Facebook released Poke, the first of many Snapchat-wannabe attempts.
To Zuckerberg’s credit, he knows a good thing — or big threat — when he sees it.
His 2012 $1 billion-dollar offer for pre-revenue Instagram raised eyebrows, but checks out as an exceptionally prescient move.
But in 2013, his ‘offer-you-can’t-refuse’ strategy failed him when Snap’s optimistic, 20-something-year-old founders declined his generous $3 billion offer for a nascent, profitless Snapchat.
“The fastest way to figure out if you’re doing something that is truly important to you is to find someone who will offer you a bunch of money to part with it,” Spiegel later reflected. “If you don’t sell … maybe you have the beginning of something meaningful.”
MARK, THE MIME
Poke flopped. But Zuckerberg was determined, intimidated…and perhaps a little bit spiteful.
In August 2016, Instagram released ‘Stories.’ The unmistakable similarities to Snapchat’s premise were shameless. TechCrunch’s first coverage of Instagram Stories called it a “Snapchatty feature,” “exactly like Snapchat,” “a clone of Snapchat,” and “a blatant ripoff.”
But Instagram was at the height of its popularity and growth. Its users already had followings established; its audience, younger than Facebook’s, readily adopted Stories en masse.
Snapchat’s young founders were about to learn a tough lesson: The early bird may get the worm, but the second mouse gets the cheese.
Just six months later — just two months before Snap Founder Evan Spiegel and Bobby Murphy rang the opening bell at the NYSE — daily active users on Instagram Stories surpassed Snapchat’s.
DO NOT RESUSCITATE
‘sooo does anyone else not open snapchat anymore? Or is it just me … ugh this is so sad,’ tweeted a concerned Kylie Jenner in early 2018. ‘Still love you tho snap … my first love.’
Snapchat’s stock sunk like a punctured blimp for more than three years. It only briefly breached its $17 IPO price once, before descending to new depths where it would drag along the $5-$7 price points for almost four months.
Copycats were Snapchat’s biggest problem, but not its only one. Key executives left the company at difficult times, the app’s redesign was poorly received, new features flatlined upon release, its Android performance was subpar, and it struggled to monetize its platform effectively.
From late 2017 through mid-2019, Snapchat routinely reported disappointing metrics. Spiegel was active in earnings calls, jumping in to field investor questions and reselling Snapchat’s potential — but investors were losing faith.
TARANTULAS, EASTER EGGS, AND AUGMENTED REALITY ABETMENT
In Snap’s darkest hours, an unexpected lifeline: Some banger filters.
Instagram had filters in Stories too — but Snapchat’s filters went viral regularly. Identifying the opportunity, Snap invested in a filter development platform for its users and creative team, and dialed up its focus on augmented reality.
2019 was a big year for Snapchat filters. When Snapchat’s gender swap filter went viral, the app rocketed to the #1 iOS download spot in the App Store. The second half of the year brought a winning streak that included lighting rods like the baby lens, tarantula-on-your-face lens, and age progression augmented reality filter. Recently, Snapchat’s anime filter made headlines.
Innovations coming to fruition gave Snapchat the CPR it needed. The company’s market cap registered an uptick, a harbinger of a reversal in Snap’s fortunes.
In late 2018, Snap released Snap Camera, a desktop app for Snap’s lenses. It fumbled out the gate. But in March 2020, as the workforce was sent home and Zoom meetings became standard, the desktop app saw a ten-fold jump in downloads.
Similarly, Snap Map, a location-based feature that shares users’ locations with friends via Bitmojis on a map, disappointed on arrival. But Snapchat kept iterating. It introduced Snapmap-based games, notably, an augmented reality Easter egg hunt reminiscent of Pokemon Go. Snap Map’s active monthly users skyrocketed. Facebook scrambled to follow suit.
Snap Maps also laid a foundation for Snapchat’s foray into premium publisher content. The company partnered with social analytics agencies to create searchable databases with billions of Snaps users elected to make public.
Access to this real-time raw source footage was a windfall for publishers, long spurned by Facebook and eager for access to content and audiences. Snap Map also features heat maps that log Snap activity levels. Both products are praised as tools for journalists.
Slow and steady, Snap’s user base began to climb.
In October 2020, Snap’s stock finally topped the all-time high set over three years earlier.
The following week, Wall St. did a double take when Snap reported an 18% uptick in new users and a whopping 52% increase in revenue. Snapchat reported it made significant improvements to its platform and monetization strategy, catalysts for its impressive bottom line growth. The stock popped another 25% overnight.
In a satisfying karmic twist, the influx of users may have been in part due to the ‘boycott Facebook’ movement that gained momentum over the summer while Zuckerberg was getting ripped in a congressional antitrust hearing for cloning competitors’ products.
Snapchat’s recent victories are well-deserved and long overdue.
It’s hard to imagine that Spiegel didn’t feel a pang of self doubt when he said it in the thick of Snapchat’s troubles. But he’s probably convinced now more than ever:
“Innovators always win in the long run.”