“It’s the most viral platform ever because people need to screenshot, share, and talk to their friends,” Jarre says. “Because it is disappearing in 24-hours, they have to tell their friends or else no one will see it… There’s an insane word of mouth power. That’s how Shaun gained his followers from scratch.”
Jarre actually gained his notoriety first on Vine and then moved over to Snapchat.
So how much are the most popular stars making?
Compensation ranges widely. Consulting can pay up to $150 an hour and although Snapchatters and companies wouldn’t publicly disclose specific payments, two top Snapchat users said that the most coveted stars now earn anywhere from $1,500 a day to more than $100,000 for a week’s work for a company. That’s in the ballpark of what influencers on other social platforms are getting paid. Marcus Johns told Business Insider that a Vine ad campaign paid off his college tuition, and advertisers have sent influential Instagram users on fully paid trips around the world to Instagram events from their accounts.
Of the many things that keep founders up in the middle of the night, one of the biggest may be the looming specter of the “Big Four” as a competitive threat. Founders are taught to have a good answer for the question that inevitably rises in pitch sessions or fundraising excursions: what would you do if Facebook, Google, Apple or Amazon entered your market? How would you react?
Perhaps, if recent history is any indication, the reaction should be: bring it on. At least if you’re a social app and Facebook has you in their crosshairs.
While most point to Mark Zuckerberg’s apparent $3 billion offer for Snapchat as the first publicly expressed moment of validation for Snapchat’s business model, Zuckerberg actually had his eye on the nascent LA-based startup for some time. The Facebook Poke app, released in December 2012, was the first app built with the intent of dethroning Snapchat’s reign as the pre-eminent ephemeral app. Spiegel himself acknowledged as such, sending a note of congratulations to Facebook:
“Snapchat co-founder Evan Spiegel responded to Facebook’s new Poke app today with the brief statement, “Welcome, Facebook. Seriously.” He declined to comment further.”
Columnist MG Siegler encapsulated the sentiment of this veiled threat:
I also can’t help but wonder if maybe this is a message from Facebook: don’t want to come work with us? Fine, we’ll clone your service in a couple weeks and ship it to a billion users.
What actually happened is that a healthy percentage of those billion users not only ignored the Poke app but continued using Snapchat. In fact, Snapchat’s monthly share actually grew from December to January ’13, leading one to suspect that perhaps Facebook’s focus on the space also helped turn more attention towards Snapchat that may not have been there to start. A rising tide lifting all boats, indeed.
Facebook’s inability to gain any traction for Poke led to the infamous talks of late 2013 where supposedly an offer of $3 billion was made to Spiegel by Zuckerberg that was rebuffed.
The Empire Strikes Back
So after failing to lure Snapchat into the fold, Zuck went back to the well again and had his Facebook Creative Labs team give it another go, this time with an app called Slingshot, an asynchronous photo sharing app that again focused on the dynamics that made Snapchat such a success: ephemerality, spontaneity & customization.
Now we’re only a month into it’s release, so it’s probably too early to write Slingshot off entirely. But the numbers don’t look good. After briefly cracking the top 50 upon launch, the app has tumbled out of the top 1000 and its growth is slowing monumentally.
Which leads us back to our earlier question: is Facebook still an entity to be feared in the consumer-focused, mobile-social landscape?
Leaving aside the question (for a moment, anyway) of whether or not it would have behooved Snapchat to accept Facebook’s offer, it seems painfully obvious that once a startup has established itself as the market leader, it makes it very difficult for anyone to catch them, even if that competitor has billions of dollars at their disposal.
So what does this mean for Facebook? If they can’t entice a valuable startup (think: north of a billion dollar valuation) to sell at the price they want, they will inevitably have to overpay for the peace of mind of not having a competitor chip away at their market share in social.
Creative Labs Holds the Key
But perhaps we’re asking the wrong question. Maybe what we ought to be asking is something much deeper than that. And that is this: Can Facebook’s Creative Labs team come up with software that seriously challenges ascendant competitors on their own turf? Or perhaps more importantly, can they produce experiences independent of both the core Facebook functionality AND that of their competitors? Because that’s what ultimately will get them out of this reactive cycle of producing copycat apps and having to go back to the well (sometimes in vain) to acquire their competitors.
Facebook should be setting up Creative Labs to function more like Google X’s project teams: independent of Facebook and designed to build stand-alone experiences that leverage the creative muscle of the larger company but are ultimately their own projects capable of standing on their own accord.
Easier said than done, of course. And perhaps Facebook has already started along that path. But after missing out on ephemeral media and having to pony up $19 billion for WhatsApp, it’s high time for Facebook to start developing their own moonshots and putting a scare back into smaller upstarts in mobile/social instead of buying everyone else’s. Otherwise, startups will have their answer to the “800 pound gorilla” question, at least relative to Facebook: and that is that the emperor has no clothes.
Snapchat has filed three trademarks. The first, which was filed in 2012 and granted in July 2013, sounds like the Snapchat we’ve all come to know. It defined Snapchat as a “computer application software for mobile phones, portable media players, and handheld computers, namely, software for sending digital photos, videos, images, and text to others via the global computer network.”
These two filed in July paint a different picture:
“Computer application software for processing electronic payments to and from others that may be downloaded from a global computer network”
“Electronic transfer of money for others; providing electronic processing of electronic funds transfer, ACH, credit card, debit card, electronic check and electronic, mobile and online payments”
As Alyson notes in the piece, these didn’t come with any accompanying patents so it’s unclear whether or not they have concrete plans to do anything in mobile payments or if this is a hedge against Facebook and other companies who may be making their way into this space.
It’s also interesting in light of a decrease over the last two quarters in the amount of independent mobile payments startups funded.
StrictlyVC posted an interview today with VC Niko Bonatsos that was kind of interesting:
Controversy is great when it comes to building a brand and acquiring users for zero marketing spend. Obviously, you have to graduate from one controversy to another, or three to six months later there’s fatigue, but it can be controversy because of behavior, content, or because your product annoys people.
Obviously he doesn’t mean all of this completely literally. But this kind of thinking kind of worries me. Controversy for controversy’s sake doesn’t help anyone. Ask Chatroulette, Clinkle, Color, Diaspora or any multitude of other startups that got reams of press for being mired in controversy.
Buzz can be useful, be it positive or negative. But true network effects only come about if a service or product is compelling enough for people to use, irrespective of chatter from the outside. That’s what the Snapchat team built. In fact, the loyalty of the product’s users has kept it from falling off the map after phone numbers were exposed in various hack attemps, after unseemly information came out about Evan Spiegel etc. These were all things that came out after Snapchat had crossed the chasm and built up a huge following well into the so-called “late majority.”
The thing is Snapchat can win this battle so long as this method of sharing remains en vogue. They have an established brand, they have an identity and they have, as the article states, an ecosystem completely divorced from that of Facebook or any other social network, for that matter. And they’re completely committed to that format & methodology: something that Facebook can’t claim. How many times have you seen large companies create an “X” killer only to see it die on the vine? Heck, Google is still flailing away at trying to kill Facebook with Google+. Sometimes all of the resources in the world can’t help you against an upstart that’s built some brand equity: particularly when its ethos has been to position itself as something that’s almost diametrically opposed to your service’s principles.
By the time Snapchat caught Facebook’s attention, it was too late. The December 2012 launch of Facebook Poke (a shameless Snapchat clone) was a total flop.And once Facebook was vulnerable, reportedly offering $3 billion for the service, Spiegel said no. Today Zuck has responded, albeit somewhat subtly. The stats around Messenger alone show that Facebook is ready to fight for the kids, whether the social network needs them or not.
They might not need today’s teens right now. But Facebook will need them later, particularly to help bring in the generation that follows them. Facebook has been top dog for a long time and they have a huge moat that very, very few startups have hope of competing against. They aren’t going away anytime soon. But historically, social networks have been transient and have followed the patterns of their youngest users. I’m sure that’s been causing Zuck some sleepless nights.
That last part addresses worries that, because 4.6 million usernames and associated partial-phone numbers leaked, spammers could be attempting to send spam Snaps to every username they can find. Many people only allow Snaps from friends, but others accept them from anyone with their user name, opting for privacy by obscurity.
Spiegel is denying this lift in spam over the weekend is attributable to the breach, which seems pretty implausible. How else would so many have gotten those messages?
“The bull case on Snapchat is that there’s a company in China called Tencent that’s worth $100 billion. And Tencent is worth $100 billion because it takes its messaging services on a smartphone and then wraps them in a wide range of services—things like gaming and social networking and emojis, and video chat—and then charges for all these add-on services. And it has been one of the most successful technology companies of all time and is worth literally $100 billion on the Hong Kong Stock Exchange. Maybe that’s [CEO Evan Spiegel’s] plan. Maybe Evan’s plan is to transplant the Tencent business model into the U.S., which nobody has actually been able to do yet.”
That’s true, particularly since Tencent already invested money in Snapchat. But the question whether or not the Tencent model can even be replicated in the United States. Each of those markets are separate entities with a multitude of competitors, as opposed to China where technology tends to follow a “winner-takes-all” model. Plus we’re so used to social apps being free that I think charging for even what would be considered “add-ons” wouldn’t go over particularly well.
I’m only going to link to the discussion on Hacker News because the people who leaked the database are making it available for download and I don’t want to give them the traffic. But this is a poor job by Snapchat after essentially ignoring the issue for months and then releasing a half-hearted statement a few days ago saying how it wasn’t much of a big deal. Guess it was a bigger deal than they thought.
Snapchat hadn’t provided a public statement until now, and what it’s offered isn’t very satisfying. “Theoretically, if someone were able upload a huge set of phone numbers, like every number in an area code, or every possible number in the U.S., they could create a database of the results and match usernames to phone numbers that way. Over the past year we’ve implemented various safeguards to make it more difficult to do.”
I don’t know why this debate (usually triggered by Snapchat since it’s the most recognizable form of ephemeral media) so often delves into an absolutist argument for one or the other. The truth is that both Internets can and should co-exist. Data can and should have a shelf life. And that shelf life can and should be 10 minutes, 5 weeks or forever depending on what the originator of that data thinks it should be. Thankfully, Farhad reaches the same conclusion at the end of this piece:
Big Snapchat-like growth could mean that we’ll have a Forever Internet and an Erasable Internet living side by side. Some users mainly will choose apps and services that save our data by default, while others will choose instant deletion.
It may end up that the Erasable Internet lives exclusively on mobile and that ephemerality becomes convention on smartphones whereas anything that interacts with the traditional, browser-based, desktop experience remains accessible forever, subject to the laws and rules of Big Data. Plus, so many social networks being built on mobile are closed systems anyway, when you think of all of the mobile messaging apps that are walled gardens and only allow data to be shared between existing users of the app.
Snapchat has no revenue, and Spiegel said the company is in no hurry to make money from advertisers. “There are a lot of things in our product that make it appealing for advertisers, but we want to do it right,” Spiegel told a packed room at the Bellagio hotel in Las Vegas, according to the person who was present.
When you have the kind of money they have, with investors (and potential acquirers) beating down your door begging you to take more money, I guess you can be as patient as you want to be.
Lots of noise after the supposed turndown of a few billion dollars from Facebook by Snapchat founder Evan Spiegel. The WSJ’s Farhad Manjoo had probably the best of the “get off my lawn” perspectives (kidding! sort of), questioning not just the logic of the app itself but the wisdom of using teenagers as a gauge of future behavior on consumer internet platforms. This led to yesterday’s post from Josh Constine of TechCrunch and today’s post from Business Insider chief Henry Blodget, both of which were designed to help assuage the hysteria from both sides of the fence by quantifying (as best as possible) Snapchat’s engagement metrics.
Constine’s assumptions on DAUs are based on two figures that came directly from the Snapchat team: 400 million aggregate photo/video snaps per day and 88% of snaps being one-to-one (e.g. sent to just one user). Unpacking the numbers based on percentages of multi-user engagements, he came up with a figure of 294 million total snaps sent, which then led into estimated DAU counts for each bucket.
Blodget took numbers from an “insider,” and brought up some of the potential monetization methods being bandied about: ads sent as snaps, virtual goods, etc. Blodget later updated the post to point out that the average user gets an estimated 20-50 snaps a day.
Note of course that Snapchat is only going to provide the metrics to the public that they want released. It’s not likely there are hordes of ghost users & duplicate accounts a la Twitter & Facebook since every Snapchat account is tied to a phone number. But there’s always the possibility that snaps are being over-reported. Nor do we have any insight into retention, length of session, etc.