Snap is happy for now to let Facebook copy its features

Snapchat chief executive Evan Spiegel

Snap’s earnings are out late this evening, and investors are already anticipating bad news, thanks to a “never-ending doomsday narrative around Facebook’s perceived impact on Snapchat,” according to analyst Brian White of Drexel Hamilton.

And it’s not just a narrative —it’s a fact that Facebook has been expertly copying Snapchat’s most popular features, just when the newly public company needs to be proving it can grow.

The only thing Snap can do, according to several investors, is to innovate faster.

Keep running, and maybe Facebook won’t be able to catch up.

Snap has said product inventions will drive its growth, so let’s see some more.

But there are some ways to grow that do not need to be invented.

The rules have already been written.

To find these drivers of growth in the wild, all you have to do is look at Facebook and Instagram.

Profile pages, recommended posts and push notifications when a friend joins the app or shares an update for the first time in a while.

Then there are the constant suggestions for ways to expand your network; and, of course, sharing, liking and commenting.

Why doesn’t Snap do these things?

Snapchat last reported 166 million daily active users.

Instagram recently announced 250m daily users just for the “stories” feature it copied from Snapchat last year.

Chief executive Evan Spiegel said on Snap’s first earnings call that these “growth hacking” techniques are “the easy way to grow daily actives quickly,” but “we don’t think that these sorts of techniques are very sustainable over the long-term”.

They might turn users off, or suggest ideas to users that are “unnatural”.

Mr Spiegel wants quality over quantity — dedicated users who spend more time on the app, in an environment with their most intimate friends, and eventually generate more revenue on average per user than on a competing app.

In short, Snap has no interest in being Facebook, even if Facebook is content with copying Snap.

Ahead of Snap’s second quarter earnings, I have gathered people’s thoughts on Mr Spiegel’s stance.

The conclusion: It’s risky.

If users aren’t actively encouraged to bring friends into the application, how does the network get stronger?

I’m reminded of an extreme example — the application Path, which limited friend connections to 50 people when it launched.

Eventually, the limit increased to 150, the Dunbar number.

The app was buzzy and innovative (tools similar to Facebook “reactions” were thriving on Path years earlier) but it didn’t ever get big enough for longevity.

Facebook also experienced bumpy growth in its early days, but found momentum whenever it would introduce product updates that also strengthened and expanded its network, such as the ability to tag people in photos and posts.

But before we prescribe Facebook’s growth strategy to Snapchat, we can remember that Mark Zuckerberg was also a founder who didn’t like to do things as they’d been done before.

About 10 years ago, critics worried about whether Facebook would ever make enough money, urging the company to put bigger banner ads on its site.

I bet Mr Zuckerberg is glad he didn’t pay heed to them, then.

And so far — for better or worse — Mr Spiegel isn’t listening to his critics either.

Bloomberg


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