Specialist
Former division leader at Snap Inc.
Agenda
- Snap (NYSE: SNAP) and its product differentiation, informed by a communications focus and technology innovations
- Global growth opportunities, noting younger user base and potential expansions
- Evolving competitive landscape, highlighting Meta Platforms/Facebook/Instagram (NASDAQ: FB), TikTok and Alphabet/Google/YouTube (NASDAQ: GOOGL)
- 1-3-year outlook, highlighting potential to embrace Web3 and revenue growth following Apple’s (NASDAQ: AAPL) IDFA (Identifier for Advertisers) roll-out
Questions
1.
How has Snap evolved over the last couple of years? Obviously, a lot has gone on amid coronavirus and other things, but how would you talk about the company and platform today? I think many people are familiar with Snap and perhaps even more familiar with its primary application, Snapchat.
2.
I find it interesting that Snap still describes itself as a camera company. When it originally filed to go public, I think people were surprised by that characterisation. Why is this so important for the company, and why has it stuck with that description for so long?
3.
Snap talks about five core products – Camera, Communication, Stories, Snap Map and Spotlight. How would you break down engagement on a percentage basis across those five products? What are people using most and least? How do you see that changing in three years?
4.
You talk about Spotlight as being a potentially huge offering in terms of where the product is positioned and how it’s constructed, but you’re saying it’s not gaining traction. Can you explain the disconnect between the potential – and Snap’s historical product prowess – and the lack of traction? Is it that people haven’t discovered it yet, or is there not a user-product fit situation?
5.
I believe Spotlight launched in November 2020 amid coronavirus, so there’s a lot of catch-up to do – many different companies are focusing on this area. I could argue this is the single most important product and content area across social media, and you mentioned it’s unusual that Snapchat and Snap are late to a trend like this vs leading. Do you think part of this is that it’s not used to being in this position and doesn’t know how to catch up, or could or should it do other things to help close the gap?
6.
Snap has been engaged in a fair amount of M&A. They’re admittedly smaller deals for the most part, but over the last year or so, it has done two deals valued at USD 500m or more, WaveOptics and Mohalla Tech, so it hasn’t sat back. What can the company do to drive more excitement, engagement and success for Spotlight?
7.
You referenced the crypto community a couple of times, which I assume includes cryptocurrency enthusiasts. Why would that be important in terms of thinking about the next generation of Snapchat and its user base? Is it just a way to broaden out the types of people and the reasons for using Snap?
8.
You highlighted Chief Product Officer Evan Spiegel and Snap’s past and present around Web 2.0, but also that the company could embrace Web3. What makes you confident it would look to do this? Obviously, Snap has been pioneering in many respects, but that perhaps hasn’t been the case more recently – we discussed how TikTok seems to have taken a lead over Spotlight. What makes you think Evan Spiegel will suddenly announce he’s reorienting the company around Web3, when that’s not what he’s done historically? I don’t know to what extent he’s indicated an ability to morph based on the potential climate from a user perspective.
9.
Snap’s investments into Snapchat, its platform, new features and functionality seem to fall into two categories, AR – where I think it has done a good job of leading and innovating – and original content and Discover. These two categories can be very helpful when looking towards Web3. Is it possible the company is building towards that, using these two elements as pillars?
10.
What’s next for Snap? The company is clearly very focused on new product and feature innovation. Do you expect it to be more aggressive and launch more of a pure-play Web3-type product in 2022? That would seem like the logical next step, as it has the intellectual and engineering capabilities and the information about this and from its user base.
11.
Are the Spectacles and the Pixy selfie drone you mentioned gimmicks for Snap to gain attention and some cachet? Your comments suggest that’s partly true, but they’re also to help develop a hardware competency and capability it could leverage in a more comprehensive and serious way as it looks to enter a new stage of the company. Is that a fair way to describe it?
12.
You mentioned the increasing importance of privacy to Snap’s users, and thus to the company itself. The biggest privacy revelation over the past year has been Apple’s IDFA [Identifier for Advertisers] roll-out and the impacts on a variety of digital and social media companies, including Snap. Can you discuss IDFA, how it’s impacted Snap and what you see happening next for the company? When Snap recently reported its results, it talked about how it developed a workaround in the form of a tool that accounts for something like 90% of the company’s direct response advertising. It’s perhaps handled IDFA better than others, in part due to this fix and having a lot of proprietary first-party data.
13.
You’re suggesting many players have implemented tools in response to IDFA. However, there’s no comparison between Meta Platforms and Snap when considering revenue over the last couple of quarters. Snap has done a very good job with revenue growth, and obviously it’s a much smaller company, but Meta Platforms has had single-digit growth for multiple consecutive quarters. It seems Snap’s tool or implementation has been more effective. How would you respond to that?
14.
How do you think Snap is doing in terms of IDFA? It sounds like it’s on par with everyone else, but it’s not doing anything particularly special. For how long do you expect IDFA to impact the company, because the growth is dropping substantially, whether it’s a difficult comparison relative to 2021 or whether it’s a weakening economy? Snap’s 2021 revenue growth was 64%, but it’s seen around 33% this year. Does IDFA become less of an issue now we’re one year in and players have tried to figure out how to deal with it? Alternatively, is this a continuing issue, where certain players will be better-positioned for it or more successful at figuring it out over time?
15.
People used to think of Snapchat as being dominated by teenagers. Maybe that’s still the case, but it seems the company has broadened out its user base to 13-24- and even 34-year-olds. Has it broadened it out sufficiently enough to become more of a mass-market platform, or is there more work to do there? If so, what can it do to broaden the appeal, or is that not the right approach? Should Snap continue to focus on the younger demographic and be very successful and dominant there?
16.
Was Snap doing the right things in terms of growth outside the US? Should the company look to acquire other platforms and become more of a Meta Platforms, where it has the company and a family of apps? Most social media players – including Snap, Twitter and Pinterest – have one platform, with the exception of the two biggest companies, Alphabet and Meta Platforms.
17.
Can you discuss the competitive landscape? It seems Alphabet and Meta Platforms take a lion’s share of the spend on the advertisers and advertising perspective, but many properties are doing fairly well in terms of users and engagement, so they’re getting more and more of the spend. How would you characterise Snapchat’s performance and positioning for the future vs TikTok and Instagram’s?
18.
What’s your 1-3-year outlook for Snap? What is its biggest opportunity and risk?
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