Snap CEO annual letter (2024)

The good, the bad, the product strategy

Author

Backlog
September 07, 2024

Snap / snap.com

Snap CEO Evan Spiegel released his annual letter.

Grabbing our product-tinted glasses and divin’ straight in. Let’s see what we can learn.

The good

  • Snap has had a profitable year after two back-to-back years in the red.

  • Users spend more time on Snap. In Q2, time spent grew by 25%.

  • Snap has $3 billion in the bank and no meaningful debt to repay until 2027.

In a quick trip down memory lane, Evan shared the following data points:

2014 (IPO)

2024 (today)

Daily active users

158 million

430 million

Revenue

$404 million

$5 billion

Daily burn

$2 million

Free cash flow

The bad

  • Snap’s advertising business isn’t growing (or generating revenue) as quickly as expected. This is driving uncertainty in the market, as evidenced by a 48% drop in share price this year.

  • Competitors are snapping at their ankles. Ephemeral posts are no longer unique. Vertical videos either. Snap need to innovate, stat.

The product strategy

Evan blesses us with three insights into Snap’s product strategy:

Repositioning their advertising products to target small- to medium-size advertisers. There are more of these businesses. They’re more consistent spenders. Their incentives are more frequently aligned to revenue (as opposed to brand plays). Snap is already executing this strategy with some success, seeing an increase in lower funnel brand spending of 16%.

Developing new advertising products. Snap have continued innovating in their core product with features like Snap Maps (350 million users) and Lenses. It’s time advertising reaps some of these benefits by introducing these features as new ad targeting opportunities.

Our product strategy has been inspired in part by In-N-Out Burger. In-N-Out has developed a loyal following by using high quality ingredients, focusing on doing a few things exceptionally well, and obsessing over customer satisfaction to deliver an excellent customer experience. Their hamburger, cheeseburger, and Double-Double are our Snapping, chatting, and watching Stories. You can decide which parts of our product are the milkshake, fries, and secret menu. We’ve learned the benefits of focusing on our core product experiences and making them truly great, and this year we intend to double-down on what is working.

Evan Spiegel, Snap CEO

Taking big ‘blue ocean strategy’ bets. Evan isn’t afraid to make big bets. This time, he plans on experimenting with two:

First, a simplified version of Snap designed for accessibility and usability. The aim? Unclear. It’s likely Evan is trying to capture the ‘older’ crowd that has been mostly eluding his app so far.

Then, continue to invest into their augmented reality (AR) glasses, Spectacles. Although a first version was released in 2016, Evan believes Snap could be the first to market in this still nascent technology.