Jan 10, 2018 ยท 3 minutes

It’s a pretty sick burn that the Daily Beast prefaces its story that walks through six months of detailed Snapchat DAU data with a 13-graph lead about just how “ballistic” CEO and co-founder goes when there’s a leak and the extreme lengths the company goes to to prevent them.

Oh well.

The Daily Beast story details what parts of the app are the most popular with daily users-- information that’s been mostly withheld from the public and investors.

The two most distressing pieces of news for Snap are that a minority of users (some 20%) use Discover and while Maps had a big launch, usage tailed off afterwards quickly. The story of Maps echos Spectacles: Glitzy, well-executed roll out that excited people and proclaimed all kinds of ways it would change how friends interacted with one another IRL… only to see users rapidly lose interest.

This is particularly bad news for Snap, because the S-1 basically told investors it would succeed only if it could continually come up new innovations that would delight and addict it’s young tastemaker users. If you aren’t gonna go broad demographically and you want to scale as a high growth company, you gotta roll out hit after hit after hit. Ben Thompson called it Snap’s Apple Strategy at the time of the IPO. If your strategy relies on you being Steve Jobs, that seems like a significant risk factor. (To wit: even the actual Apple has lost that magic…)

Simply put: Snap doesn’t seem to understand what users want better than they do. And in some ways that’s good. (The prospect of Spectacles recording every frat party and Bro-b-q is a potentially horrific idea, as is the stalky potential of Maps.)

I hate to say I told you so. But in Snap’s formative years I argued on Pando and with Snap’s actual investors on occasion that distracting itself with Discover and not going all in on Stories would go down as one of the dumbest mistakes in consumer Internet history. Ok, it’s no Juicero or Bodega, but talk about grabbing defeat from the jaws of victory.

From Pando two years ago:

Whenever a content company struggles it tries to rebrand as a platform. Snapchat has to be the only potentially insanely lucrative platform that for some insane reason is sitting around dreaming of being a millenials only content company.

I mean no disrespect to VICE. As the owner of a content company, I worship at the altar of VICE. They are the undisputed gods when it comes to content creation that we all wish we could be. In content, we’re all the “VICE of X.” But VICE is worth some $4 billion. Facebook is worth $330 billion. Hell, even a wounded Twitter is worth $11 billion. If you’ve got the choice-- and Snapchat does-- there’s no question which opportunity you go after.

Platforms outperform, resist fads and have far more impact in the universe than content creators, by a factor of nearly 3x even if you look at the best (VICE) and the weakest (Twitter.)

Competitors got what Snap didn’t: Stories were the real innovation. From the Daily Beast:

Stories is Snapchat’s pioneering format. A Story is a public feed of photos and videos that disappear after 24 hours. Since Snapchat launched its Stories feature in 2013, the feature has been cloned into Facebook, Instagram, WhatsApp, and Facebook Messenger.

Had Snap focused on Stories and not distracted itself trying to be some mobile VICE, it might have retained that competitive moat a little better.

It seems Snap is getting this a little too late: The new Snap redesign splits the Discover content off from friends’ content, a move that is expected to tank Discover’s usage. From the Daily Beast, again:

One of the biggest fears about the redesign is that Discover usage will plummet and it will crater Snapchat’s ad revenue.

Snapchat already lost $443 million in the third quarter of 2017 and desperately needs to prove to investors that it can successfully monetize if it’s going to have any long-term viability.

“If I was on the Discover team, I’d be fucking furious,” one former employee said.

I’d be “fucking furious” if I were a publication that had invested hundreds of thousands of dollars building out my Discover content strategy. At least when Facebook screws over publishers, it does so with an audience of billions.