One of the most important Snapchat metrics that Wall Street is looking for is user growth, measured in daily active users.
Snap revealed on Wednesday during its first public earnings report that user growth was weak: It had about 166 million active users, or about 8 million new users. That sounds fine, but it’s lower than what Snap needs to show to justify its current valuation.
Of course, the first question asked on Snap’s earnings call touched on the DAU issue, and CEO Evan Spiegel was ready for it. He blamed the underwhelming results on comparisons to other companies that fudge their numbers with excessive notifications and other “growth hacks.”
“I’d like to speak a little to the DAU question, because it’s a question we get all the time,” Spiegel said. “I think one of the reasons why it’s such a popular question is because there’s a lot of this thing in our industry called ‘growth hacking’ where you send a lot of push notifications to users or you try to get them to do things that might be unnatural, or something like that.”
Some commenters online saw that line as a reference to some techniques Facebook and Instagram use.
Spiegel doesn’t think that’s a good approach for Snapchat. Instead, he redirected his answer to how Snapchat can increase the amount of time that users are spending in the app.
He gave an example of how Snapchat avoided “growth hacking” in the past:
“If we had just in the beginning encouraged Snapchatters to add all their friends in the contact book, instead of just a few of them, they might feel really uncomfortable creating Snaps and adding them to their story because they wouldn’t know who was actually watching,” Spiegel said.
Speigel said that if Snap focused on “creativity,” or making Snapchat easier and more fun to use, then the users would naturally follow.
“The way we talk about DAU growth at our company is as it pertains to creativity,” Speigel said. “The reason why [Snapchat Lenses] prompted such an explosion in creativity is it really lowered the barrier to creation on our service. People enjoy looking like a puppy and things like that,” Speigel said.
“I think the more we’re able to reduce friction from the creative process, more people will feel empowered to express themselves, and we believe that translates to DAU growth,” Spiegel said.
Get the latest Snap stock price here.
Spiegel calls out IG and FB’s “growth hacking” (like push notifications) to explain Snap’s long-term growth plans
— Lauren Johnson (@LaurenJohnson) May 10, 2017