- Snap reported terrible earnings Tuesday and announced it would redesign the Snapchat app.
- It also announced a $US40 million write-down related to unsold Spectacles.
Snap has always been written about as an innovative product company, but has failed to prove that now that it’s public.
Going into its IPO this spring, the common theme around Snap that it was a company focused on innovative products that would set it apart from other social networks like Facebook, Instagram, and Twitter.
The company reimagined how people communicate with smartphones, emphasising text, video, and augmented-reality tricks. More importantly, its success was tied to the 27-year-old CEO Evan Spiegel, who’s been billed as a product visionary in the model of Steve Jobs.
A Recode profile of Spiegel from 2016 cited several sources close to the young CEO who compared him to Mark Zuckerberg, Jobs, and even Picasso. And that perception permeated just about everything written about Spiegel since.
In The Wall Street Journal story tied to the debut of Snap’s wearable Spectacles, Spiegel even stole a move right out of Jobs’ playbook, unveiling a new gizmo with the fanfare of stage magician, something Jobs was famous for doing in private briefings with the tech press. He even borrowed one of Jobs’ famous quips during a product demo. Boom!
From the WSJ profile:
“You wanna see it?” [Spiegel] asks, grinning widely. There’s drama in this reveal: I’m about to join an exceedingly small circle of people whom Spiegel has shown the object to. As he lifts the towel, he breaks into a delighted laugh. “Boom!”
In my experience, if someone’s being compared to Steve Jobs — or worse, mimicking Steve Jobs — they’re most definitely not another Steve Jobs.
We got proof of that Tuesday after Snap reported dismal earnings and Spiegel admitted that the company’s core product, the Snapchat app, was too hard for people to use and would go through a major redesign. Meanwhile, the company announced a $US40 million write-down for unsold Spectacles, it fired members of its hardware team in September, and its long-serving senior VP of engineering was stepped down.
These are not the moves of a company with a strong product vision.
Even after the initial hype of the Spectacles launch last year, usage was “shocking low,” as my colleague Alex Heath reported. It turns out the artificial scarcity of Spectacles during the first weeks it went on sale was the only real innovation.
The myth that Snap is full of product geniuses led by Spiegel has been busted, disappearing faster than a sext sent over its own app.
Now Snap appears to be rushing towards a major pivot to fix its product, just months after its IPO and in full public view where every change will be scrutinised by analysts, investors, and the media. It’s a risky move from a product team that hasn’t yet proven it can break out beyond its core group of young users in a significant way.
Yes, Spiegel and company should be credited for coming up with an innovative paradigm for communicating with photos and video on mobile devices. But that paradigm was easily copied by Facebook and Instagram and leveraged by those larger social networks.
Snap’s products have failed to resonate outside a niche group, and it turns out that translates to weak overall performance.
Get the latest Snap stock price here.
Business Insider Emails & Alerts
Site highlights each day to your inbox.