Snap, innovation and well forgotten old
We all know the phrase “trying to invent a wheel” - a metaphor used in situations where someone is trying to bring something to an ideal state that already works very well, tested by time, and no improvement will lead to any useful results. . However, this saying did not prevent new attempts of innovators.
In this material, it will be discussed that instead of trying to thoroughly remake any elements of the payment and commerce sphere, a more correct strategy of innovation will be to take the fundamental elements and apply modern tools and technologies to improve them.
That is, the basic idea is that we need to improve, and not redo it.
To demonstrate the essence of this idea, the author of the material decided on the example of the company Evan Spiegel, Bobby Murphy and Michael Linton Snap .
The results of the company's first quarterly report , published just over a month ago, caused a flurry of criticism. Snap shares fell 20% after news of poorly anticipated profitability ($ 149.6 million versus $ 159 million), a slowdown in user base growth (8 million new users or a 36% increase against the projected 52%) and a loss of $ 2.2 billion 750 million of them - dividend payments to Spiegel).
Currently, Snap, which showed a brilliant result on its first day of trading on March 2, closed it up with a 44% increase from the initial price and recovered from the recent recession. And even despite the fact that the figures for the first days of an IPO have not yet been achieved, the company's market capitalization is $ 25 billion.
Not bad for a modern business, which is not even six years old, and has been selling advertising only since 2014.
Therefore, before writing off the service three months after his IPO, let's remember that Facebook in 2012 also experienced a fall in stocks soon after an IPO, but this did not prevent it from growing and getting stronger - so much so that its market capitalization today is 445 billion dollars.
But let's leave the critique of profitability indicators to market experts. Instead, let's take a look at the business by analyzing the information in the form of an S-1 company to try to see how innovative businesses like Snap succeed.
The author of the material interviewed several avid users of the service about how they could describe it and how they like it so much.
Almost all of them expressed the same thought: Snap is a social network, and they like it, because almost all their friends use it.
The amazing thing about this story is that Snap itself describes its business quite differently.
In fact, it was the observation of the approaches of traditional social networks that prompted the founders of Snap to create something else. Of course, Snap is a place where friends can share news about how they are doing. And of course, attracting and expanding the network of users bound by friendships is a key point for monetization of the platform. However, the company itself does not consider its service a social network in the sense in which we see, for example, Facebook.
On the very first page of its S-1, exactly like on its website, Snap absolutely uniquely describes itself as a “camera company”.
That is exactly like this: “Snap Inc. - camera company. And that's all. Point.
But how the document describes the company's mission:
Yes, in the original document the word reinvent is used, the literal translation of which is “reinvent,” but let's not hurry and examine the situation more closely.
Of course, within the framework of the service, users send images to friends, but the thought of Snap as a camera company does not fit in the head.
The first in the history of the camera was invented by the Frenchman Joseph Niep, and the manifestation of the photos taken with it took a long time. In general, at the dawn of photography, in order to take just one photo, one had to hire a photographer, wait for his arrival, collect all the participants of the survey or prepare a place, and in addition to this, process the photographs.
Only after another 100 years, thanks to the efforts of George Eastman and his company Kodak, the cameras turned into a mass consumer goods, allowing you to take "snapshots", that is, photos that do not require serious preparatory work. The Brownie cameras , which were first launched in 1900 and retained their popularity until the 1960s, were the first devices to provide consumers with this capability.
However, as Snap notes in his S-1, taking pictures at the dawn of the camera period allowed you to do anything, but not capture the spontaneous moments from the life of their owner.
For shooting, the camera had to be on hand, every minute, every day, filled with film and ready to go. Of course, in 9 cases out of 10 this was not the case, and given the fact that photographing was then a novelty, people wanted to keep all their pictures as a souvenir.
This meant that the photos had to be done flawlessly.
As a result, snapshots turned into endless posing and “say cheese”, that is, a series of pictures, the contents of which were carefully thought out by mothers, fathers, aunts, uncles, grandparents during family holidays, parties in honor of birthdays, get-togethers at the table, graduation , first participles, baseball games, weddings, meetings of old friends and many other events.
Surely you have hundreds of such pictures to confirm my words.
Prices for the passion for photography in those days also bite. The cost of a camera, film, its manifestations turned shooting into an expensive process, which also prompted people to attach great importance to images.
Therefore, from the earliest days of the invention of cameras and until the appearance of the first smartphones, the creation of images was aimed primarily at capturing memorable moments when the composition and plot were thought out and planned by the author in advance.
Being a standard component of every smartphone, the camera, according to the founders of Snap, makes a smartphone a unique product that can be used by its owner to express something much more than just a written text. Images convey context and emotions well, and according to the creators of Snap, they give friends the best opportunity to transfer the full depth of the moment. Smartphones, which are always available for the modern consumer, nowadays allow us, finally, to achieve the spontaneity that the creator of Kodak aspired to 117 years ago.
The Millennials, reacted to this idea with great enthusiasm than any other generation. According to some calculations, the millennials, on average, make over 25 thousand selfies during their lives, giving this occupation about an hour a week. The Snap user base, 62% of which is people aged 18 to 35, makes 2.5 billion snaps every day, taking advantage of a number of built-in creative tools to improve the quality of pictures before sending them to friends.
So did Snap manage to “reinvent” the camera or come up with completely new ways of communicating with smartphones?
Live communication with friends is an honest and direct exchange of feelings and emotions between the parties who trust each other and are not afraid to be convicted. Friends do not hesitate to tell each other things that they might never have said to unfamiliar people and would not want this conversation to be heard by strangers. Friends also trust each other secrets, knowing that all the words spoken by them will remain only between them and will not “pop up” in any other situation.
The founders of Snap in S-1 claim that modern social networks have completely abandoned the idea of trusted personal communication between friends. They believe that since social networks were created on the basis of ideas of freedom of expression, viral dissemination of information and permanent storage of published words and photos, in principle they cannot be a place for the exchange of sincere feelings between people.
Instead, according to Snap, such services offer a collection of posts that position people the way they want others to see them. Therefore, instead of live posts and self-expression, users of social networks get neatly conceived and carefully formed through the publication of relevant content image of a person.
“Deletion should be the default option, while persistent storage is an option that can be customized.” That's how Snap rethought the idea of a trust-based place where friends could share their most sincere feelings by doing images of rich visual context of what is happening. Understanding that messages will disappear a few seconds after their discovery, Snap believes, will facilitate the free exchange of photos without obvious regret for their publication, fear of being convicted or other complexes, since the exchange will occur between friends and will be based on trust.
At the very beginning of the application’s existence, critics argued that the mechanism for automatic deletion of photographs should have attracted sexual message lovers as a magnet. However, according to the founders of Snap, this format solved the problem of consumers, which they didn’t even know about and which appeared as a result of careful collection of information from users aged 18-24 years old about what they liked and did not like in the existing social networks.
This data allowed them to find out that people like sharing photos. They do not like the inability to delete their own photos, which can be collected by someone and published elsewhere against the will of their owner.
Therefore, Snap managed to enlist the support of the most active generation in the history by creating a trusted place where people could share the most sincere feelings and thoughts by sharing photos. In other words, the service recreated the personal exchange that once took place in the physical world, inside the application, but with an emphasis on photos and small text messages to them.
But let's think for a moment about how original this idea is?
Snap founders readily admit that it is not at all original. For about 125 years, the main “social network” has been the telephone network. People used their phones to chat with friends. The majority of people believed that their conversation would be available only to the participant on the other end of the wire and only until they hung up (there were, of course, common telephone wires through which noisy neighbors could try to eavesdrop). But in general, no one was worried about recording the conversation, unless, of course, he got into some really dark story, because of which a private detective or government tried to listen to him.
Before the invention of telephones, telegraph messages and personal letters, it was quite possible to maintain the privacy of communication.
Therefore, Snap simply took as its basis the “old-fashioned approach”, which everyone liked very much, and made it better. The service did not reinvent the concept of personal, intimate communication between friends without recording a conversation, but simply improved it with the help of new technologies and tools that consumers have already used to communicate with each other.
By doing this, the company pointed out one aspect of the existing social networks, which was initially considered a boon, but soon became a disadvantage and a source of conflict: the distribution of content created by other users without their consent.
Snap admits that at first they had no idea how the company would make money. Therefore, they do the same thing that the two-way platforms that work with clients usually do — building up the user base. The service also recognizes that at first the development went slowly because of the novelty of the idea. However, as soon as Snap gained a critical mass of users, they began to experiment with several monetization strategies and, judging by the recent indicators of the profit report, work in this direction is still far from complete.
Snap makes money from advertising, long ago leaving behind its original idea of selling premium premium filters for sent images. The appearance of this option was not only ignored by users: they even stopped using Snap to send photos to friends - a bad result in terms of expanding the network of people who trust each other.
Today, Snap makes a profit when publishers pay the service for access to the audience of the application. The profit thus generated for taste and color is different, and the concept itself over the years has received considerable development. Today, it includes such varieties as Sponsored Creative Tools , Stories, and Snap Ads , with support for video format, which was initially met with resistance from advertisers.
And here in Snap they again decided to adapt another concept that has proved itself well in the physical world: television advertising.
TV advertising is very effective. Videos, as a rule, have an entertaining character, since only such an approach can keep viewers from another campaign to the refrigerator during advertising. In addition, people have much less hatred for such videos than for online advertising, which has become frighteningly obtrusive in recent years.
In other words, the “camera company”, concurrently “not a social network,” began work on the re-creation of a television format of advertising on mobile devices.
In Snap realized that many of the views began to "leave" with television and ordinary computers in a mobile-oriented environment. This shift is most pronounced among the 18–24 age group, whose representatives, according to Nielsen, regardless of the season, spend 35% less time watching television programs than the same age group in 2010.
Snap also realizes that consumers, even millennials, love to watch video ads when it’s shot funny and creative. This meant that advertisers have products that are interesting to consumers, including millenials, but they do not have access to them, since their huge television budget does not allow them to turn to those who do not watch television.
Snap told advertisers about how they can “hook” millenials and advertisers pecked, but did not accept the idea of changing the format of advertisements to the vertical orientation of smartphone displays.
The service defended its position by proving with the help of tests that the use of a vertical format led to an increase in the number of consumers who watched the ad until the end. Vertical orientation of the phone - the most natural position for the consumption of mobile content. The company also managed to defend its position on the issue of content types that publishers could publish on their platform. As a result, so that Snap does not have problems with the “fake news” that Facebook has recently encountered.
However, did Snap "re-invent" TV commercials? Or did he just give advertisers a new channel for advertising?
Perhaps you think that the author made too much emphasis on the meaning of words, say that for some people this is a new invention, and for other people just an improvement, and that investors pay more for companies that can truly rethink rather than just bring to perfection.
Well, maybe call it what you want.
Yes, Snap did not invent a new camera, and vertical format video does not arouse much enthusiasm among advertisers, however, it’s possible to write down the definition of difficulties that prevented, mostly millennials, communicate with friends online in existing social networks.
Providing such a communication experience means reproducing everything that friends value most in personal communication: privacy, transience and the ability to remain sincere and honest in their words. Snap shifted this experience to today's popular mobile devices.
Advertisers also stayed in the black, having the opportunity to create entertainment advertising in the spirit of television commercials, which consumers always liked, but became unavailable to them as soon as they stopped watching TV.
The irony is that this approach really allowed the company to rethink the concept of a modern social network, turning the place for an online party where any “friend” could share content about another “friend” into a place for personal communication with people you know and trust. as if you were all going in real life.
What can innovators in the field of payments and commerce learn from this story?
For example, that rethinking something does not necessarily mean that consumers will like these or other ideas or that in the end it may not be exactly what you hoped for at the beginning. Sometimes attempts at fundamental change create more difficulty. Perhaps this is exactly what happened with social networks and some mobile payment schemes that operate at the speed of plastic cards, but are not widely spread in places of payment.
Some of the best technologies of the future begin with the fact that the inventor takes all the best from the past and makes this foundation even better. This is exactly how Snap sees his work on the improvement of fleeting communications of tv-format advertising.
Around the same time, when George Eastman and his Kodak company showed the world what their new invention is capable of, most people who bought their cameras did this by going to the seller who knew them well by name, who simply recorded this purchase. into their account. They left the store with a camera in their hands and a bill that will be paid later. Yes, there were times when it was so easy to pay for the purchase.
Some of these buyers even went home to call their friends and talk about what they had just bought.
And when they hung up, their conversation disappeared, leaving no trace in the story.
In this material, it will be discussed that instead of trying to thoroughly remake any elements of the payment and commerce sphere, a more correct strategy of innovation will be to take the fundamental elements and apply modern tools and technologies to improve them.
That is, the basic idea is that we need to improve, and not redo it.
To demonstrate the essence of this idea, the author of the material decided on the example of the company Evan Spiegel, Bobby Murphy and Michael Linton Snap .
The results of the company's first quarterly report , published just over a month ago, caused a flurry of criticism. Snap shares fell 20% after news of poorly anticipated profitability ($ 149.6 million versus $ 159 million), a slowdown in user base growth (8 million new users or a 36% increase against the projected 52%) and a loss of $ 2.2 billion 750 million of them - dividend payments to Spiegel).
Currently, Snap, which showed a brilliant result on its first day of trading on March 2, closed it up with a 44% increase from the initial price and recovered from the recent recession. And even despite the fact that the figures for the first days of an IPO have not yet been achieved, the company's market capitalization is $ 25 billion.
Not bad for a modern business, which is not even six years old, and has been selling advertising only since 2014.
Therefore, before writing off the service three months after his IPO, let's remember that Facebook in 2012 also experienced a fall in stocks soon after an IPO, but this did not prevent it from growing and getting stronger - so much so that its market capitalization today is 445 billion dollars.
But let's leave the critique of profitability indicators to market experts. Instead, let's take a look at the business by analyzing the information in the form of an S-1 company to try to see how innovative businesses like Snap succeed.
The author of the material interviewed several avid users of the service about how they could describe it and how they like it so much.
Almost all of them expressed the same thought: Snap is a social network, and they like it, because almost all their friends use it.
The amazing thing about this story is that Snap itself describes its business quite differently.
In fact, it was the observation of the approaches of traditional social networks that prompted the founders of Snap to create something else. Of course, Snap is a place where friends can share news about how they are doing. And of course, attracting and expanding the network of users bound by friendships is a key point for monetization of the platform. However, the company itself does not consider its service a social network in the sense in which we see, for example, Facebook.
On the very first page of its S-1, exactly like on its website, Snap absolutely uniquely describes itself as a “camera company”.
That is exactly like this: “Snap Inc. - camera company. And that's all. Point.
But how the document describes the company's mission:
“We believe that rethinking the concept of a camera represents our greatest opportunity to improve the quality of life and how people communicate with each other.
Our products give people new opportunities for self-expression, a sense of the current moment, a knowledge of the world around us and a joint joyful pastime. ”
Yes, in the original document the word reinvent is used, the literal translation of which is “reinvent,” but let's not hurry and examine the situation more closely.
Of course, within the framework of the service, users send images to friends, but the thought of Snap as a camera company does not fit in the head.
Snap camera history chapter
The first in the history of the camera was invented by the Frenchman Joseph Niep, and the manifestation of the photos taken with it took a long time. In general, at the dawn of photography, in order to take just one photo, one had to hire a photographer, wait for his arrival, collect all the participants of the survey or prepare a place, and in addition to this, process the photographs.
Only after another 100 years, thanks to the efforts of George Eastman and his company Kodak, the cameras turned into a mass consumer goods, allowing you to take "snapshots", that is, photos that do not require serious preparatory work. The Brownie cameras , which were first launched in 1900 and retained their popularity until the 1960s, were the first devices to provide consumers with this capability.
However, as Snap notes in his S-1, taking pictures at the dawn of the camera period allowed you to do anything, but not capture the spontaneous moments from the life of their owner.
For shooting, the camera had to be on hand, every minute, every day, filled with film and ready to go. Of course, in 9 cases out of 10 this was not the case, and given the fact that photographing was then a novelty, people wanted to keep all their pictures as a souvenir.
This meant that the photos had to be done flawlessly.
As a result, snapshots turned into endless posing and “say cheese”, that is, a series of pictures, the contents of which were carefully thought out by mothers, fathers, aunts, uncles, grandparents during family holidays, parties in honor of birthdays, get-togethers at the table, graduation , first participles, baseball games, weddings, meetings of old friends and many other events.
Surely you have hundreds of such pictures to confirm my words.
Prices for the passion for photography in those days also bite. The cost of a camera, film, its manifestations turned shooting into an expensive process, which also prompted people to attach great importance to images.
Therefore, from the earliest days of the invention of cameras and until the appearance of the first smartphones, the creation of images was aimed primarily at capturing memorable moments when the composition and plot were thought out and planned by the author in advance.
Being a standard component of every smartphone, the camera, according to the founders of Snap, makes a smartphone a unique product that can be used by its owner to express something much more than just a written text. Images convey context and emotions well, and according to the creators of Snap, they give friends the best opportunity to transfer the full depth of the moment. Smartphones, which are always available for the modern consumer, nowadays allow us, finally, to achieve the spontaneity that the creator of Kodak aspired to 117 years ago.
The Millennials, reacted to this idea with great enthusiasm than any other generation. According to some calculations, the millennials, on average, make over 25 thousand selfies during their lives, giving this occupation about an hour a week. The Snap user base, 62% of which is people aged 18 to 35, makes 2.5 billion snaps every day, taking advantage of a number of built-in creative tools to improve the quality of pictures before sending them to friends.
So did Snap manage to “reinvent” the camera or come up with completely new ways of communicating with smartphones?
Snap story trust chapter
Live communication with friends is an honest and direct exchange of feelings and emotions between the parties who trust each other and are not afraid to be convicted. Friends do not hesitate to tell each other things that they might never have said to unfamiliar people and would not want this conversation to be heard by strangers. Friends also trust each other secrets, knowing that all the words spoken by them will remain only between them and will not “pop up” in any other situation.
The founders of Snap in S-1 claim that modern social networks have completely abandoned the idea of trusted personal communication between friends. They believe that since social networks were created on the basis of ideas of freedom of expression, viral dissemination of information and permanent storage of published words and photos, in principle they cannot be a place for the exchange of sincere feelings between people.
Instead, according to Snap, such services offer a collection of posts that position people the way they want others to see them. Therefore, instead of live posts and self-expression, users of social networks get neatly conceived and carefully formed through the publication of relevant content image of a person.
“Deletion should be the default option, while persistent storage is an option that can be customized.” That's how Snap rethought the idea of a trust-based place where friends could share their most sincere feelings by doing images of rich visual context of what is happening. Understanding that messages will disappear a few seconds after their discovery, Snap believes, will facilitate the free exchange of photos without obvious regret for their publication, fear of being convicted or other complexes, since the exchange will occur between friends and will be based on trust.
At the very beginning of the application’s existence, critics argued that the mechanism for automatic deletion of photographs should have attracted sexual message lovers as a magnet. However, according to the founders of Snap, this format solved the problem of consumers, which they didn’t even know about and which appeared as a result of careful collection of information from users aged 18-24 years old about what they liked and did not like in the existing social networks.
This data allowed them to find out that people like sharing photos. They do not like the inability to delete their own photos, which can be collected by someone and published elsewhere against the will of their owner.
Therefore, Snap managed to enlist the support of the most active generation in the history by creating a trusted place where people could share the most sincere feelings and thoughts by sharing photos. In other words, the service recreated the personal exchange that once took place in the physical world, inside the application, but with an emphasis on photos and small text messages to them.
But let's think for a moment about how original this idea is?
Snap founders readily admit that it is not at all original. For about 125 years, the main “social network” has been the telephone network. People used their phones to chat with friends. The majority of people believed that their conversation would be available only to the participant on the other end of the wire and only until they hung up (there were, of course, common telephone wires through which noisy neighbors could try to eavesdrop). But in general, no one was worried about recording the conversation, unless, of course, he got into some really dark story, because of which a private detective or government tried to listen to him.
Before the invention of telephones, telegraph messages and personal letters, it was quite possible to maintain the privacy of communication.
Therefore, Snap simply took as its basis the “old-fashioned approach”, which everyone liked very much, and made it better. The service did not reinvent the concept of personal, intimate communication between friends without recording a conversation, but simply improved it with the help of new technologies and tools that consumers have already used to communicate with each other.
By doing this, the company pointed out one aspect of the existing social networks, which was initially considered a boon, but soon became a disadvantage and a source of conflict: the distribution of content created by other users without their consent.
Snap money history chapter
Snap admits that at first they had no idea how the company would make money. Therefore, they do the same thing that the two-way platforms that work with clients usually do — building up the user base. The service also recognizes that at first the development went slowly because of the novelty of the idea. However, as soon as Snap gained a critical mass of users, they began to experiment with several monetization strategies and, judging by the recent indicators of the profit report, work in this direction is still far from complete.
Snap makes money from advertising, long ago leaving behind its original idea of selling premium premium filters for sent images. The appearance of this option was not only ignored by users: they even stopped using Snap to send photos to friends - a bad result in terms of expanding the network of people who trust each other.
Today, Snap makes a profit when publishers pay the service for access to the audience of the application. The profit thus generated for taste and color is different, and the concept itself over the years has received considerable development. Today, it includes such varieties as Sponsored Creative Tools , Stories, and Snap Ads , with support for video format, which was initially met with resistance from advertisers.
And here in Snap they again decided to adapt another concept that has proved itself well in the physical world: television advertising.
TV advertising is very effective. Videos, as a rule, have an entertaining character, since only such an approach can keep viewers from another campaign to the refrigerator during advertising. In addition, people have much less hatred for such videos than for online advertising, which has become frighteningly obtrusive in recent years.
In other words, the “camera company”, concurrently “not a social network,” began work on the re-creation of a television format of advertising on mobile devices.
In Snap realized that many of the views began to "leave" with television and ordinary computers in a mobile-oriented environment. This shift is most pronounced among the 18–24 age group, whose representatives, according to Nielsen, regardless of the season, spend 35% less time watching television programs than the same age group in 2010.
Snap also realizes that consumers, even millennials, love to watch video ads when it’s shot funny and creative. This meant that advertisers have products that are interesting to consumers, including millenials, but they do not have access to them, since their huge television budget does not allow them to turn to those who do not watch television.
Snap told advertisers about how they can “hook” millenials and advertisers pecked, but did not accept the idea of changing the format of advertisements to the vertical orientation of smartphone displays.
The service defended its position by proving with the help of tests that the use of a vertical format led to an increase in the number of consumers who watched the ad until the end. Vertical orientation of the phone - the most natural position for the consumption of mobile content. The company also managed to defend its position on the issue of content types that publishers could publish on their platform. As a result, so that Snap does not have problems with the “fake news” that Facebook has recently encountered.
However, did Snap "re-invent" TV commercials? Or did he just give advertisers a new channel for advertising?
An instructive chapter in the history of Snap
Perhaps you think that the author made too much emphasis on the meaning of words, say that for some people this is a new invention, and for other people just an improvement, and that investors pay more for companies that can truly rethink rather than just bring to perfection.
Well, maybe call it what you want.
Yes, Snap did not invent a new camera, and vertical format video does not arouse much enthusiasm among advertisers, however, it’s possible to write down the definition of difficulties that prevented, mostly millennials, communicate with friends online in existing social networks.
Providing such a communication experience means reproducing everything that friends value most in personal communication: privacy, transience and the ability to remain sincere and honest in their words. Snap shifted this experience to today's popular mobile devices.
Advertisers also stayed in the black, having the opportunity to create entertainment advertising in the spirit of television commercials, which consumers always liked, but became unavailable to them as soon as they stopped watching TV.
The irony is that this approach really allowed the company to rethink the concept of a modern social network, turning the place for an online party where any “friend” could share content about another “friend” into a place for personal communication with people you know and trust. as if you were all going in real life.
What can innovators in the field of payments and commerce learn from this story?
For example, that rethinking something does not necessarily mean that consumers will like these or other ideas or that in the end it may not be exactly what you hoped for at the beginning. Sometimes attempts at fundamental change create more difficulty. Perhaps this is exactly what happened with social networks and some mobile payment schemes that operate at the speed of plastic cards, but are not widely spread in places of payment.
Some of the best technologies of the future begin with the fact that the inventor takes all the best from the past and makes this foundation even better. This is exactly how Snap sees his work on the improvement of fleeting communications of tv-format advertising.
Around the same time, when George Eastman and his Kodak company showed the world what their new invention is capable of, most people who bought their cameras did this by going to the seller who knew them well by name, who simply recorded this purchase. into their account. They left the store with a camera in their hands and a bill that will be paid later. Yes, there were times when it was so easy to pay for the purchase.
Some of these buyers even went home to call their friends and talk about what they had just bought.
And when they hung up, their conversation disappeared, leaving no trace in the story.
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