Many ideas have emerged from Stanford University dormitories over the years, but not all of them grow into multi-billion dollar businesses.
Snapchat beat the odds, however. The company’s stock recently skyrocketed during the COVID-19 pandemic, a ray of hope in a decade of ups and downs.
The graph above is a rundown of Snapchat’s 10 year history, including user growth and financial data. Snapchat’s wild ride from startup to huge success is well documented, so we’ll focus on the key elements of the story – product design, the Facebook rivalry – and see how the company is doing today after the hype surrounding it the app died down.
But first a short story …
Setting the scene
Snapchat originally started life as a project called Picaboo in 2011.
Co-founders Evan Spiegel, Bobby Murphy, and Reggie Brown, who visited Stanford, started developing an app that could send photos that would disappear after a certain amount of time.
Picaboo was renamed Snapchat in 2012 and by the end of the year it was clear that the start-up was up to something big. A $ 13.5 million Series A financing in early 2013 contributed to the company’s explosive growth.
Positive momentum: product design
One of Snapchat’s greatest strengths over the years has been innovative product design. A lot of the functionality we see in every social app now comes from Snapchat.
Here’s a quick rundown of Snapchat’s key features and product developments over the past decade.
Of all of the functions listed above, the concept of Stories is perhaps the most significant contribution to the digital landscape. The disappearance of short videos started as a messaging tool but ultimately changed the way people share their lives online.
Also the pioneering acquisition of Looksery helped bring Augmented Reality (AR) to millions of people in 2015. AR is still a major growth driver for Snapchat today as advertisers take on the lens role.
Negative momentum: Facebook rivalry
Mark Zuckerberg recognized the potential of Snapchat early on.
When the company was only a year old, the Facebook CEO offered the Snapchat founders $ 60 million to buy the company. When they turned down the offer, Facebook almost immediately launched an app called bag which was very similar to what Snapchat offered. You will be forgiven for not knowing what poke is as the app received a tepid reception and quietly closed in 2014.
“Hope you enjoy poke.” – Mark Zuckerberg, in an email to Evan Spiegel
For Snapchat, Poke was a hidden blessing as it paid even more attention to their growing app. However, Mark Zuckerberg wasn’t done with trying to steal the company’s thunder. After Facebook offered $ 3 billion in cash to purchase Snapchat (the offer was again declined), Facebook copied a number of features from Snapchat and incorporated them into Instagram.
Stories were a huge hit for Instagram, and Snapchat, which wasn’t quite the size of Instagram, took a huge hit. Growth started to slow noticeably after this Instagram update.
Snapchat bottomed in 2018 after stocks fell below $ 5 and user growth stalled. Also the disappointing sales of Snapchats glasses Product generated negative press and damaged the brand’s “cool factor”.
Today, however, the situation is very different. The app still has a strong market share among the younger population and nearly 300 million daily active users. Snapchat was one of the many digital companies to benefit from the COVID-19 pandemic (or at least the surge in digital content consumption), and its share price has soared to new highs. Another promising indicator is the company’s increasing average revenue per user, or ARPU.
Of course, as the last 10 years have shown, success is not guaranteed. TikTok is still a major dynamic competitor, and tastes can change quickly in the digital world. Still, there is a positive way forward for Snap Inc.