There are two juicy stories floating around about Snap today, which are especially poignant in light of Snap’s anticipated public filing for an IPO later this week.
1. Instagram Stories is stealing Snapchat’s users
For the first few weeks after its release, Instagram Stories were really only used by top influencers (Shaq, Emrata, NatGeo, The Onion, etc), but recently I have seen an explosion in usage by average users.
I have always disliked Snapchat’s interface, and Instagram’s implementation of stories works beautifully. Instagram essentially lives on one screen, whereas Snapchat has a confusing barrage of sliding mirrors to navigate.
Ben Thompson talks about Instagram copying Snapchat in length on his Exponent podcast this week. To me, the success of Instagram stories is quite simple. Instagram is attacking Snapchat’s domain, namely transience, from a position where its users are accustomed to polished and permanent posts. They are moving from the high brow to the low brow. Snapchat, which has moved recently to have a more permanent relationship which its users (Spectacles, Memories), has to do the reverse, i.e. go from cheap disposable schtick to more meaningful lasting content. Instagram copying Stories is like New York Times creating a gossip column, whereas Snapchat trying to move up the ladder is like the People trying to do editorial journalism.
Tech history is full of successful copies. Thompson makes the point that Android was first a copy of RIM’s Blackberry OS, but then pivoted to copying iOS when it saw the success Apple was having. Microsoft attacked the smartphone from a place of cockiness and simply tried to replicate Windows on a smaller device, and as such missed out on the entire smartphone era. It takes a strong leader to admit a company has the wrong strategy, and an even stronger one to go out and copy whatever is working correctly, but there are outsize rewards to those who do.
2. Brand usage snoozes on Snapchat
This one is no surprise to me. I’ve long posited that Snapchat’s connection with users is less about the user’s brand loyalty to the service and more about the strength of connection that Snap enables between people. That is, a Snapchat user sees the app as a communication channel more than a platform for extended social activity.
While I don’t have access to or really care about the entire Business Insider report, the text copy ahead of the paywall says that only 67% of brands that started using Snapchat continue to post at least once a month. If the takeaway is that the 33% of brands that went dormant on Snapchat did so because they didn’t see a substantial ROI on their time investment, Snap is going to have a very difficult time convincing ad agencies to commit to large ad deals.
If I’m a 40-year old institutional money manager getting pitched on the Snap IPO, I am extremely worried about these two trends. Not only do I likely not use the service (when Facebook IPO’d in 2012 it already had a critical mass of adult users), but all the evidence points to a product that is failing in its current iteration of garnering user impressions.
I’m bullish on Snap in the long term, primarily because its users spend more time on it than comparable services, but that is dependent on it improving what I see as its largest flaws:
- Unnecessarily complex interface
- Ineffective ad model
- Lack of permanent user-generated content
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Ben Davis 
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