The Fight Over The Young Generation SNAPCHAT vs FACEBOOK The Fight Over The Young Generation

A few things before we begin.. You will be put in the management position of Mr Spiegel, CEO of Snapchat This Case follows a strict chronological development The high media nature surrounding Snapchat will give you information about the development that has not yet happened during time of decisions you will face. Information besides what is presented in the case or that is beyond in time should not be used during discussions of management decisions. The “Case year” will be noted here as the story progresses 2011

A few things before we begin.. This is a two-step One management decision in the first shorter discussion Followed by a part 2 & a longer discussion 2011

The Background of Snapchat Founded 2011 by Stanford students Evan Spiegel and Reggie Brown, later on adding Bobby Murphy Disruptive idea of “temporary social media” The Idea of Snapchat “Snapchat isn't about capturing the traditional Kodak moment. It's about communicating with the full range of human emotion—not just what appears to be pretty or perfect.” Evan Spiegel, CEO 2011

Ownership Lawsuit & reBranding Launched under the name Picaboo the summer of 2011 Slow growth and by the end of the summer the founders started fighting over ownership  Spiegel & Murphy reached a settlement removing Brown from his ownership The app relaunched under the name “Snapchat” Within one year the app had 100 000 daily active users 2011

The “Tech Start up issue” – Venture Capital Increasing server costs put the company in financial constraints The entire infrastructure builds on and is provided by Google on leasing terms Lightspeed Venture Partners invested $485,000 in the first round of funding 2012 Zuckerberg flew out to meet with Spiegel late 2012 with the intention to intimidate the start-up. Saying that Facebook had spent 12 days programming & now was launching a competitor app called Poke 2012

Snap it up - The rocket growth Snapchat continued their course despite the competition and within twelve months Facebooks challenger app Poke had not gained any market share and was withdrawn from the market. Exponential growth for Snapchat led to 30 million monthly active users by the end of 2013 User base is strong and mostly consisting of millennials – The future of Online Users 4 additional funding rounds  $ 163 million in venture capital & valuing the company at $2 Billion dollars Still Snapchat had no revenue at all 2013

Social Media Industry - Competitors Facebook – The social media with personal pages & friend’s activity flow Instagram – The mobile photo sharing application LinkedIn – The social business and employment network Pinterest – The inspiration pin board network for online images Twitter – The social micro messaging network 2013

Positioning – Blue Ocean Strategy Temporary Snapchat Blue Ocean Uncontested market space Innovation Innovation Twitter Instagram Facebook LinkedIn Red Ocean Contested market space Permanent 2013

”…if you can’t beat them, buy them…” The Unexpected offer Zuckerberg reached out once again, to Spiegel a year later… Offering Spiegel and his co-founder $3 billion USD for Snapchat $1 billion more than the recent valuation from VC funding rounds “…It’s revolutionary, such an offer for a tech-company that is two years old and that does not even have any revenues…” ”…if you can’t beat them, buy them…” 2013

Main Question: Should we sell Snapchat to Zuckerberg or not? To sell or not to sell? Main Question: Should we sell Snapchat to Zuckerberg or not? We get $1 billion USD more than what the company is valued for.. And if we choose not to sell.. How do we protect our position in the market? How do we continue to grow the user base? Try to motivate your answer WHY & identify issues Snapchat has.. 2013

Lets take Management Decision & vote.. Raise your hand if you think Snapchat should NOT SELL Ps. If you do, we will ask some of you WHY.. 2013

Snapchat rejected Facebooks offer. Part 2. The Continuation.. There are very few people in the world who get to build a business like this, I think trading that for some short-term gain isn’t very interesting. – Evan Spiegel Snapchat rejected Facebooks offer. 2013

…but according to Facebook “Stories had become an industry standard”. Part 2. Facebooks move.. “Today, we are launching Instagram Stories, share memories with friends that disappear after 24 hours.” Facebooks subsidiary Instagram copying one of Snapchats main features, in what is termed “a public rip off”... …but according to Facebook “Stories had become an industry standard”. 2016

Part 2. Customers reaction.. 2016

The last competitive advantage of Snapchat Part 2. Snapchat Filters The last competitive advantage of Snapchat The only feature left differing Snapchat from Instagram Snapchats aggressive Technology Acquisition Strategy Acquired 9 companies between 2014-2016 Video, Streaming, Facial Recognition & other technologies – A total of $ 500 million USD More than 158 million active users in 2016… …But, the quarterly growth of 15 million users droped with 66 % to only 5 million 2016

Reconsidering the offer.. …if Spiegel had known that this would happen, would he have made any difference in his decision to not sell? Everyone voting NOT TO SELL before, raise your hand if you would like to CHANGE DECISION and have sold before 2013

Reconsidering the offer.. Main Question: What are the issues/threats & how do we move forward? And if we choose not to sell.. How do we protect our position in the market? How do we continue to grow the user base? Try to motivate your answer WHY & identify issues Snapchat has.. 2013