After Rocky Year, CEO Evan Spiegel Is Still Happy Snap Went Public
Snap CEO Evan Spiegel says he doesn’t mind having to report quarterly financial results to pesky investors, whose disappointment could send the company’s stock plummeting.
Snap’s (SNAP) first three quarters as a public company last year were tough. The messaging company consistently reported disappointing user growth along with sales that failed to meet Wall Street’s expectations, causing its shares to fall.
Earlier this month, however, Snap shared some good news —that it now has 187 million daily active users, which beat analyst projections of 184.2 million, while its sales jumped 72% year-over-year to $285.7 million. After the report, investors sent Snap’s shares up nearly 30%.
For six years as a private company, Snap was insulated from fickle investors and could concentrate on developing its Snapchat messaging app without much distraction. Now that the company is public, however, all eyes are on Snap to show huge growth, especially as Facebook’s (FB) competing Instagram service consistently debuts copycat features and tries to steal users.
Spiegel said that it’s “been energizing” for Snap since going public, and said the company is at an interesting intersection of still being a young company spending lots of cash for growth while being scrutinized each quarter by Wall Street.
Working at Snap is not for the faint of heart, Spiegel said. He likened the company’s tough work culture to how water appears calm right before it boils, using an obscenity in front of the audience of bankers and financial officers.
“For people that are excited about pushing themselves, I think it’s a great place to be,” Spiegel said.
To keep up growth, Spiegel said Snap is focusing on expanding the service outside of the U.S. and Europe, and partnering with wireless carriers worldwide to bundle the Snapchat app into various packages that they in turn sell to their customers. Spiegel previously discussed these carrier deals during the company’s last earnings call with analysts, saying that these partnerships with unspecified carrier companies in “over a dozen markets” would “begin reducing cellular bandwidth costs for Snapchatters around the world.”
He didn’t say how much Snap spent on these types of carrier partnership deals.
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About the big cloud computing bills Snap pays to companies like Amazon and Google to run its service, Spiegel argued that it would have to spend even more and if it had to build and operate it’s own data centers. Snap has agreed to pay Amazon $1 billion over the next five years for cloud services, and another $2 billion to Google over the same time.
Lately, some Snapchat users have been complaining about a recent redesign that splits the disappearing videos of their friends from videos shot by celebrities and media companies. Some investors and analysts fear the redesigned app could cause Snap’s users to disappear.
But Spiegel said it’s the right decision because it makes a clear distinction between the private communications of users and their friends, and those of broadcasting networks and big-time stars.
To people who feel that the new Snapchat makes them feel less connected to celebrities who may have appeared to be their friends in the app, Spiegel said “Exactly!”
“They’re not your friend!” he said.