Snap won't turn into TikTok, Spiegel says
Facing serious headwinds, Snap CEO Evan Spiegel said Wednesday the company plans to double down on its focus on close visual communications between friends and family, rather than turn its entire business into a TikTok-like feed.
Why it matters: Meta has faced intense user blowback for trying to pivot Instagram to be more like TikTok. Spiegel argues that for Snap to remain competitive, it needs to focus on what makes it different.
- "I think we'll compete by continuing to focus on the reason why our community gets value from Snap, and there is a drive towards that north star of overtime delivering more and more value to the people who use our service," he told tech journalist Kara Swisher and marketing professor Scott Galloway on stage at Vox Media's annual Code Conference.
The big picture: Spiegel's appearance comes days after he announced that Snap is laying off 20% of its workforce in order to withstand an ad slowdown.
- Speaking on stage, he acknowledged the difficulty of that decision, and blamed the war in Ukraine as well as inflation for prompting companies to cut their digital advertising, which in turn led to some of Snap's business challenges.
- As a part of the layoff announcement, Snap said it would reduce some of its investments in original content.
Snap is known in the publishing industry as a more reliable publishing partner than some of its rivals, and its relationships with its publishing partners are considered much more sustainable than those offered by its rivals.
- Spiegel said Wednesday that Snap is on track to bring more than half a billion dollars to its content partners and creators this year.
Between the lines: Snap has lost nearly 80% of its value this year as growth in the ad industry slows and competition from TikTok increases.
- Spiegel noted that the U.S. has struggled to respond to TikTok's unprecedented growth because of the scale of its investments.
- TikTok made small investments that were able to bypass regulatory reviews and then "they spent billions upon billions of dollars of acquiring users, right and buying content to subsidize both sides of that marketplace," he said.
- "I think what nobody had anticipated in the United States was the level of investment that [TikTok parent] ByteDance made into the U.S. market."
Yes, but: Despite those challenges, Spiegel said going public in 2017 was and continues to be the right decision.
- Asked about one day selling the company and taking it private, Spiegel said that despite ups and downs, he and his co-founder, Snap CTO Bobby Murphy, "believe that the best way to realize our long term potential is by building an independent company."
What's next: For now, Snap is focused on generating cash to withstand a market downturn, but it's still committed to investing in what it believes will be a large part of its future: augmented reality.
- In particular, augmented reality lenses that allow users to try on clothing virtually is a focus for the company, Spiegel noted. Virtual try-ons that reduce return rates will be a huge part of online retail in the future, he said.