After a sub-par IPO earlier this year, Snapchat has been faced with a flurry of questions and remarks on its growth strategy and numbers, which got further aggravated when Facebook’s Instagram decided to beat it at its own game(talking solely in terms of user growth numbers). Furthermore, Snapchat has a fairly high cash-burn ratio due to the fact that it outsources most of its computing resources to services like Google Cloud.
The downsides aside, is Snapchat going terribly wrong? Or does it have an undisclosed, ground-breaking long term strategy in its kitty?
Snapchat (Snap) bases its strategy on high-speed routine innovation to stay ahead of competition, however Facebook has an unparalleled network effect to seed growth. While Facebook’s copycat approach is paying off well, one of its design engineers mentioned that “Stories are a format rather than an app”, which essentially implies that Facebook is adding those features as a way to enhance the UX on their app. It could well be compared to how Apple ‘stole’ the mouse from Xerox — was it really a theft? Probably not. Steve saw the mouse as a way to interact with the computer that Apple was building, again, with the purpose of enhancing the UX. They did not blatantly reverse-engineer the Xerox mouse and bundle it on the Macintosh; they had built it on their own design notions. Let’s leave aside the debate about whether Facebook is a copycat or not though, I would rather cover it in a separate article.
Is product innovation a self-sufficient strategy on its own?
There is nothing so useless as doing efficiently that which should not be done at all.― Peter Drucker
Innovation without a well-drawn out strategy in place is as good as hitting darts in thin air. Facebook’s strategy is pretty clear in this regard — build on Snapchat’s features to provide its users a more immersive experience on its platform. Snapchat, on the other hand, rests its confidence on its ability to innovate alone.
An alternative road ahead
Since Snap calls itself a camera company, which is fairly true given that it has actually done radical innovations on that ancient piece of hardware. But it is still an app, a product, that could be overthrown one fine day.
Platforms tend to have a longer, sustainable life due to the very fact that there are switching costs and a history factor involved that they keep building along with their existence which makes it cumbersome for users or competitors to replicate. Let’s take Facebook’s Messenger for example here: the way Facebook turned its “Stickers” on the Messenger to a marketplace rather than just a feature, made innovation much faster and radical as it became decentralised, open to creators.
Similarly, if Snapchat focuses on building technology for its underlying filters and making it the core of its business, there could be a plausible synergy with Android if they make it the default camera application on smartphones, reaching billions of devices across the world. Equivalently, if they could license their software to enhance existing cameras by Canon or Nikon for example, like Android’s business model in the smartphone space, they could again harness an ecosystem of their own. In fact, even if such a leap is impossible, they could turn their filters into a marketplace to allow developers and creators to turn in and build fascinating new filters and experiences for its camera app. That would essentially make it a hard-to-copy, rapid innovation platform rather than just an app on the marketplace.
Thanks for stopping by this impulsively drawn out opinion! I would love to hear your thoughts too :)