Success Story of Snapchat – Earning Millions by making Disappearing Texts
In this week’s newsletter, we will talk about the success story of Snapchat and its co-founder Evan Spiegel. How Evan started Snapchat for sending texts and media temporarily and how it became an app earning millions.
This wouldn’t have been possible without hard work, passion and persistence. Let’s see how!
Success Story of Snapchat – Earning Millions by making Disappearing Texts
Snapchat is an America-based platform for instant messaging and sending multimedia. Snapchat allows its users to send and receive messages, images and short videos, known as snaps, with other Snapchat users. They can also add multimedia to theirhistory, that can be seen by their followers. Apart from this, a user can directly send private snaps to other users. However, all the multimedia is shown for not more than ten seconds.
Though there were some differences regarding the start of Snapchat, it was actually founded by Reggie Brown, Evan Spiegel and Bobby Murphy, who studied together at Stanford University. They wanted to create something through which they could send images that would be displayed for some time only. This ultimately turned into a multibillion app. The initial name of the app was Picaboo, but in September 2011, it was renamed Snapchat.
The temporary display of multimedia has two advantages:
It encouraged people to use the app.
It solved the problems of storage and management of such files.
Evan Spiegel, the co-founder of Snapchat, is one of the youngest entrepreneurs to become the CEO of a multibillion platform. He was born on June 4, 1990, in Los Angeles, California. When he was just 2, he became fascinated by technology and its wonders. At the tender age of 10 years, he developed an iPhone app called Spiegel’s World which became quite popular. Spiegel then became certain about his passion for technology and wanted to take up a similar career path. After completing high school, he entered Stanford University to pursue a business and computer science.
It was then that Reggie Brown came to him and Bobby Murphy with the idea that attracted and inspired them. Bobby built the app from scratch and did the required coding. It was named as Picaboo and launched in July 2011. After quitting Stanford University in 2011, Evan also established a company that didn’t work out due to novelty.
There was some dispute and the mastermind of the app, Reggie, was thrown out of the company by the co-founders Spiegel and Murphy. They then renamed and relaunched the platform as Snapchat in September 2011. The app was quite popular already, with about 100,000 users. Brown made a settlement with the other two for $157 million in September 2014.
After Picaboo became Snapchat, the remaining co-founders had to present their case even stronger. They wanted to spread awareness and a better image of the app among the users, saying that deleting something doesn’t mean it was bad. Evan had given an interview saying, “Online, typically you delete something if it’s bad or if it’s really embarrassing. What Snapchat said was if we try to model conversations as they occur, they’re largely ephemeral. We may try to write down and save the really special moments, but by and large, we just try to let everything go. We remember it, but we don’t try to save it.”
Evans posted a blog for the first time, stating his intentions for creating Snapchat:
“And after hearing hilarious stories about emergency detagging of Facebook photos before job interviews and photoshopping blemishes out of candid shots before they hit the Internet (because your world would crumble if anyone found out you had a pimple on the 38th day of 9th grade), there had to be a better solution.
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. Like when I think I’m good at imitating the face of a star-nosed mole, or if I want to show my friend the girl I have a crush on (it would be awkward if that got around), and when I’m away at college and miss my Mom…er…my friends.
We’re building a photo app that doesn’t conform to unrealistic notions of beauty or perfection but rather creates a space to be funny, honest or whatever else you might feel like at the moment you take and share a Snap.”
Snapchat launched its app for Android by 2012, introducing a new feature called video snaps. Users could send short videos called snaps, that lasted for not more than 10 seconds. This is how Snapchat continued to become successful – it went on creating new and better features for its users that became popular among the masses. One major factor behind this growth and success is the use of AR, i.e., augmented reality, that is not used in a better way by any other social network platform.
Snapchat was supported by two things, stories and chats. The Stories is a feature allowing you to upload posts for 24 hours, after which they are removed. This is also followed by Instagram stories. When Facebook was unable to acquire Snapchat in 2016, it imitated and integrated Stories features into Instagram. Though many speculated the fall of Snapchat, but the company stood strong and independent. Unlike other platforms, Snapchat let users chat with others, with messages getting automatically deleted after some time. This was fitting for users who preferred quick and easy conversations.
From its beginning, Snap’s chat feature has attracted many users from Gen Z. They have been so impressed that they remained its dedicated users, that let Snapchat increase its numbers and surpass Twitter in this respect. Given below are some of the other interesting features of Snapchat:
Stories: This feature was introduced in 2014, allowing users to upload snaps that lasted for 24 hours. Many celebrities, influencers, etc. used it to show their fans a part of their daily lives.
Chat: This proved to be the trump card for Snapchat. It let users send messages in chat window, share snaps, talk with others on live chat, transfer money, etc.
Our Story: It lets users from everywhere upload multimedia from public events to their profiles.
Memories: Users can save screenshots of multimedia and snaps here. All these will be stored in Snapchat’s cloud, and users can then access media from local storage in their devices. These media are protected by a pin, making it a sanctuary just for you.
Discover: This feature allows various brands and influencers upload stories for the public.
Snap Originals: Launched in 2018, these comprise of 100+ exclusive short shows made for Snapchat users, that can be viewed vertically and in full screen.
Snap Map: Through this feature, users can send their live location to their friends or followers on Snapchat. You can also find out your friends from the world map when their GPS is on.
Filter: Snapchat popularized these fun things. Filters can change an entire picture – you can add to it numerous effects, stickers, time, location, etc. It makes your images and snaps more entertaining.
Snapstreaks: It is a figure that shows the number of times you and your friend have snapped each other within 24 hours during a time period. The streak breaks if no snaps are sent for more than a day. It has become a challenge and addiction for many people, who open Snapchat only to uphold their streaks.
So, how did Snapchat promote itself to become so famous? Believe it or not, word of mouth played a major role in this. When just a couple of months passed after its launch, Snapchat had only 100 users. But when the cousin of a co-founders shared it with his friends in school, the app became popular among teenagers everywhere. Many curious people who tried out the app were fascinated by the fact that embarrassing photos were gone for good when the user on the other end opened the message. After the app became popular through its users, new features were added that improved the platform and attracted more users. Continuously upgrading the existing and advanced features kept its users hooked to the app.
Snapchat had targeted the Millennials who know to live their life to the fullest and take advantage of all the features offered by the app. They love the app so much that they have even invested in stocks of the company. This truly shows their loyalty towards Snapchat.
There are various factors that are behind the billion-dollar growth of Snapchat, like:
Originality Of Concept
Since the target market of Snapchat consists of young people, it had to introduce Emojis for the satisfaction of their users. That is why Snapchat purchased Bitstrips, an Emoji app, with $100 million, so that bitmojis can adapt to the style of the app. For users of Snapchat, this feature is very useful for posting media and snaps, and chat in an enjoyable way.
Another $150 million was spent on a Ukrainian startup Looksery, for adapting facial recognition technology as the base of the popular Snapchat Lenses. Though this feature is meant for entertainment, the causal algorithms are very complex and fascinating.
Snapchat functions very differently than other apps – from the central function to the method of connection between the users – all having personal and human touch. These features transformed Snapchat into popular app for users and brands that want to leave a long-lasting effect on public.
The trick behind this popularity is to combine and play with different techniques for attracting new users and keep them engaged.
Due to the latent possibility, as visible from its marketing section, the entire team of Snapchat created a platform, where brands not only endorse their products but also make creative and entertaining ads. You can also take advantage of Snapchat marketing framework through Snapchat Sponsored Geo Filters for personal advertising based on location.
Community Geofilters allowed users to create custom Geofilters or purchase branded filters as well. Snapchat has another useful feature – money transaction filter, that lets users exchange money among themselves.
The most famous AR filters for selfie are the dog ears and animated beards. The company has developed and improved itself based on this technology for years. It even claims itself to be a camera company.
Users can also modify backgrounds and the environment through AR, making the platform more interactive and creativity. Users can open up and share their thoughts and opinions with other users. They plunge into the regular AR experiences, that is equal to about 6 billion experiences.
Marketers can target any section of the audience on Snapchat through traditional routes, such as using business account for sharing posts, interacting with the common public and impressing them. Snapchat knows the importance of quality content, and so they make traditional TV shows available on their Snapchat Discover page.
Snapchat also lets companies create AR filters. Companies with creativity can trend and become famous quickly. Also, the AR-based Dress Up feature is meant to enhance your experience of online shopping experience. It allows users to try various products on themselves, retailers to have more conversions, and reduce expensive and polluting returns.
Snapchat is popular for other advanced features also – bringing huge innovations and proving to be a leader in the field of technology and AR, and creating new market where brands can show their creativity. It gives tough competition to other similar platforms due to new features and improvement of existing ones. Another plus point of the app is that it created a unique user experience.
A Geo-fence can be used to restrain the swipe action of Snapchat geographically. Smaller geo-fences are available at lower prices for small companies. But for a highly populated area, it ensues an additional cost.
“The second possibility is the advertiser can purchase “Lenses”. It is one of the basic Snapchat functions, where you can on-the-fly take a picture and apply drawings or other effects on it. It can be an interesting way for a number of advertisers to brand products or services – but it requires resources in 3D graphics and animation. The third platform is more along the lines of advertising you see on Google or Facebook. But in the form of a video clip of up to ten seconds,” says Mads Haulund.
Robert Cornelius Murphy realised the potential behind Spiegel’s idea and became the co-founder of Snapchat. This rapid growth, however, meant that Spiegel and Murphy were not far-sighted with respect to the company. They were more concerned with monetization and earning income from the platform, and did not focus on development of features.
To overcome this, Anthony Noto was hired as the COO in 2015, who consolidated the funds of the company and used to develop the product. This proved beneficial, as by 2016, Snapchat became one of the most popular apps.
However, all this success was accompanied by failures. But Evan didn’t falter even once and overcame all the failure, becoming a successful CEO. He doesn’t hide his errors and rectifies them. This made him successful.
The innovative yet simple features of Snapchat, that were described above, proved vital in the path of its success. In 2013, the trio of founders shot down the offer of acquisition by Mark Zuckerberg, CEO of Facebook. Though it would have fetched them $3 billion, it was a profitable decision for the platform. At first only college students used this app intensively, but soon its market expanded to other nations, including those of Asia.
When Spiegel launched Snapchat, the total annual revenue was just $5 million. However, the company experienced high rate of growth, and by 2014 the annual revenue had risen to over $1 billion. 99% of this was earned from advertisements due to its popularity among the youth. Snapchat enjoyed 75+ million monthly users since 2015. Within 4 years, Snapchat had a market valuation of about $25 billion, that is the highest for a US tech Initial Public Offering since 2012. It received funds equal to $4.9 billion in over 14 rounds. As per January 2020, Snapchat has 360 million active monthly users.
FactSet had made a survey that inferred Snap Inc.’s revenue growth to be around 48% in 2021, with an annual revenue amounting to $3.72 billion. They had also forecasted an annual revenue of $5.11 billion in 2022.
As of 2021, its valuation stands at$33 billion. It enjoyed a revenue of $4.1 billion, with $1.5 billion earned in the fourth quarter of FY2021. Snap Inc., the parent company has also acquired 21 companies like Fit Analytics, Voisey, Voca.ai, Teleport, PlayCanvas and Zenly, etc. The quarterly revenue of second quarter of FY2022 stands at $1.11 billion.
Users are exchanging millions and billions of snaps every day. This will not stop anytime soon, instead, it will continue becoming popular and profitable. This means you can expect the competition from other similar platforms to grow as well. In 2013, Spiegel appeared in the list of TIME’s 100 Most Influential People in the World.
Snapchat is currently dealing with a lot of problems. The major one is the competition it gets from Facebook, Twitter, and Instagram, that have a greater number of users and are regularly improving their products and features to gain new users. This negatively affected Snapchat’s growth, as its users shifted to those platforms.
Another problem is its stock value that is plummeting every day. In March 2022, it had a stock value of $17 billion that has now fallen to $10 billion. Due to this many investors had left the company, resulting in lack of new funds.
Snapchat is also facing problems due to its advertising strategy. The companies and brands that used this platform to promote their products and give ads have shifted to Facebook and Twitter providing similar ad services. This has also caused a detrimental lack of investment and decreased its growth.
However, Snapchat and its co-founders have no intention to stop. Even after 10 years Snapchat is known for a young user base, strong and experienced team, low debt, etc., and is sur to go far in its path to success.
So, even if you face hardships, do not give up. Continuous effort, patience and determination will surely fetch sweet fruits of success, even in hard times!
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