Topic: Growth
DirecTV Now Struggling to Grow, Says Bloomberg (May 26, 2017)
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Snapchat is Struggling to Grow Partly Because Evan Spiegel Trusts Gut Over Data (May 24, 2017)
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★ Snap Inc Reports More Slow User Growth, Growing Losses, Minimal Spectacles Sales (May 10, 2017)
Snap, owner of the Snapchat app, today reported its first earnings as a public company, and it was a somewhat unique experience. Its press release, linked below, is entirely devoid of commentary, and although its call had a little more of that in prepared remarks, it was mostly focused on its evolving ad products. The results themselves are more of the same from the S-1 filing, which I suggested at the time was lousy preparation for an IPO because it featured significantly slowing user growth and a lack of clarity about the future. This first quarter of public earnings reinforces that perception, with more slower growth than last year. Massive stock-based compensation related to the IPO dramatically distorts the margin picture, but even stripping out SBC leaves a worsening margin picture as costs in several categories rose faster than revenue. Evan Spiegel and the other executives on the call seemed keener to talk trash about competitors, notably Facebook, than in really answering investors’ pressing questions about user growth, and that’s reflected in the stock price, which has dived since the release. The bombastic tone would have been justifiable if the company’s growth hadn’t slowed significantly since the introduction of Instagram Stories with no signs of recovery, but in the current context it feels like naivety or denial instead. Snap’s management argues that measures of engagement and “creation” are more important than user growth metrics. However, it provides very few of those, and then not consistently or with enough granularity to measure them over time. The conclusion from all of this is that Snap’s future is that of a niche company dominating narrow segments of the population rather than a company with broad mass market appeal, and that has significant implications for its valuation. Two other points worth making: the company provided enough data in today’s call to suggest it sold fewer than 100k Spectacles units since launch, confirming the perception that it’s been seen as an experiment than a meaningful new part of its business. Secondly, it continues to suggest that its sub-par Android app has hurt growth, and that recent improvements have moved the needle, though the numbers in question have moved so little that this isn’t going to turn around the growth trend.
via Snap Inc.
Instagram Announces 100m New Users in 4 Months on Day Twitter Announces 9m in Three (Apr 26, 2017)
It’s hard to avoid the sense that Facebook is trying to rain on Twitter’s parade here. It’s announced that Instagram now has 700 million monthly active users, up from 600 million in December, which means it’s added 100 million users in just a little over the time it took Twitter to add nine million. It previously announced that Instagram Stories has 200 million users, up from the 150 million it had shared earlier, and attributed the growth in the core Instagram user base in part to an improved signup flow. But Instagram has also benefited from strong adoption in emerging markets, including Brazil, which is its second largest market after the US, with 45 million users. That’s in marked contrast to Snapchat, which has emphasized primarily mature markets on the basis that emerging markets users have more constrained and expensive bandwidth and would be less likely to use a visually intensive app like Snapchat. And of course Facebook’s other apps continue to grow rapidly too: Messenger and WhatsApp are now both over 1.2 billion, while the core app will likely hit 2 billion in the next quarter or two.
via TechCrunch
Facebook Messenger now has 1.2 billion users, its second messaging app to hit the milestone (Apr 12, 2017)
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Snap’s revenue growth looks like it will come from more ads, not more users – Recode (Mar 13, 2017)
In a sense, there’s really nothing new here – the key quote comes from the S-1/A filing from a month ago. The article, though, argues that Snap will make money from higher ARPU over time rather than from user growth. While it clearly won’t be going for user growth in emerging markets for the reasons stated in its S-1/A, I don’t read that as not being focused on user growth – it clearly will be but that focus will be on mature markets, where it still has tons of headroom, at least in theory. It’s worth noting some other things here: Kurt talks about Facebook as the comparator, and it’s clearly the obvious one, but Twitter is another. And whereas Facebook has now reached a nearly $20 ARPU in the US quarterly, Twitter has stagnated at around $6-7 over the past year. Just because Facebook was able to keep growing ARPU seemingly indefinitely, that doesn’t mean Snapchat will be able to. And I’d argue that with such a simple, non-stream-based interface, Snap probably has far fewer places to put ads, meaning its ceiling is likely quite a bit lower than Facebook’s. It’s also worth remembering that Facebook’s ARPU numbers are at least a little misleading – the user number is only for the core Facebook app, whereas the revenue number includes Instagram, WhatsApp, and Messenger too. Lastly, part of rising ARPU at Facebook is price per ad, not just more ads shown, which is a reflection of new demand outstripping new supply, something else that’s not guaranteed with Snapchat. Overall, I’d be very wary of drawing too many conclusions about Snapchat’s potential from Facebook.
via Recode
Parents adopting Snapchat as their kids exit – Axios (Mar 1, 2017)
We’ve seen this happen so many times now with social networks that it’s a cliche at this point – as the parents arrive, the kids start leaving. That’s still an exaggeration with Snapchat at this point, and certainly the arrival of the olds isn’t the cause of the departure (technically, slower growth) among youngsters, but a maturing of the base is natural over time as Snapchat already has massive penetration among younger demographics, at least in its biggest markets. These eMarketer numbers, though, still don’t paint a picture of very rapid growth at Snap, which continues to be the biggest worry ahead of this week’s IPO.
via Axios
Lyft expands to 54 more U.S. cities in race with Uber – USA Today (Feb 24, 2017)
A few weeks back, I wrote about Lyft expanding into 40 new cities as part of a 100-city push for 2017. Here’s the second part of that push, with another 54 cities launching today. Given what’s been happening with Uber over the past week or so, the timing of this massive expansion couldn’t be better from Lyft’s perspective – it’s now primed to benefit from the #deleteUber movement in many more places, given that it’s the only meaningful alternative to Uber across most of the US. Again, as I wrote in that earlier comment, this means Lyft is likely investing heavily in those new markets, which will push it further into the red at a time when it looked like it might be making progress towards profitability, but if this expansion helps it close the gap with Uber, then it’s almost certainly worth it.
via USA Today
In Move to Facebook, Barra Leaves Unfinished Expansion at Xiaomi – Bloomberg (Jan 30, 2017)
This is a good overview of how the international part of Xiaomi’s business fared over the last several years, while Hugo Barra was in charge, and it argues that Xiaomi’s progress during that time was limited to some countries and mostly symbolic elsewhere – gaining mind share but not market share. And of course, it still hasn’t fully launched in the US, which can be considered the biggest failure of Barra’s leadership of the international business, with the company’s first big CES press conference one of his last official actions in the role.
via Bloomberg
Inside Instagram’s reinvention – Recode (Jan 23, 2017)
This is a great little profile of Instagram, with lots of little tidbits of information. There are several overarching themes: the mimicking of Snapchat features is definitely one of them, but the broader context is that Instagram is generally moving really fast to ship new features, which is particularly striking given that Kevin Weil, who runs product, came from Twitter, a company that often seems paralyzed by indecision when it comes to tweaking functions. The whole piece reinforces the sense that Instagram is the vehicle through which Facebook is both iterating more quickly and trying to compete more directly with Snapchat, while the evolution within the core Facebook product is slower and more deliberate.
via Inside Instagram’s reinvention – Recode
Twitter’s marketing chief shows off vibrancy in her pitch – Mashable (Jan 13, 2017)
Twitter CMO Leslie Berland spoke at CES about what Twitter is doing to grow its business, and it gets at the root of Twitter’s current problems. The good news is that Twitter seems to have a decent understanding of why it’s stuck when it comes to user growth – people don’t know what Twitter is for, they think it’s a social network, and they think they have to tweet themselves to get value out of it. The problem is that Twitter hasn’t done very much yet to address these three issues effectively, and you could argue that’s Berland’s job now, to the extent that marketing includes product. But of course Twitter has famously had separate heads of product, and Jack Dorsey himself seems to want a strong role in that domain too, which may be part of the problem (that and the inability to retain those heads of product).
via Twitter’s marketing chief shows off vibrancy in her pitch – Mashable
Uber expects to give 15 million rides this New Year’s Eve – Recode (Dec 29, 2016)
Three times growth from 2015 to 2016 is remarkable, and a useful indication of how fast this industry is still changing and growing. And yet peaks like this are still one of the biggest challenges for companies like Uber (and even Amazon, in a completely different way) – build your infrastructure for normal operation, and it’s tough to handle massive spikes in demand. Surge pricing helps a little, but you still can’t get out any more than your total number of drivers at any given time.
via Uber expects to give 15 million rides this New Year’s Eve – Recode