What start-ups can learn from the Snap IPO

Whether you think investors were "mad or genius", Timothy Armoo argues there are three things to learn from Snap's $28bn market listing

On March 2 2017, I waited for the NYSE to open and I purchased shares in Snap.

I did this, not only because my company helps brands reach people on Snapchat but, also, because I fundamentally believe that Snapchat is a generation defining company.

Snapchat’s IPO has been the talk of the media with every newspaper offering perspectives as to whether investors are mad or genius for backing Snap. This article however will focus on what start-ups can learn from Snap’s IPO.

I believe that start-ups can learn three key things from Snap’s IPO – namely on positioning, the importance of focus on one metric and the importance of building a multi-faceted product or service:

Positioning is everything

In its S-1 form, Snapchat described itself as a camera company. This helped boost its stock price as it emphasised the role that the camera will play in the future, using Spectacles as an example of its first foray.

Tim Armoo Snap IPO

Showcasing Snap’s Spectacles

By constantly reinforcing that it is a camera company, Snap has, to some extent, avoided constant comparisons to other social networks. For a company which isn’t profitable and is spending a lot of money, a $28bn (and at one time $33bn) market cap appears odd to some but such are the advantages of careful planning and positioning.

If Snapchat had described itself as just another social network and hadn’t thought about its positioning in the market as being hugely differentiated –  touting the role that the camera is to play in their future – investor appetite would not have been good.

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Takeaway lesson for start-ups: Positioning is not an afterthought and should be planned right from the off in your start-up’s journey.

Pick your one metric

Snapchat’s currency is engagement and it knows this. Analysts often comment on Snap’s slowing user growth, however this is short-sighted and often comes as a consequence of comparing Snap to Facebook (they can’t be compared, see previous point).

I’ve said this many times but Snap is NEVER going to be as big as Facebook as it is simply not a utility in the same way Facebook is but that is completely fine because Snap’s engagement is off the roof!

For its audience – primarily those aged 25 and under – Snapchat boasts usage of 30 minutes every day. Considering that the platform is 100% opt in and in 10 second chunks, that’s a huge amount of engagement.

If Snap can keep its 160 million+ audience engaged then it wins and it’s not playing the same game as other companies who are merely hungry for eyeballs.

As a start-up, the key to company success is to define one metric that you believe to be important and make that your sole focus. I see too many companies attempting to have several yardsticks of success – user growth, revenue, engagement, sign-up rates, profits etc. and this often leads to them boiling the ocean.

Takeaway lesson for start-ups: Pick the one metric that defines success for your company and solely work on boosting that. You grow what you focus on.

Take a multi-faceted approach from the off

I am passionate about Snap because I believe it doesn’t just serve one function.

A number of people suggest Snap is like Twitter with slowing user growth and lack of profitability, however I believe this to be wrong. Why?

Twitter is simply a messaging product, a way to broadcast to the world whereas Snap is a messaging app which enables you to send fun self-destructing messages to your friends. Secondly, Snap has redefined how younger audiences watch TV by taking old media companies and repackaging them in a way that makes sense to a younger audience through the Discover portal. Thirdly, Snap has ushered in a new wave of branded content due to its partnerships with NBC and BBC to create mini documentaries.

I believe that this multi-faceted approach to product will stand Snap in good stead and is a good lesson for start-ups. Most start-ups build a singular product or service with a singular use case and bet their company on that. Even worse, any attempts by start-ups to have a multi-faceted product/service are often half-arsed attempts which lead to wasted resources.

The key then is to look at your product/service from the beginning and think about the difference use cases and actively build those out. By building a product/service eco-system which can interact with distinct different sets of users, your start-up is more likely to succeed.

At Fanbytes, not only do we have an advertising network for distributing Snapchat campaigns, we also have a design community that creates Snapchat ads for brands, an automated video creation product and a branded content product. All this is hosted on one single platform.

As a consequence, we’re a much stronger player in the market as we’ve built a whole suite of products around different consumer needs.

Takeaway lesson for start-ups: Define multiple distinctive use cases for your product or service and purposefully build a product eco-system.

Timothy Armoo is the CEO of Fanbytes, the first self service video ad network for Snapchat helping global brands create, distribute and analyse branded Snapchat campaigns. 
Using a crowdsourced design network, engaged influencer network and analytics, Fanbytes helps brands reach generation Z at scale for a fraction of the cost.


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