Snap CEO Evan Spiegel is here to lose money and earn your trust
“Just cause Yahoo has a search box, it doesn’t mean they’re Google.”
In this case, Snapchat is Google, and Facebook is Yahoo. It takes guts to lob a line like that in your first-ever earnings call as CEO of a public company, particularly when you shares just dropped 25 percent.
But that’s what Snap CEO Evan Spiegel told investors on a call Wednesday when they dared to ask about Facebook CEO Mark Zuckerberg’s tendency to copy his company.
The analyst specifically referenced Facebook’s F8 presentation, but we all know Facebook has done much more to copy Snap than just pitching a similar augmented reality future.
Snapchat is all about secrecy, as an app and as a company. That includes Spiegel, who is rarely seen or heard from — at least in a typical business capacity. But no longer.
What we quickly learned Wednesday was that Spiegel is not here to be bullied. Here’s here to be admired, even if that includes losing $2.2 billion over three months and failing to meet all of analysts’ expectations.
Snap Inc., the company behind the disappearing messaging app, released its first-ever earnings report Wednesday since going public in March. Part of their quarter-by-quarter duty is having an hour-long phone call with analysts at major financial institutions.
Snap executives rarely speak on the record with reporters, and even when they do, they give pretty stale responses on whatever it is they’re announcing.
Sure, they open up behind closed doors, and they show some personality on-stage at events. But Wednesday was the first time that a handful of executives were put to the test, in a public forum, on how they answer to questions about their business.
And let’s just say: It was awkward … at the beginning … but things got a lot better later, especially when the question comes to his business acumen and how Snapchat compares to Facebook.
“Hi everyone,” Spiegel started. He later went onto use the phrase “across our Snapchat application” and then in another robotic statement said, “We are pleased with early results on these improvements, particularly on Android devices.”
Earnings calls are tough and can be particularly difficult for young CEOs. The format is almost universal — opening remarks followed by running a gauntlet comprised of analysts hurling questions about their company.
Spiegel seemed to find a certain amount of comfort, particularly when his humanity began to shine through on the topic of the beauty he sees in his product, still within his prepared remarks.
“With so many snaps created every day, there really is a story for anything on Snapchat,” Spiegel said.
Spiegel isn’t really a household name, yet. Your mom may know Mark Zuckerberg, Jeff Bezos, Eric Schmidt, and even Jack Dorsey. But the CEO of Snap may more commonly associated with being Victoria Secret model Miranda Kerr’s fiancée. That may change.
He put himself out there during a photo shoot and interview with Vogue Italy in October 2015 that produced some gems. Like this photo:
The interview provided some rare reflections on how Snapchat has grown and what he wants it to become. “We hoped that Snapchatters would take photos and videos to express their personality, instead of photographing beautiful subjects,” Spiegel told Vogue Italy. Indeed, they did.
The month prior to his Vogue cover shoot, he offered GQ, another Conde Nast brand, answers to his 10 essentials, which included Kora Organics Daily Hand Cream and chapstick.
Spiegel has been questioned on television and at events a few other times, such as during Recode‘s Code Conference. He also released a nearly four-minute video in June 2015 titled “What Is Snapchat?” Spiegel, dressed in his uniform (a v-neck white t-shirt) sat at a wooden table and drew sketches on what his little app was all about.
When it comes to business, the financials, we know little of Spiegel’s style, especially on how he defends such things like maybe, again, losing $2.2 billion in one quarter.
We learned quickly. In the first question on Wednesday’s earnings call, Spiegel showed he will fight to defend his company and speak very damn fast while doing so.
An analyst asked Spiegel about Snapchat’s daily active user growth, which the app failed to meet. User growth is a key metric used by investors to gauge whether the company can grow big enough to make the kind of money that can justify Snap’s multi-billion-dollar valuation.
What can we expect out of Snapchat? Well, it’s not Facebook. Spiegel made that clear, referencing “growth hacking,” where apps will have a notification that demands users to open the app every day. Snapchat doesn’t have those, unless you actually receive a genuine message — quite unlike Facebook and Instagram.
“The way we think about daily active user growth is through the lens of creativity and creation. We built our entire business on creation,” Spiegel said.
Sure, Snapchat has less users, but it seems that Spiegel is trying to make the most out of each of them. He positioned Snap as something of the anti-Facebook. He offers them fun products that encourage them to play around like by “looking like a puppy,” Spiegel said and then gave a few awkward laughs.
Spiegel spoke a lot about “relationships,” “new perspectives,” and “education.”
He’s working to convince analysts and investors that he doesn’t need to grow his company the exact same way as Facebook when it comes to the consumer product and the advertising product.
Another analyst asked Spiegel about how he thinks about the future of hardware about the company. Spiegel didn’t spill any secrets but said they’re thinking a lot internally. He did show off a statistic that “more than 5 million snaps” have been taken by their video-camera glasses Spectacles. That’s far less than the 3 billion taken, but it’s something.
Spiegel brought out the guns when asked about revenue and advertising. He takes the blame of his own salesforce and places it onto the industry as a whole.
“I think the big issue with advertising is education. We have world-class advertising,” Spiegel said. “Early adopters are seeing great results.”
Spiegel also seemed to come at the call with the mindset that even the people who analyze his company aren’t that familiar with the product, at least with what the product has to offer everyday. When asked about Snapchat Discover and the other media partnerships the app has, Spiegel talked up their Shows venture. He referred to it as a new endeavor, though it’s been going on since August last year.
“Don’t know if you got a chance to see it?” Spiegel said in a casual tone.
The biggest shift of the boldness and brightness of Spiegel came when he directly asked about Zuckerberg. That’s when he referenced Yahoo to Google.
“If there’s one thing I want to communicate today it’s the overall creativity to our business,” Spiegel said. “If you want to be a creative company you got to deal with that people are going to copy your stuff.”
Losing $2.2 billion these last three months? Well, seemed like not a big deal, if you were to listen to Spiegel. You have to have faith in the 26-year-old CEO if you’re going to bet on Snap. And secrecy is part of the bet.
“I think at this point we’re famous for not giving guidance on the product pipeline,” Spiegel said. “Should be a fun rest of the year.”