
Snap expects layoffs to save $34M a year - fancyfacebook
https://www.marketwatch.com/story/snap-expects-downsizing-to-save-34-million-a-year-2018-03-30
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mythz
So SNAP lays off another 7% of their workforce to save $34M a year whilst
their CEO pockets $638M in compensation (3rd highest CEO payout ever) before
they're remotely close to profitability. Not sure if company-wide layoffs and
paying their CEO more are going to achieve their growth/profitability
aspirations.

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pjc50
The logical conclusion of today's corporate structure is a company with a
single employee, the CEO, who is paid all the profits, while all the actual
labour is performed by zero-hour sub-minimum-wage contractors, all either
funded by VC money or floated but posting zero dividends.

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jobigoud
If the service can be implemented as a decentralized autonomous corporation
running on a Blockchain you might not even need the CEO.

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maxxxxx
Who can then pocket all the money?

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lukewrites
The GPs at the venture funds, just like nature intended.

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maxxxxx
"just like nature intended."

:)

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product50
This is why the 10/20/30/40 vesting schedule which companies like Snap have is
so problematic. Snap is laying people off and are saying that they expect to
save a large amount of costs related to stock based compensation because of it
(given they are a business I don't blame them for this line of thinking).
However, from the laid off employee perspective this is pretty bad: 1) they
worked hard to get Snap to this point but didn't get an equitable share of the
rewards given backvested stocks 2) some of them might have just ended year 2
or year 3 of their tenure at snap and the big pay off was about to come and
just like that they were laid off. Worse, being laid off destroys your
negotiating position as you are trying to get a compensation package from your
next company. An equitable 25/25/25/25 vesting schedule would have dealt with
this much more fairly from the employee's standpoint.

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aardvark291
> 10/20/30/40 vesting schedule

What does this mean?

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CocaKoala
I suspect (and somebody else please correct me if I'm wrong) that it refers to
how much of your options vest over a period of time.

So you'd get 10 percent of your options after one year, another 20 percent at
the end of your second year, another 30 percent at the end of your third, and
the remaining 40 percent at the end of your fourth year.

Note that in order to collect even half of your options, you need to work
there for three years.

~~~
product50
This is correct. Snap has this structure in place before their ipo.

Source: I had an offer from Snap 3yrs back which I rejected because of this.

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gaurav_v
I did some accidental market research on Snap with my girlfriend's 9 year-old
cousin this weekend.

She had tons of snaps, but informed me that they were almost all blank images.
She and her friends send each other these blank images to maintain 'streaks,'
which count the number of continuous days that two people have messaged each
other.

So attached to these streaks were the cousin and her friends that if the 24
hour mark was approaching and the cousin hadn't sent a blank message to her
longest streak, the counterparty would log-in to the cousin's snapchat and
send _herself_ a message, to make sure the streak continued.

My cousin said that the blowup in (blank) picture messages had slowed the app
to a crawl, leading her not to use it anymore, aside of course for streaks.

Not the kind of of daily-active-users that advertisers crave. I'm 28; never
heard of streaks before this.

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kevindong
One of my friends does this with his long-term girlfriend. I think they're at
something like a 3 year streak at this point. They've exchanged
username/password credentials to keep the streak alive in the event one of
them forgets or my friend messes up his phone so badly he can't get it to
boot. He's very enthusiastic about custom ROMs on Android so bricking his
phone is not out of the ordinary.

edit: he says they've done that at least twice

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breitling
Someone should let them know not to keep having layoff rounds periodically. It
is better to have one deep round and that's it. What they are doing creates so
much uncertainty, anxiety, and kills employee morale.

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s73v3r_
I don't think most investors or executives care about employee morale. "The
beatings will continue until morale improves."

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keepper
Or.. they could save a couple of hundred million a year by moving off of
GCE/AWS into their own infrastructure... ( they have an insane $500M commit
for both of these cloud providers.. higher than the $400M that all of google
spent on infra in 2012 )

It's amazing that at their scale, they are still mostly in GCE. They are
easily an order of magnitude larger than netflix, and at least netflix is
smart enough to have built their own CDN.

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dec0dedab0de
34 Million a year for 220 employees? I know that includes office space,
equipment, and benefits, but that still seems like a lot to me.

Edit: I must have had a brain fart when I wrote this, because I was thinking
over a million per employee. Now it seems too low.

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pianom4n
Not really, that's only $155k per person. The cost per engineer is probably
around $400k.

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JustSomeNobody
I feel so underpaid right now it's not even funny.

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foobaw
Even considering insurance/benefits, stock options, and various bonuses,
400K/year is a lot more compared to 150K.

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CocaKoala
Note that the 400k/year is cost per employee, which does not directly
translate to "paychecks and benefits per employee".

The employer pays payroll taxes, needs to pay rent on square footage for the
office to support the employee, etc. That's all going into cost per employee,
but isn't money the employee sees directly.

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pkaye
Assume 200k/year in the employee salary. Break down how much the other things
you mentioned above will add?

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CocaKoala
From some quick googling:

Office space in San Francisco is ~$5 per square foot per month, and an
employee needs somewhere between 100-250 square feet of office space. So if
you give them a small 175 square feet, then you're at ten grand per year.

Medicare is %2.9 percent of salary, half paid by the employee and half by the
employer. Social security is %12.4 percent, again split between
employer/employee for 6.2 percent from each. . It looks like California's
unemployment tax is another %4.2

I have no idea what the average cost per employee things like health insurance
and other benefits cost; I'm sure you can google as expertly as I can, so now
that I've shown some good faith in giving you a starting point I trust you're
willing to take it to the finish line.

There's probably some other taxes that I'm missing, since I don't run a
business and have never had call to learn about the ins and outs of these
things. Usually it comes up in conversations around negotiating for raises to
give somebody some perspective about how much they care about an extra ten
grand a year (a lot) versus how much their employer cares (it's basically a
rounding error compared to how much their bottom line for retaining an
employee is).

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s2g
how many hundreds of millions did they give the CEO again?

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toastking
I really hope Snap's struggles as a public company don't effect other
"Unicorns" going public. Judging from Spotify's weird IPO filing I think other
companies are getting spooked.

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lulmerchant
I hope it does. Snap was clearly overvalued to an absurd level. If things like
this don’t make investors more discerning, then you’ve got the workings of a
bubble on your hands.

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pm90
People said that about Facebook as well and yet now its super profitable.

Not disagreeing with what you say; I would be very interested in a side by
side analysis of FB and SNAP to see why one succeeded and one is struggling.

Perhaps one main reason is simply that FB is aggressively trying to kill SNAP
whereas FB itself didn't have that kind of a determined opponent.

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lulmerchant
They're not really comparable when you look at the numbers. Facebook had 500
million active users, a steadily growing user base (1 billion was projected
within a year at the time of the IPO), and a clear monetisation strategy.

Snap had 150 million active users, most importantly it's growth was seriously
stunted, and it's monetisation strategy was rather 2 dimensional.

Facebook IPO'd at around $100 billion, Snap IPO'd at $20 billion, and it got
very close to $30 billion in the trading immediately after. However nothing
about it's numbers should justify that. Investors get seduced by the promise
of a SaaS revenue hockey stick, and I hope people learn the lessons of Snap
before they buy into future hype IPOs so easily.

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xstartup
Why the growth stunted for SNAP? Maybe it's because FB did smth?

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mbrumlow
Why so many people to start with? Seems like they hired a ton of people.

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rtx
There was documentary posted here yesterday, The China Hustle. It showed
Chinese companies showing fake transactions to boost revenue numbers. This
could be that kind of scam, hire lots of people to show growth.

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gxs
You are right, it's definitely a possibility.

But as an aside, when I worked as Zenefits, we hired irresponsibly, but the
intentions weren't to be deceptive; the mistake was thinking that the hockey
stick curve would climb forever.

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iaw
Look, at this rate in ten years we'll be making 10x global GDP! Just have to
make sure we keep up on hiring...

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swyx
as a former TMT investor i have learned that when hot tech companies go from
focusing on topline growth to bottomline savings it is never a good thing.
classic "look over here!"

