
Snapchat CEO predicts Facebook will implode like Yahoo - lovelearning
http://www.businessinsider.com/snapchat-ceo-says-facebook-will-implode-2014-12
======
zanek
The top comment on BI said exactly what I was thinking. People are acting like
this guy is the Oracle of Omaha when he's flying by the seat of his pants with
a auto-deleting photo app. Seriously people ?

"Yes, and in his email he seems to believe that his dick pics app is
"revolutionizing personal communication". Ok guy."

~~~
zamalek
It doesn't take a genius to realize that Facebook walks a thin line on a daily
basis. Many of us may use the platform, but are probably providing less useful
data as our trust for it diminishes.

That doesn't mean it's going to implode. Zuckerburg is a ruthless and savvy
businessman, with many more years of experience compared to Spiegel. There are
a lot of people who are not as savvy as us and Facebook will continue to
derive profits from those people.

Snapchat has a very high user engagement but only across a very specific
demographic. Even my 80 year old mother uses Facebook, I strongly doubt she
would would _ever_ have _any_ interest in Snapchat.

Spiegel would do well to take a few pages out of the elephant's book and put
them to use: he's assuming that his own demographic is the only one that
exists. The kid has hit a profit mine and now thinks he can predict the future
- user engagement is not everything, user retainment counts for something too.

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jim_greco
It always amazes me the way in which people make up an entire complicated
chain of events in their mind to fit their world view. He boils Facebook down
to a one note company that could never respond to changes in the market.

Fed stops QE => Tech stocks cool => Less money pours into VC technology =>
Companies stop buying app install ads => Huge hit in Facebook revenues =>
Facebook implodes

Ridiculous.

~~~
_almosnow
What is Fed QE?

Edit: Thanks.

~~~
mef
[http://en.wikipedia.org/wiki/Quantitative_easing](http://en.wikipedia.org/wiki/Quantitative_easing)

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johladam
Is it standard practice that, as the CEO of one company and sitting on the
board of another, that you use your company email in that regard? The reason
why this was leaked was because the CEO of Sony Pictures did not isolate his
CEO job and his "part-time" jobs, leading to leaks like this.

~~~
smtddr
I definitely know people who use their company email for things that are not
work related. I personally don't do this, but I think a lot of people do.

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Circumstances
Evan Spiegel might have a point in regard to Facebook "imploding" respectively
declining in the medium term, although I would have not placed VC sponsored
Ad-Money at the top reason.

Personally, I rather see a decrease of "traditional" user engagement as a
growing risk for Facebook. I have the feeling that a lot of user attention is
currently shifting from Facebook to other services as each FBs user stream
seem is becoming ever more non-personal and is nowadays primarily used to push
and promote offers and services and semi-public personalities.

That Snapchat on the hand I believe, might have an even higher chance of
"imploding" due to its unsure commercial application as well as its probably
super change affine / non-loyal users.

~~~
wuliwong
Someday Facebook will lose it's position at the top, maybe sooner than later.
Nobody knows that answer, not even the Snapchat CEO. While Snapchat is an
insanely popular app, it isn't profitable. This is a gigantic, difficult step
in the process that they may never take. My bet would be on Snapchat's demise
preceding Facebook's.

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bhouston
I have to agree. I keep looking at these trend lines and it seems very
negative for Facebook:

[http://www.google.com/trends/explore#q=facebook%2C%20youtube...](http://www.google.com/trends/explore#q=facebook%2C%20youtube%2C%20google%2C%20yahoo)

Last time I posted the above chart it wasn't as severe but many explained it
away people saying it is because Facebook is all mobile now, but so is Google
and so is YouTube.

~~~
basch
that means nothing. that could easily be explained away by people using speed
dial in their browsers more, or autocomplete in their address bar instead of
googling facebook to arrive at facebook.

~~~
extc
It can't mean _nothing_.

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ssharp
Are marketers really putting blind money on Facebook like they do on other
forms of offline advertising -- or they did with online advertising during the
first dot-com bubble? Or are they putting up money, measuring their CPAs
against LTVs and changing advertising tactics when CPAs get too high? There
are lots of choices for online advertisements today and a platform will
produce profits as long as the platform produces profits for its advertisers.

Snapchat's CEO clearly disagrees when he says: "VC dollars are being spent on
user acquisition despite unknown [lifetime value] of users — a recipe for
disaster."

So he's saying people take VC money and invest it in poorly devised
advertisement strategies. I'm not familiar enough with VC-backed companies but
is this that common? Are Facebook ads, AdSense, etc. just filled with dumb
money from VC investments? In my experience, that answer is no, but maybe
things are different.

Curiously, I'm wondering how Snapchat is valuing the lifetime value of _their
own_ users, considering revenue from their users is zero.

~~~
discardorama
> So he's saying people take VC money and invest it in poorly devised
> advertisement strategies. I'm not familiar enough with VC-backed companies
> but is this that common?

This was very common in the last dot-com boom. That time, Yahoo was the
beneficiary of the funds. People were blindly throwing money at "internet
advertising", without any clue as to whether they were getting any value or
not. And VC-backed companies were doing even more so (and buying shitty
Superbowl ads....)

~~~
wuliwong
You are repeating what OP said. He's asking about now, not then.

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josefresco
Funny prediction from a CEO of a company with no revenue. At least Facebook
has a revenue model to criticize. Evan Spiegel wasn't even 10 years old when
Yahoo! was dominate. I wouldn't take this type of meta-business advice from
someone with so little experience.

~~~
coralreef
His hypothesis isn't wrong though. It may be more productive to attack his
rationale than his experience.

------
discardorama
The irony here is: Snapchat just took investment _from_ Yahoo[1]. A case of
biting the hand that feeds it?

[1]
[http://www.bbc.com/news/technology-29502069](http://www.bbc.com/news/technology-29502069)

~~~
kornakiewicz
Why so? The current state of Yahoo is common knowledge.

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lazythrowaway
All I know about Facebook as a direct marketer - we went from spending $3000 a
month in June to $400,000 this month alone for one client because the CPA is
there (not LTV, just first purchase).

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striking
I can't help but agree. Many companies that have explosive growth tend to
depend on it. If the growth is explosive enough, they may end up eating their
entire market. Now they have no growth (which is okay in some cases but);
since they depend on it, they implode.

Either change your business model to use what you already have and optimize
your existing assets... or implode.

~~~
onion2k
They've already changed their business model.

So long as Facebook are reasonably astute they have enough assets that they
can just buy any competitor that looks promising. Their real challenge isn't
remaining relevant to the market themselves any more; it's making sure they're
quick enough to buy enough innovative startups so that Google/Apple/etc can't
gain too much of the ad market and managing the process of integrating those
startups in to the Facebook platform seamlessly.

------
programminggeek
I think this overstates the VC backed money that is going into Facebook ads.
This also assumes that no other advertisers will come in behind them.

Advertisers go where the eyeballs are. With a billion people connected to
Facebook, you have a lot of eyeballs, and thus money. That is not going to
change anytime soon.

As long as the people use facebook, it will make money. Almost by default.

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panon
It's more relevant if you read it here:

[https://sg.finance.yahoo.com/news/snapchat-ceo-predicts-
face...](https://sg.finance.yahoo.com/news/snapchat-ceo-predicts-facebook-
violently-162807586.html)

Facebook will probably go up and down, but it's here to stay.

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pierreio
Babel metaphor aside, is Spiegel's core argument true?

> He believes Facebook's ad revenues are also overdependent on venture-backed
> startups buying traffic and users

FB's ad portfolio seems too composite to be called startup-dependent. Or is
it? I have no data on this.

~~~
easytiger
Depends, are companies selling weight loss pills generally VC backed?

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nakedrobot2
This is exactly what the Oculus acquisition is all about and it was a genius
move.

~~~
csmattryder
Yep, I can see FB staying in the tech game long after their core product has
lost interest, due to them buying into emerging technologies.

Yahoo tried it with their Tumblr acquisition (and others), but they seem to
buy companies at their peak, rather during their early growth stages.

~~~
higherpurpose
Or maybe they'll run Oculus into the ground, too, much like Yahoo did with
dozens of companies it bought for a lot of money, too (Flickr would be one of
the more known examples).

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dschiptsov
You don't have to be Snapchat CEO for that - every empire will turn to dust.)

The law of diminishing returns works equally well for FB or MSFT or NOK
(remember that?) or AALP or whatever it is.

------
xyby
Summary: Snapchat CEO says most of Facebooks revenue is overpayed app-install
ads. Startups are wasting their money on these ads. But nobody knows if that's
true.

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wuliwong
Kudos to a lot of people in this discussion who have noted that they do not
have any real numbers to back up their opinions. It is funny, because the CEO
of Snapchat had no numbers but didn't let that stop him! I like that their is
a higher level of integrity in an HN discussion than a Business Insider
article. :)

~~~
coralreef
How do you know he doesn't have access to numbers? Just because they weren't
included in a leaked email didn't mean he hasn't perhaps seen Facebook's data
in some sort of disclosure period or exchange between the two companies.

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cdnsteve
how can we down vote this, feels like TMZ is on HN?

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_almosnow
You guys are acting as if Evan publicly said those things. Keep in mind that
the source of this is a private email exchange. He's not talking bullshit just
for the hype of it.

This is something that the guy and his team had obviously put a lot of thought
on, and the position they had right now is something that we couldn't even
imagine. Yeah, many people can say that they understand how SV works but they
don't have Snapchat in their hands. Snapchat is arguably the hottest startup
right now and even as some people may disregard it as a "dick picks app", the
reality is far from that. Put some rationale into it, this is not another
Zynga, Rovio, whatever, this is not a fad; people do not just stop messaging
each other and move to "something else", well, they actually do and they may
move to Snapchat.

Also they didn't sell out; would you let down $750M in cash if you didn't have
a plausible plan to make even more? Come on guys, don't be naive...

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kuni-toko-tachi
The larger issue is the vulnerability of user data. The Sony hack is the state
of things to come. As more and more personal data is compromised, faith in
services like Facebook and the Internet in general will crater. This doesn't
even take into account government use and misuse of such information.

The Internet is growing darker each day and data retention will be a
significant liability for years to come.

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michaelochurch
This would be like me saying that LeBron James is off his game. You'd rightly
tell me that I'm not a basketball player and don't know what I'm talking
about.

Seriously, why is this Joffrey's opinion of any value?

