Snap tries to win back investors

I’m writing to you from the westside of Los Angeles, where I spent this morning at Snap HQ hearing company executives make their annual pitch to investors. It was great seeing some of you there in person. In today’s edition: I dig into Snap’s challenges and tease one of its coming announcements. Plus, notes on the generative AI mania, Twitter’s desperation, and notable people moves. --- [Image: https://cdn.vox-cdn.com/thumbor/0-vH0JURsZguZekbfYl9MFnhzso=/0x0:501x501/501x501/filters:focal(251x251:252x252)/cdn.vox-cdn.com/uploads/chorus_asset/file/24722493/Command_Line_Evan_Spiegel.jpg] Snap’s trust deficit Toward the end of Snap’s Investor Day presentation this morning, during the Q&A portion with analysts and management, LightShed’s Rich Greenfield asked a zinger: “Why should investors have faith in the plan you all laid out today?” CEO Evan Spiegel and other executives had just spent the last two hours walking through the state of Snapchat, sharing updated user growth stats, rearticulating the company’s vision for AR, and the like. After the nervous laughter in the room subsided, Spiegel demurred. “There aren’t a lot of independent internet companies that benefit from the scale we’ve reached,” he said before giving the expected CEO answer of being “excited” about the future. His point about scale is right. As a product, Snapchat has defied the odds and managed to keep growing. Spiegel announced today that the app now has 750 million monthly active users, making it larger than Twitter, Telegram, and Pinterest. “These guys have always had more ambition than the world gives them credit for,” a longtime investor in the company told me during a coffee break. “The app is doing well,” said an analyst in attendance when I asked for his reaction to the presentation. “The problem is that the market doesn’t care.” (Snap’s stock price declined more than 4 percent today.) As I watched Spiegel and co. present, the disconnect became more obvious. For all the success Snap is having in growing its user base, the future of its business remains as uncertain as ever. Back in 2021, when the stock price was in the $60 range, Snap was predicting more than 50 percent yearly growth for multiple years. There were no such financial projections today. Apple’s ad tracking changes clearly hurt its ads business more than expected. Meanwhile, efforts to monetize large swaths of the Snapchat experience, including its TikTok rival called Spotlight, are still nascent, and the core chat experience remains totally unmonetized. A bright spot is the growth of Snapchat Plus, the company’s $3.99-a-month subscription that unlocks additional features in the app. There are now over 2.5 million paying Snapchat Plus subscribers, Spiegel said today. Achieving that number in barely seven months is impressive. But according to a memo Spiegel wrote to employees that I published on The Verge last September, the company’s goal was to reach 4 million subscribers by the end of 2022. Other revenue streams are coming soon. I’m told that Snap plans to unveil its AR-for-enterprise effort led by Jill Popelka at its annual developer summit in April or possibly sooner. The idea is for apparel brands to use Snap’s virtual try-on tech and 3D asset management to facilitate AR shopping on their sites. In his memo to employees from last September, Spiegel said the goal is to “integrate with at least 5 paying customers in 2023.” Going into this year, Snap has made some tough but necessary calls, namely laying off 20 percent of its workforce. It has quietly stopped calling itself a “camera company” — a tagline dating back to the IPO that has consistently confused people — and seems intent on doing what it takes to win back investors. Now, execution is all that matters. --- Other notes: * We’ve quickly entered the hangover phase of the generative AI + search hype cycle. Last week was a lot of gushing about Microsoft upending search by integrating OpenAI’s tech into Bing, and now this week has surfaced what it’s like to actually use generative AI in the context of a search engine. It turns out that these chatbots are better at having strange and sometimes disturbing conversations than giving factual answers. I can see why Google is taking its time and asking employees to be careful while testing Bard, its forthcoming ChatGPT competitor. * Twitter is still begging laid off employees to come back. “If anyone wants to work at Twitter, the SRE [software reliability engineer] pipeline is now open with pooled hiring,” reads a message from a Twitter recruiter that was sent my way. “Ex tweeps are welcome as well. The compensation structure isn’t defined but will be by end of March. After the recent incidents there is now more focus on reliability.” Meanwhile, Elon Musk is now saying he will stay CEO until the end of the year. * Meta has an efficiency czar. If you work there, “EDS” is an acronym you may hear soon. I’m told that Emily Dalton Smith, a VP of product management who reports to head of product Naomi Gleit, has been tasked with finding efficiencies throughout the company. Meanwhile, layoff rumors continue to swirl ahead of what employees are calling the coming “flattening” of managerial layers. It’s unclear if that will mean more layoffs versus PIPs and attrition through reorgs. Mark Zuckerberg has made it clear in meetings that he expected more employees to voluntarily leave by now... --- People moves * YouTube CEO Susan Wojcicki is leaving after nine years at the helm and over two decades at Google. She’ll be replaced by CPO Neal Mohan. “Susan has a unique place in Google history and has made the most incredible contribution to products used by people everywhere,” Larry Page and Sergey Brin said in a joint statement. “We’re so grateful for all she’s done over the last 25 years.” * Meta’s chief business officer, Marne Levine, is leaving the company after 13 years. Her remit is being split up between Justin Osofsky, who is now head of online sales, operations and partnerships, and Nicola Mendelsohn, who is the head of the global business group. * Another Meta exec departure being reported first here: Matthew Idema, VP of business messaging and previously the COO of WhatsApp, announced internally this week that he is leaving. A spokesperson tells me his departure doesn’t signal a shift in strategy and that VP Dan Levy will continue leading business messaging across all of Meta’s apps. * Prabir Adarkar has been promoted to president and COO of DoorDash, replacing Christopher Payne. Ravi Inukonda is the company’s new CFO. * Several members of Google’s Brain research group have recently gone to OpenAI, including Hyung Won Chung, David Dohan, Jason Wei, and Shane Gu. --- Interesting links: * Must read: A former Googler named Praveen Seshadri outlines what the company needs to do to reset its work culture. * Om Malik asks if Google needs a new CEO. * Andy Jassy’s internal comments to Amazon employees were leaked by Insider’s Eugene Kim, including this line: “I’m quite confident that we’re going to deliver an immense amount and redefine what it is to be Amazon.” * The Washington Post interviewed TikTok CEO Shou Chew. * Emily Baker-White of Forbes maps out how a TikTok ban would actually work. * Apple’s mixed reality headset is now on track for a debut this summer at WWDC, according to Bloomberg’s Mark Gurman. * URL flex: OpenAI owns AI.com, which now redirects to ChatGPT. --- That’s all for this week! As always, if you liked what you read, please forward it to a friend. I’ll be back next Thursday with another edition. In the meantime, if you have any feedback or ideas for stories I should be looking into, let me know. Thanks for subscribing.

Snap tries to win back investors

Snap tries to win back investors

Plus: The generative AI hangover and Twitter’s desperation.

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Snap tries to win back investors

Snap tries to win back investors

Plus: The generative AI hangover and Twitter’s desperation.

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Logitech now sells a $299 folding chair

Disney’s password-sharing crackdown has begun

The new WGA contract will change how Hollywood works

The iPhone 15 Pro case market is a minefield right now

All the news from Meta Connect 2023

More from Command Line

The chaos at Unity

Command Line: The mailbag issue

How Big Tech really feels about the EU’s crackdown

Why Google’s co-founder left retirement to work on AI