Scaling Up Snapchat with Casey Winters and Julie Zhou

Two growth experts riff on what the ephemeral messaging company can do to keep building their user base

Snapchat’s public offering marked the biggest U.S. tech IPO since Alibaba in 2014. This milestone has put a spotlight on the social media company, with public investors digging into their long term growth potential and path to profitability. One of the increasing concerns about Snap is user growth. While Snapchat boasted 50M new daily actives users in 2016, their growth slowed down considerably at the end of the year, only adding 5M new users in Q4. This halt coincided with the launch of Instagram Stories, which many believe to be the biggest threat to Snapchat’s outlook. In 2017, Facebook has doubled down on their assault on Snap with more competitive products including Messenger Day and their new camera, featuring disappearing messages and the ability to add masks, frames and filters.

In our latest Greymatter podcast, we asked two experts to dissect different dimensions of Snapchat’s growth. Greylock Growth Advisor in Residence and former Pinterest Product Lead for Growth Casey Winters teamed up with former Yik Yak Director of Growth Julie Zhou to dig into whether Snapchat is at risk of losing their millennial core market, if they need to change their unique UX to move upmarket to older users, if they should be allocating resources to continue engaging with influencers, and what things they should be thinking about to scale on an international level.

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Below are a few excerpts from their conversation. This transcript has been edited for brevity.

Retaining Snapchat’s Core Market

Casey Winters: There are some concerns that Snapchat’s core market is moving back to Instagram. The college market has been historically very fickle. Do you believe they should be concerned that the college students are moving away from Snapchat? How big of a problem do you think this is?

Julie Zhou: I have spoken to lots of millennials and lots of college students during my time at Yik Yak, and so far it doesn’t appear to be that Snapchat is losing their core demographic. Some of them that I’ve spoken to said they are spending a little bit more time on Instagram, but the majority of them say Snapchat fills a position in their social media usage patterns that really nothing else can match. That’s because it still feels different. It sounds really fluffy, but it’s pretty important because the millennials and teens have grown up in an era where everything they do in social media is work. It’s permanent. It’s part of their portfolio. Snapchat and Yik Yak, for a long time, were their fun social media. It was raw. It was real. They didn’t have to worry about how it reflected on their later chances in life.

I think as long as Snapchat is able to differentiate themselves for a distinctly different use case and a different role in someone’s social media usage than Facebook or Instagram could ever step into, they’re not really in danger of losing their core demographic.

Casey Winters: That makes sense. I think at least Facebook has seen that as a threat, that Snapchat really nailed that “fun” use case. We saw Messenger Day launch recently. And, we saw Instagram Stories launch earlier as a response to try to add the fun back into these social networks that had become work. Do you feel like Instagram and Facebook are being successful at that?

Julie Zhou: I think that Instagram and Facebook are being very successful at capitalizing on the ephemeral content, that form factor. I think what they’ve done is choked off Snapchat’s current growth potential into the 30-something market. Before, only Snapchat had the ephemeral content. It had those fun filters. Now Facebook and Instagram do too, and they’re executing them better because that’s what they specialize in. If I was interested in ephemeral content and the cool filters that I see on Snapchat, now I can just use them on what I’m familiar with — Instagram and Facebook. I don’t have to spend the time to learn Snapchat as a result. I think they’re doing a very good job there. But, Snapchat’s core user base doesn’t seem to be moving, so I don’t know how good they are doing at stealing Snapchat’s core demo.

Casey Winters: I’d argue it’s almost more important that Snapchat starts to steal more of Instagram and Facebook’s users than the reverse, right?

Julie Zhou: I agree.

Casey Winters: If you think about Snapchat owning the college market right now which they appear to be, or at least if they don’t own it, they take a good chunk of student’s time along with Instagram. There’s a couple things about the college market. One is, they grow up quickly. And if your app does grow up, it can alienate the usage of the core users. If your mom starts to get in on it, all of a sudden it’s not cool for you as a college student. And you have this issue with college students where you have to reacquire them every year during the long breaks.

Julie Zhou: Oh yeah. That was definitely a major challenge that we ran into at Yik Yak. It was fresh, new, and exciting to every crop of incoming freshmen or every time the new college year started, but as they started to graduate and move on, it was almost like every year we had to reacquire and reacquaint people with, “Hey, here’s this new usage of Yik Yak.” Everyone knows that everyone stopped using Facebook once their parents started using it.

Casey Winters: Is that really true? Did you stop using it once your parents started using it?

Julie Zhou: My parents have not started using it.

Casey Winters: Neither have mine to be frank. But I feel like Facebook- it’s moved from when I was excited to use it, and now I feel like I’m forced to use it. But, I didn’t leave because my aunts and uncles and parents were on it. You hear that the students have left or at least they’ve migrated time to other social networks like Snapchat and Instagram, but I still think they’re on it. I still think they’re spending time, and I still think they’re building value for Facebook, but feel free to challenge me.

Julie Zhou: Whenever we asked our market at Yik Yak: Name the social media apps that you use. It was almost always Instagram first, followed by Snapchat and then at some point down the line, either third or a couple others later, they said, “Oh, Facebook. I have to use Facebook.” Everyone uses it, but they don’t have much fun with it. Similarly with Instagram, some of them have fun with it, but the majority of them find it super stressful, and they feel like they have to put their best foot forward. For instance, some people who post a photo on Instagram. If they don’t immediately get a certain number of likes in 10 minutes, they’ll delete it and they’ll find another one, or they’ll apply a better filter onto their old one. That’s the type of pressure that they put on themselves when they’re using social media like Instagram and Facebook.

Changing the UX to Move Upmarket

Casey Winters: Josh Elman, one of our partners, has this great post on how Snapchat landed this concept of sharable design versus intuitive design. My perspective on that is that it’s really great for high penetration with young people, but as you’re trying to move these friend graphs beyond people that you’re hanging out with everyday to people that are across the country, it makes it a lot harder to expand the graph because the other people are forced to figure it out the UX on their own. I don’t know, at least for me, Snapchat was pretty hard to figure out on my own. If you’re Snapchat, and you think you need to keep user growth going, do you change that paradigm that’s been really successful for you in your early days and got you to where you are, or do you find a way to stick with it and make it slightly easier for older people to use?

Julie Zhou: I think when Snapchat first launched their confusing UX, it wasn’t so much deliberate as it was, “Let’s get this out there,” and it was so compelling. The concept of ephemeral messaging, disappearing messages, this kind of raw social media content was so compelling that they grew in spite of their unique UX.

Another thing I wanted to add to what Josh said about how the UX is sharable — the design is also sharable. It’s not only that you can grab someone and say, “Hey, here’s how to use this.” It’s very visible in the physical world if you’re walking by someone who is using a filter. Snap could’ve easily made the activation of the filter to press a button or to double tap, but instead they make you open your eyes wide. They make you stick your tongue out. There’s only so many times you can walk by people doing this weird stuff before you’re like, “What on earth is going on? What is this?” It’s very similar to the Pokémon Go craze when suddenly you see everyone walking around with their heads down and doing the same swipe up gesture to throw Poké Balls over and over again. It’s very powerful when you can get critical mass like that of people doing these very specific actions, and then when you start tying that to an app, then you’re off to the races.

To answer your question about “Do I think Snap needs to change their UX to make it friendlier?” Not necessarily, because the throwing of a Poké Ball, the opening of your eyes to learn how to use a filter may have been really confusing initially, but now I think everyone knows how to do it, and I think the X factor of Snapchat’s growth has always been that they come up with some new feature that completely changes the game again. I would never say this about any other product, but Snapchat has had a record of coming out with these types of things, whether they be Stories, filters or lenses.

Casey Winters: I don’t know, I think I disagree with needing to change. This is one of the things we saw at Pinterest. The early community had such strong bond with the product in spite of its flaws as you mentioned and we continually saw people in research getting confused. I think what we realized and what helped us reignite our growth was saying, “Hey, you can keep the product the way it is for existing users, but new users need an easier way to get into it.”

While I agree the core product doesn’t need to change for Snapchat, I do think the introduction to it should change if they want to go further into international or go into slightly older people in the US because it seems like their basic understanding of onboarding is pretty limited. It doesn’t seem like they really know how to guide you through the different things that would connect users to, “This is valuable,” or really make sure they even connect with friends. It’s still pretty hard to connect with friends on Snapchat. Those are the types of things I think about. If they want to continue to scale, they’ll need to improve because, while I don’t have the data, my guess is that the biggest problem with Snapchat right now is not that people aren’t trying it or that people fall off once they get engaged. It’s that people fail in the introduction to the product.

It’s not an Onboarding Problem, it’s a Friending Problem

Casey Winters: If you’re really good at having a lot of hype and getting people to try [your product] but you’re very bad at that initial activation, you cap out. We’ve seen this with Twitter. Twitter is capped out around 320 million active users, and that’s my fear as to what’s happening with Snap. They have this incredible hype around them, and everyone is like, “What is this? I need to try it.” Then they try it, and they’re like, “What is this? I don’t understand it.” Too many people do that, and you just get capped. The audience they have is valuable, but I think if they’re going to try to continue to grow revenue, they’re going to eventually need to grow users or they’re going to run out of ads to show to existing users.

Julie Zhou: Yeah, I think Snap’s onboarding is terrible. It is awful. I do not think though that’s the reason that they’re not growing. I don’t believe that, and that’s because we in growth really, really like to remove friction. We really like simple onboarding, and for the majority of products, that’s extremely true. I think for something like Snap, the onboarding can be annoying, but if the value is there and the value is being provided to the user, they’ll go through that friction. I think the comparison with Twitter is not entirely accurate because you would go through the onboarding, and then you would have no idea what to even do with Twitter after you’d successfully onboarded, and that would never change over time. They would continue suggesting more and more people for you to follow. The more people you follow, the more confusing and the more messy your feed gets, right?

Casey Winters: Yep.

Julie Zhou: If you managed to get through the Snapchat onboarding flow, you don’t need to do anything. You can watch other people’s stories and see what’s happening. Now, this is a completely different scenario if you’re the only person in your social circle to be using Snapchat. Then you run into problems. But I think for people like me especially who have a lot of friends who are already using it, it almost didn’t matter that I didn’t create my first snap for at least two months because I was watching other people’s. I would see them use features and be like, “Hey, how did you come up with this? How did you do this?” I would learn it, and every single week it seemed like I was learning more and more about how to use these stickers. It was almost like a little dopamine hit every time. I was proud of myself for learning it. Then Instagram Stories came along, and I saw I got four times as many views on it because the majority of my network was there, and that killed it for me.

Casey Winters: It’s almost as if the onboarding problem is not really an onboarding problem. It’s a friending problem. As long as you can get connected to a certain number of friends, the onboarding takes care of itself by the friends inside the product and potentially outside the product teaching you it. But one of the issues I had when I signed up is that Snapchat only found like one friend for me to follow on it, and while I knew that wasn’t true…

Julie Zhou: You need to be younger and hipper, Casey.

Casey Winters: That is true. But it is also true that I had a lot more friends on Snapchat, and I think Snapchat could do a better job of making sure they’re surfaced so I can follow them and see how all of them are using it. All of my younger, hipper friends at Pinterest were using Snapchat, but none of them showed up when I onboarded even though I had their contact information.

Julie Zhou: I would totally agree with that. I would say, I don’t think it’s terribly important that Snap teach you exactly how to use a filter or use a lens in the onboarding. You can figure that out by yourself, but if they don’t immediately connect you with everyone else who you could possibly know that’s also using Snap, then that’s a big problem.

Scaling Internationally

Casey Winters: I want to talk a little bit about international. It appears that Snapchat’s growth has been hit hardest on Android in international markets. When you look at how Facebook and Twitter conquered international, they did it with text. They weren’t image-based services at the time, so it didn’t matter that it had to work on lower-end devices. Facebook actually built a specific product for lower-end devices that I think has more active users than Snapchat does now, and this was a challenge for us at Pinterest because we were an image-only service. I can imagine it’s even harder for Snapchat as an image and video service, but then I also look at Instagram, and they don’t seem to be having a problem growing internationally.

When Evan Spiegel has talked about international, he’s talked about markets like the Netherlands and the Nordics, and I look at the math on that and think, “That’s not that many people.” Whereas you hear about Instagram and Facebook and they’re talking about India and Indonesia where there are more potential users than there are in the U.S. Do you feel like there’s a way for Snap to go after those markets the way the app is now? Instagram appears to be having success there. Is there something replicable, or is it just they need to wait 10 years for phones to get up to speed there?

Julie Zhou: Snapchat is a bandwidth hog, and they have not done anything to show that they care about it or to show that they are doing anything about it. The fact that Evan Spiegel is going after the high bandwidth and relatively cheap data markets shows that, and that’s fine if they want to keep growing slowly internationally. But if they want to make a commitment to targeting any part of Asia, then they really need to commit to figuring out a way to make their product less data-heavy. Especially in countries like Brazil. There will be people there who have multiple SIM cards, and they’ll swap one out with another because they just don’t have enough data. There are people who download Instagram to send one photo and then immediately delete it after that, and then go back on their computer at home.

I get where there’s probably some hesitancy on Spiegel’s part to go into those lower bandwidth markets or adapt Snapchat for those markets because it does fundamentally change what the app is about. But they got to do it. I believe that data prices are going down, compression technologies are going to get better, and Snapchat actually has a great opportunity to lead the way if they choose to.

Casey Winters: Yeah, I agree. You look at the size of Instagram on Android. It’s a 50 megabyte app. Snapchat is over three times the size. I don’t understand why it would need to be to be successful, so I feel like they haven’t taken a look about how can we make this more palatable. Not necessarily forIndia, but maybe Brazil which you brought up which is a great example. Social networks thrive in Brazil. It’s a very sharable culture, and Snap is shooting themselves in the foot by not saying, “Hey, are there easy things we can do to make it easier for people in these other countries to try it?”

I think the way that Evan Spiegel is thinking about this is he’s very revenue-focused. It’s smart to make revenue when you’re a startup, and that perspective is, “Well, the majority of the ad market is in 10 countries. Why don’t I just deeply penetrate those countries and I’ll make all the revenue and all these other countries don’t matter.” Well, look at the difference in stock performance between a Twitter and a Facebook. Facebook has shown they can continue grow into Indonesia, into Nigeria, and Wall Street has rewarded them for that. I think the reason they have is not because they’re blinded by a huge active user number. It’s that they believe that those markets will eventually monetize as well as the U.S. does now, and there are lot more users in those markets and a lot more users coming online. Long term revenue will be majority international even if that’s 10 years out or further.

When you’re thinking about long term cash flows, those markets are critical. I think Evan’s taking a short term view looking at the ad market as it is today instead of as it will be, and my perspective is that the phones and the data plans in these international markets are catching up a lot faster than we think they will, and we’ll be surprised at their capabilities very soon.

This summary originally ran on Venture Beat.

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