Snap Announces Major Restructuring into Small ‘Startup Squads’ to Boost Competitiveness and Revitalize Growth
In an effort to regain competitive edge against larger industry players, Snap Inc. is undergoing a significant internal restructuring. CEO Evan Spiegel announced in the company’s latest annual letter that Snap will be organized around small autonomous teams, comprising approximately 10 to 15 individuals, akin to start-up environments.
This move follows a period of mounting pressure for the company, with its advertising revenue growth stagnating at 4% during Q2 and a concerning 2% decline in North American daily active users to 98 million. This drop in user base signals potential trouble in Snap’s primary market.
However, Spiegel points out one positive development: Snapchat+ subscriptions have surpassed $700 million in annual recurring revenue from over 15 million paying subscribers, indicating a significant growth potential for direct revenue at the company.
Snap is also investing heavily in Specs, the development of its own augmented reality (AR) glasses. Spiegel describes these as “a once-in-a-generation transformation towards human-centered computing.” Notably, competitors such as Meta and Google have partnered with Ray-Ban and Warby Parker respectively, to pursue a similar vision for the future.
Spiegel acknowledges the current stock price as reflecting doubt but emphasizes the potential for “startup-style returns” at Snap’s current valuation of approximately $12 billion. While unmentioned, it is worth noting that this figure represents a significant drop of 90% from September 2021 when Snap’s market cap peaked at over $116 billion amid the height of social media mania.
