What lessons can all entrepreneurs and business owners take away from startup success story Snapchat?
Whether you are a Snapchat addict or have never used the social media platform, there’s a lot of takeaways for business owners and entrepreneurs from the rise of Snap, and the concerns analysts have about its future.
- Social Media is Volatile
With a single Tweet Kylie Jenner recently wiped out $1.3B of Snap’s market value in just hours. She turned on the platform, seemingly in favor of Twitter, which has rebounded from the brink, mostly thanks to Trump. Snapchat can be used for branding, marketing, and lead generation. However, business owners can’t forget the big lessons learned from Facebook and other third party online platforms. So many real estate businesses and professionals went all out building up Facebook with content, and directing users there, only to have their content and investment held hostage and depleted by constant changes and increased advertising costs. These platforms can be great for marketing, just don’t neglect to equally invest in your own online assets too.
- Be Careful of How Fast You Hire
According to its recent annual report Snap has continued to moderate recruiting, and has gone through several rounds of layoffs. They hired fast. Perhaps too fast. It’s a very tempting pitfall for many entrepreneurs and businesses owners. You want to grow, and you need a team. Yet, hiring too quickly, and not getting the right fit, or recruiting people that require too much hand holding and management can be a drain. Before you make your next hire check out these tips for building a business.
- Expect to Redesign Often (and the Consequences)
Startups and entrepreneurs should expect to redesign their websites and online assets often. The wisdom of SIlicon Valley is now that if you think your site is perfect, then you took too long to launch it. Speed is more important. Get your website up and running. Plan to keep testing and tweaking. New trends will almost certainly demand an overhaul at least every 5 years anyway. Make it look good. Make sure it is effective. Yet, don’t be mislead into thinking this is going to be the one that lasts forever. In fact, in its early days Google said it was better if users discovered the platform later, because it would be constantly getting better. Of course, most people are resistant to change, and many users may not like your updates. Most will get over it, if your platform is valuable enough. Just brace for it. Snap recently encountered this with its own redesign and the Kylie Jenner Twitter backlash.
- Executive Compensation is a Part of Your Brand
According to Reuters and Fox Business, Snap’s co-founder and CEO, Evan Spiegel is enjoying one of the top executive compensation agreements ever. He received an IPO award of around $630M, plus a $98,000 salary, and other bonuses, including concierge medical service. The money you take for yourself, especially in relation to investors and other workers says a lot about your brand. There is no right or wrong answer. You may be building a personal brand that should command a nine figure salary. Or you may be focusing on a nonprofit leadership brand. Everyone has a role, and should be compensated in line with the value they bring. If you are creating billions in wealth and revenue, you probably should be compensated for that, versus someone who is maybe contributing several thousand dollars to the topline each year.
- There are Pros & Cons of Control
Analysts note that public shareholders in Span get absolutely no voting rights. Two head executives make all the decisions. That can be great if you know best, and you aren’t being set up by backers to be removed as CEO. Though it can concern investors. It may mean missing out on vital insights from a well rounded and experienced board. Consider the type of input you need to perform at the top of your industry, and balance that with the ability to direct your company in line with your values and vision.
- Getting More Money Now Isn’t Always Better
Evan famously turned down $3B for his company from Facebook. It’s now worth an estimated $15B. Sometimes it is smarter to push off the desire to raise more money immediately or to sell out. Snap did raise money, and go IPO. Both of which can traditionally weaken the founders’ vision and control over their baby. Often it can help grow, if you bring in the right advisors and partners. Just do the math carefully. Don’t sell yourself short.
- Crazy Business Models Seem to be Working
Silicon Valley has been rolling out business models that contradict virtually everything most MBA students learn. Many seem to be working. At least for now. At least in some ways. Whether it is the freemium model or buying the business at the cost of extremely high burn rates, just to eliminate competition, they seem to be rocketing entrepreneurs to stardom and billions in paper valuations. Think Uber, Zillow, Snap, and Dropbox. Whether that is sustainable or pops we’ll have to see. The point is that it is okay to think outside the box, and that traditional business owners need to watch out for these invasions in their markets too.