Evan Spiegel is the skunk at the founder’s party
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
By Jennifer Saba
NEW YORK, Sept 13 (Reuters Breakingviews) -Snap SNAP.N architect and boss Evan Spiegel gets points for frankness. In a blog post published last week, he bluntly lays out the reason for the investor chill that has dogged his $16 billion social media company’s stock price: slower advertising growth than its peers. He also provides the counter argument to another missive recently making the rounds in Silicon Valley that champions the virtues of founder-led companies and leaders who keep a tight grip on the wheel. Spiegel serves as an example of a master mind who could benefit from more managerial suits.
Y Combinator founder Paul Graham published a memo in September that suggests hiring outside executives is the kiss of death for pioneers who delegate duties to “professional fakers.” He draws upon the experience of Airbnb ABNB.O creator Brian Chesky, who at first followed the conventional wisdom to “hire good people and give them room to do their jobs” to disastrous effect. But by swooping back in and keeping an eagle eye on things, Chesky changed the course of the $75 billion home-sharing network as evidenced by Airbnb’s cash flow. Spiegel fits into the mold: along with co-founder Robert Murphy, he has absolute voting power and calls all the shots.
Spiegel’s memo shows he has necessary self-awareness, though that’s hardly a consolation for shareholders who have seen value incinerate 40% so far this year compared to the S&P 500 Index’s .SPX 15% rise. Spiegel blames the issue on the “ongoing evolution” of the ad business. Snap is moving away from depending on larger brands—like Nike NKE.N and Coca-Cola COKE.O —to those of small and medium-sized marketers who spend more consistently and make up a larger pool of dollars. But shares of competitor Meta Platforms META.O, which also relies heavily on advertising, are up 45%.
Trouble is, Meta is an impossible-to-beat competitor. Its platforms Facebook and Instagram long ago made a play for smaller advertisers, with much success. Mark Zuckerberg’s $1.3 trillion company has also made several attempts to copy and paste Snap’s best ideas. For example, Meta’s partnership with Ray Ban owner EssilorLuxottica ESLX.PA to make smart glasses has exceeded expectations.
Graham’s “Founder Mode” missive takes startups to task for farming out responsibilities. But there are plenty of cases where founders stepped down, and success continued. Uber Technologies UBER.N Chief Executive Dara Khosrowshahi restored order and generated profit to the parent of the ride-sharing app, despite taking the reins from creator Travis Kalanick. Apple AAPL.O is up 15-fold since Steve Jobs stepped down in 2011. Spiegel, too, may need more outside help after 13 years helming a business that is still struggling.
Follow @jennifersaba on X
CONTEXT NEWS
Snap co-founder and Chief Executive Officer Evan Spiegel wrote a post on Sept. 3 explaining that the social media company’s share price lagged the market because advertising revenue was growing slower than Snap’s competitors.
“The growth of our digital advertising business is one of the most important inputs to our long term revenue potential, and investors are concerned that we aren’t growing faster,” he wrote.
Investor and Y Combinator co-creator Paul Graham wrote a blog post in September arguing for the merits of startup founders staying involved in the business rather than switching to hiring outside managers and becoming more hands off as the company grows.
Graphic: Meta's shares outperform Snap's https://reut.rs/3XojCR4
Editing by Lauren Silva Laughlin and Sharon Lam
Mga Kaugnay na Asset
Pinakabagong Balita
Disclaimer: Ang mga kabilang sa XM Group ay nagbibigay lang ng serbisyo sa pagpapatupad at pag-access sa aming Online Trading Facility, kung saan pinapahintulutan nito ang pagtingin at/o paggamit sa nilalaman na makikita sa website o sa pamamagitan nito, at walang layuning palitan o palawigin ito, at hindi din ito papalitan o papalawigin. Ang naturang pag-access at paggamit ay palaging alinsunod sa: (i) Mga Tuntunin at Kundisyon; (ii) Mga Babala sa Risk; at (iii) Kabuuang Disclaimer. Kaya naman ang naturang nilalaman ay ituturing na pangkalahatang impormasyon lamang. Mangyaring isaalang-alang na ang mga nilalaman ng aming Online Trading Facility ay hindi paglikom, o alok, para magsagawa ng anumang transaksyon sa mga pinansyal na market. Ang pag-trade sa alinmang pinansyal na market ay nagtataglay ng mataas na lebel ng risk sa iyong kapital.
Lahat ng materyales na nakalathala sa aming Online Trading Facility ay nakalaan para sa layuning edukasyonal/pang-impormasyon lamang at hindi naglalaman – at hindi dapat ituring bilang naglalaman – ng payo at rekomendasyon na pangpinansyal, tungkol sa buwis sa pag-i-invest, o pang-trade, o tala ng aming presyo sa pag-trade, o alok para sa, o paglikom ng, transaksyon sa alinmang pinansyal na instrument o hindi ginustong pinansyal na promosyon.
Sa anumang nilalaman na galing sa ikatlong partido, pati na ang mga nilalaman na inihanda ng XM, ang mga naturang opinyon, balita, pananaliksik, pag-analisa, presyo, ibang impormasyon o link sa ibang mga site na makikita sa website na ito ay ibibigay tulad ng nandoon, bilang pangkalahatang komentaryo sa market at hindi ito nagtataglay ng payo sa pag-i-invest. Kung ang alinmang nilalaman nito ay itinuring bilang pananaliksik sa pag-i-invest, kailangan mong isaalang-alang at tanggapin na hindi ito inilaan at inihanda alinsunod sa mga legal na pangangailangan na idinisenyo para maisulong ang pagsasarili ng pananaliksik sa pag-i-invest, at dahil dito ituturing ito na komunikasyon sa marketing sa ilalim ng mga kaugnay na batas at regulasyon. Mangyaring siguruhin na nabasa at naintindihan mo ang aming Notipikasyon sa Hindi Independyenteng Pananaliksik sa Pag-i-invest at Babala sa Risk na may kinalaman sa impormasyong nakalagay sa itaas, na maa-access dito.
