Snapchat's COO Quits, But The Tech Firm Will Probably Survive The Loss

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Mar 17, 2015
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Touted as ‘one of the most richly valued private tech companies of Silicon Valley’, by The New York Times Dealbook, Snapchat has gone from a social messaging start-up, three and a half years ago, to a messaging and media distribution power player valued at $15 billion. But the news of Snapchat’s rising star, it seems, did not reach top level executives as they are, almost back to back, abandoning ship.

The latest in line to leave is Snapchat’s Chief Operating Officer Emily White. She has been with the social messaging software company since 2013, after garnering many years of Silicon Valley experience at Instagram. She is the third executive to quit after sales chief Mike Randall and HR boss Sara Sperling, in the last two months.

Snapchat is an instant, short term messaging application that lets users send photos, videos and text, which disappear forever after 10 seconds, to other users, “lovingly built in Los Angeles, California”. “Snapchat has always been about sharing your point of view. That’s why our application opens straight into the camera. It’s the fastest way to share little moments with our friends – to let them know where we are or how we feel right now,” it says about itself on its blog.

In 2013, Facebook (FB, Financial) made a $3.5 billion bid to buy Snapchat, while Chinese investor Tincent Holdings offered $4 billion. In 2014, Snapchat reportedly entered into talks with Chinese e-commerce company Alibaba Group (BABA, Financial) for working out an investment deal. The $200 million deal works out in the best interest of both the tech companies. Snapchat gets a foothold in the Chinese market that is overflowing with 1.3 billion potential customers for the messenger. As for Alibaba, which is always on the lookout for the hot new start-up in Silicon Valley to invest in, this investment deal provides a vantage to the Western software market.

Snapping up the media market

Since January this year, Snapchat has been on an upswing, despite the executives leaving. In a strong push towards monetising its extremely popular messaging service, Snapchat launched its media curation and distribution app (as a channel) called Discover. This channel, built into your messaging service profile, relies on “editors and artists” to curate multimedia content from big ticket media publishers such as Vice, Yahoo! (YHOO, Financial) News, National Geographic and ESPN. Snapchat has hit the nail right on the money with Discover.

Publishers on Snapchat are able to demand high daily fees of $50,000 to $100,000 from advertisers. In return advertisers are guaranteed a view count determined on traffic patterns of the last few weeks. Recode.net reports that advertiser’s get 500,000 hits a day on ads that earn them 10 cents per view. These high ad revenues are split between Snapchat and media publishers, depending on the space that sells the ad. Because of the much higher rate per thousand views and the large number of views, Snapchat’s ads space, running alongside its video content, is lucrative.

Snapchat has also launched an Internet TV series called Literally Can’t Even, akin to Netflix (NFLX, Financial), that can be accessed from within the Discover channel. It is in further negotiations with the National Collegiate Athletic Association (NCAA) to bag the rights to stream live basketball games, again in-app.

Executive exodus

While Sara Sperling, who oversaw the Human Resources department, among others, at Snapchat departed in February due to personal reasons, White allegedly had a battle of wills (and wits) with CEO Evan Speigel. Speigel is looking to take on more power and responsibility as CEO by taking on more roles at Snapchat. This could have overlapped with White’s areas of functioning which included business operations, HR and sales. Departures and entries of talented executives is common for Internet start-ups, especially in the growing early days. But Snapchat has witnessed almost consecutive executive exits in the last two months.

There still remains a fair amount of talent in Snapchat’s fold – Tim Stehn, from Amazon (AMZN, Financial) and Steve Horowitz, formerly with Google (GOOG, Financial), Apple (AAPL, Financial) and Motorola (MSI, Financial), as Vice Presidents of engineering; Simmi Singh, from Egon Zehnder, as chief talent officer and an enterprising executive at Snapchat, Imran Khan, as chief strategy officer.

Last word

But what remains to be seen is if CEO Speigel is able to keep up Snapchat’s glory run, and for how long. So let’s stay tuned to check out whether the CEO is able to sustain the performance of Snapchat in the long run after the re-shuffle which is likely to take place in the management roles while top executives continue to leave the company for better choices.