Snap CEO Evan Spiegel Makes Earnings-Call Debut

By Scott Austin Features Dow Jones Newswires

Evan Spiegel, the 26-year-old co-founder and Chief Executive of Snap Inc., made his earnings-call debut on Wednesday moments after the company issued its quarterly report, which sent the stock sliding more than 23% in after-hours trading.

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Snap has billed Mr. Spiegel as a brilliant product-visionary, much in the same way that Mark Zuckerberg is considered the brains behind Facebook's product. Mr. Spiegel on Wednesday spoke rapidly, at times apologizing when forgetting the second question from an analyst, but ultimately he sounded confident -- even cocky at times when talking about his company's fierce rival, Facebook Inc.

Here are some of the highlights from Mr. Spiegel's comments on the analyst call:

Facebook is... Yahoo?

When asked by an analyst what he thought of Facebook's ability to copy Snapchat's features, Mr. Spiegel first laughed, which drew some snark on Twitter. It wasn't clear whether Mr. Spiegel snickered because he thought it was a silly question, or just because it was a tricky one to answer.

Mr. Spiegel talked about how companies with creative products have to be comfortable with others copying their technology. When Google came along, he said, companies had to have a search strategy. The same with Facebook and social, he said, and Snap is now causing companies to have a camera strategy.

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But there was clear bravado at the end of his answer: "Just because Yahoo has a search box, that doesn't mean they're Google."

Forget "growth hacking"

Mr. Spiegel subtly knocked the Silicon Valley buzz phrase "growth hacking" -- calling it "unnatural," when asked about how Snap thinks about boosting its daily user numbers. Growth hacking refers to how startups experiment with inexpensive marketing and product tactics -- like push notifications -- to rapidly gain customers. If Snap early on encouraged users to add all their friends in their mobile phone's contact book instead of only a few, "they might feel really uncomfortable creating Snaps and adding them to their Story, because they wouldn't know who was actually watching," he said.

"I think while [growth hacking is] the easy way to grow daily active users quickly, we don't think that those sorts of techniques are very sustainable over the long-term," he said. "And I think that can ultimately impact our relationship with the customer." Instead, Mr. Spiegel said, Snap is focusing on creative ways to enhance the functionality of the camera to capture users.

Snap isn't for Grandma -- yet

Investors have questioned whether Snapchat can extend its appeal beyond young people to mainstream users of all ages -- the so-called olds -- as Facebook has done. Mr. Spiegel said Snap focuses mainly on a younger audience when it develops new features, because teens tend to adopt new technology faster.

"That's sort of partly inspired by trying to teach my grandma how to use email," he said. "She would really prefer to just talk on the phone. Now a lot of grandparents are using email, but 20 years ago, it was a little different."

Ultimately, he said, he wants Snapchat to have "universal appeal," meaning that eventually grandma will use it.

Developing markets are still developing

Unlike his counterpart at Facebook, Mr. Spiegel has been rather public about his strategy to ignore less-developed countries in favor of North America and Europe, where there are big ad dollars but overall fewer people to tap. Mr. Spiegel tried not to dismiss the rest of the world's billions, making the case that Snap only works well when mobile connections are strong.

"I think the connectivity issue is a real problem in the developing world, because it really changes the use case of our service and the behavior of people that use Snapchat," he said, explaining that people in those countries tend to use Wi-Fi at home or in an internet cafe because broadband cell service is expensive. "And what that means is that you can't use Snap to communicate in the moment...and that turns Snap into much more of a broadcast, lean-back kind of service."

Mr. Spiegel said Snap eventually wants to reach other markets when the connectivity improves, though he said the company is "digging out of a performance hole on Android." That is because Snap has prioritized Snapchat's features for Apple Inc.'s operating system and not Android phones, which are preferred in emerging markets but only represented about 30% of added subscribers in the first quarter.

(END) Dow Jones Newswires

May 10, 2017 20:24 ET (00:24 GMT)