A Product Market Fit Show | Startup Podcast for Founders
00:31:13 · Jeremy Liew
With Snapchat, firstly the data showed that it was obviously happening, 50% month to month growth, something's going on. What's really important in all of this is that the founder needs to have a unique insight. It's explaining what is going on. He was able to do that in this really clear way that I think we all know it's common knowledge. At that time, no one was talking about this. No one was talking about how historically human communication was ephemeral. No one was talking about performance anxiety and social media. No one was talking about the fact that when you were posting on social media, you were just posting the highlight reels of your life. When you're happy, when you're proud, when you're excited, when you're doing something new and novel and fun and interesting and Evan's perspective was if you want to make real lasting friendships, you can't only be sharing the top 10% of your life. You've got to see the full 100% of your life; when you're happy and excited and proud and nervous and anxious and sad and angry and all of the emotions that you have. That wasn't happening on social media but it had a place on Snap, and that was creating stronger relationships. That was what was driving this organic viral growth; not viral because people were sending out invites because historically that's the way people measure virality is like how many invites did you send and what's the response rate? Is K greater than one? But viral in the sense that people are talking about it to each other. You see someone get a message, open their phone, laugh, and then put their phone away and be like, what was it? What did you see? What's so funny? Why are you laughing? Your friend would be like, "Oh, I can't show you. It's disappeared." It's like, "What do you mean it's disappeared?" Oh well it's this new app Snap. I use it with my good friends. Tell me more. How can I get on it? The only way you could get on it that time, you remember there was no digital invitation process. In the beginning, the only way you could be at it is for someone to give you their username so that people were telling someone about the app they downloaded. They would have to give you the username to get connected. Then the first thing they would do was they would send them a snap of themselves making a funny face or something.
00:33:17 · Jeremy Liew, Pablo Srugo
Then the user culture grew because the propagation of new users wasn't through some blast invitation, like you show up and you try to figure out how to use it. It happened because a person who used it who knew how to use it properly, whatever that means, but that culture of how do you snap in the beginning would send you a funny picture or a random picture or a picture is what they were looking at. You started to understand through the process of actually receiving snaps, how to send snap, what's a good snap, what are you supposed to do here? That was incredibly powerful. [00:33:57] S1: By 2013, Snapchat has about 50 million daily active users. They raise a series A from benchmark. They keep growing just later that year, raise a series B, they have an acquisition offer for $3 billion from Facebook, which they turn down, and for many, many years they keep growing in a pretty crazy rate. By 2015, they cross 100 million daily active users. By 2018, they cross 200 million daily active users. Like I said, now they have 400 million daily active users, and in many cases in the younger gen demographic they've got 90% penetration. The other thing I wanted to understand was what was so special about Evan? What did Evan get right? What did he do right that led to the Snapchat that we know today?
00:34:37 · Jeremy Liew
[00:34:37] S0: I think that product has always been the magical superpower for Snap and it has come from this unique insight, this understanding of the user base. I think there are plenty of people who are great product who will take current best practices and iterate on that. What Evan had this superpower was his ability to not just look at current best practices and think, okay, how can I make that better, but he would question the basic premises and come up with something that was entirely novel. The ephemeral messaging was a good example of that. We said, okay, well historically have we recorded our communications? No, we have an occasion. Another thing that he did was when he came up with stories, historically social media had always been reversed chronological order. The most recent thing was on the top of the feed. He explained it to me, how do you tell stories beginning, middle, end? How does social media tell stories end, middle, beginning? That makes no sense. We are going to tell stories in chronological order and they're going to disappear because that is part of what's so important about Snap. We are going to tell stories beginning, middle, end. Now everybody does that. Now it's obvious. It's the new best practice. It was a complete innovation at that time. It's just one of a bunch of examples of how Evan and his product insight is understanding of the consumer has led to building a product that started at 50% DAU MAU and then went to 60 and 70 and it just keeps on going up because he understands the user. It's not about a clever growth hack, it's about understanding the user and what they want.
00:36:14 · Pablo Srugo, Jeremy Liew
[00:36:14] S1: Maybe just as a final question, obviously you've seen the growth of Snap and you've seen many other consumer apps. From the perspective of let's say there's a founder of a consumer app, they're getting some growth and they want to get a sense of do they have real product market fit, as you think through that question, what are some of the top things that you look for? [00:36:33] S0: I would say it's those four questions that I led with the beginning, could this become part of pop culture, and a subset of that is, what's demographics of the power users if they're still young and female. That's definitely a good indicator. If you think about a lot of it's not just Snap, Instagram, Facebook, MySpace, they all started with young female users. Pinterest, maybe older female users, I think Reddit's really the only big social media example that started with a primarily male audience, which doesn't mean – I'm not suggesting that – obviously Reddit exists, it can happen, but if you look at the preponderance of the data – [00:37:06] S1: The pattern, yeah.
00:37:06 · Pablo Srugo, Jeremy Liew
[00:37:06] S1: The pattern, yeah. [00:37:07] S0: There is a pattern that says young female users is very positive for that, so could it become part of pop culture? Is it building new habits? Is there a scalable repeatable way to grow? By the way, that doesn't have to be real world virality. That's the best form, but it doesn't have to be that. You can do manufactured virality, you can do invitations many people do. You can do paid marketing. Is it scalable and repeatable? Then finally, does the founder have a unique insight that explains it all? Both parts of that are important. Is it an insight? Is this something that really explains what's going on and is it unique? To say, oh, well this is working because everybody has a milk float now, that's not a unique insight, but what Evan came up with was a unique insight. [00:37:47] S1: We'll stop it there. Thank you very much for taking the time. That was some great anecdotes and I think will really help founders understand how Snapchat happened, but I think more generally what it takes to build one of these NF1 companies. [00:38:03] S0: Terrific. Good. Glad to be able to help.
00:38:03 · Jeremy Liew, Pablo Srugo
[00:38:03] S0: Terrific. Good. Glad to be able to help. [00:38:06] S1: If you listened to this episode and the show and you like it, I have a huge favor to ask for you. It's actually a really small favor but it has huge impact. Whichever app you're listening to this episode on, take it out, go to Product Market Fit show and leave a review, please. It's going to help. It's not just going to help me to be clear, it's going to help other founders discover this show because the algorithms, whether it's Spotify, whether it's Apple, whether it's any other podcast player, one of the big things they look at is frequency of reviews. It's quantity of reviews. The reality is, if all of you listening right now left reviews, we would have thousands of reviews. Please take literally a minute, even if you're just writing "great podcast or I love this podcast," whatever it is, just write a few words. Obviously the longer the better, the more detailed the better, but write anything, leave five stars, and you'll be helping me but most importantly, many other founders just like you, discover the show. Thank you.