I'm going to be devil's advocate here but the CEO (especially of a troubled company like Snap) needs to take the best decisions for the company and stretch solvency and viability for as long as possible.
Of course, it's unpopular to promote someone, then rescind that offer and hire someone else. But in this case, the tradeoff seems reasonable.
Hiring a well connected, veteran exec who comes from a company known for its operational excellence seems like the right decision. It appears that this was a poor timing issue.
Maybe the handling of the situation was unprofessional and I bet there are ways to avoid these fake start promotion situations, but I think at this stage you gotta play your cards. Either you save face and do the politically correct decision (promoting a good employee, but ultimately an employee with no new insights or inputs) or you take a risk for the company knowing that you're about to make a decision that could be decisive for the company's future but that may have an impact on the impressions people have about your decision-making abilities.
Given that Snap is running out of cash and cred, I think it makes sense to do the latter.
It also seems that Snap may be looking for a buyer pretty soon and some of their recent moves indicate that they are trying to create a story on why Snap would be a good an asset for Amazon.
True. But I think the contrast here is who is more capable of adding value to Snap. The Ex-Time Warner marketing executive or the Ex-Amazon Ad executive. Profile wise they are pretty similar but yet they come from very different industries and probably have very different operational philosophies.
Also, 2 months is a very short time for everyone but Snap. In a 12 months runway, 2 months is 16% of the time you have before running out of cash.
I don't know if you're being sarcastic or not, but my core argument wasn't trying to say Jeremi Gorman is better than Kristen O' Hara for this job. I don't have enough information to factually check that.
I was defending Spiegel's decision (hence my devil's advocate opener) and why something that seems wrong for the general public may be what's best for a company like Snap at this point.
>I was defending Spiegel's decision (hence my devil's advocate opener) and why something that seems wrong for the general public may be what's best for a company like Snap at this point.
And the entire basis of your presumption was that O'Hara wasn't exactly what she is ("a well connected, veteran exec who comes from a company known for its operational excellence" who is also a new employee.)
Even if you were right from the start, you're just absolving a CEO of poor decision making. He didn't just "make a decision", he publically promoted someone to an important role and soon after changed his mind. Not exactly grand leadership on display.
Even worse, imagine if you're one of the direct reports or the teams below those reports, how confident do those employees feel?
I know that if it were me and I had a boss for two months -- someone I liked working with -- and we had a game plan and then my boss was promoted, that would make me feel relatively secure in where things were headed. But if two days later, my boss is no longer promoted, an outside hire is brought in (who doesn't know the team or the job -- and two months or not, that matters), and my boss has now left the company -- well, I'd feel a lot less secure in my job and in the company as a whole.
And honestly I feel for the new person coming in -- because if there is loyalty to O'Hara -- no matter how qualified Gorman might be -- that's an awkward staff meeting.
This isn't a situation where you had a few candidates in the running and one candidate thought they had the job and then didn't get it -- that happens a lot and that is uncomfortable too.
This is your CEO made an offer, told the staff, and then changed his mind. It's not speculated in the Bloomberg piece -- and this is total conjecture on my part -- but perhaps Gorman turned down the role or hadn't responded by the deadline -- then did, and Spiegel felt he had to undo his mistake. Even then, I don't know if that kind of about-face is helpful from an optics perspective or from a team morale perspective.
Even if this was the right move from a personnel perspective, it just makes Spiegel look out of his depth as a leader and manager. And in the case of Snap -- Evan is the face of the company and his perceived competency matters as much as anything else.
I don't think you have any facts to validate that either. I'm just going by their resumes.
One is a former executive at Time Warner, the other is a former executive at Amazon.
This is likely another vapid and factless analysis but it seems that Snap could benefit more from the latter.
Either way my original point was that it's hard to understand decisions like this when the company's future is at stake.
>I don't think you have any facts to validate that either.
You're right; I don't have facts to fight your non-facts aside from the facts which have already been stated which show that your facts were non-facts to begin with.
As an aside, you have no facts to disprove the existence of the abominable snowman.
> A less charitable way would be the CEO is shooting from the hip and doesn't have a clue what the company needs.
- He continued backing the redesign long after it was clear the public hated it
- He continued to push spectacles and insist they were a "camera" company, long after the market showed there was no demand from it.
- In the last 5 years he's gone from insisting that snap is a "social media company", to "a camera company", to "the fastest way for people to connect".
In my mind, he seems like he's pretty out of touch with what the public wants from Snapchat and is just bouncing from one idea to another hoping to get lucky again.
I feel like he was a college kid who built an app that he wanted, but as he's aged he no longer identifies with Snap's user base. He's trying to push his idea of what Snap should be (because that worked originally) as opposed to asking users what they want.
He is simply refusing to accept that water is wet -- SNAP is a cam show company. The one that is very successful in that market without even trying - it does not provide payments, subscription management, or fine grained permissions. If they are to add those three they would squash their competitors like a bug and probably eat the OTT market as well.
That's no excuse. If they needed a connected, veteran executive now, they also needed one when they decided to promote someone who didn't have those credentials. So this indicates poor leadership qualities in multiple ways. Not the least of which is treating a valued employee like garbage.
Exactly. The issue isn't that he made a choice, it's that he made a different choice first--not too long ago--and made it public.
Sure, walk back a commitment if it's the right thing to do--but your employees/investors will be right to ask why you made the commitment in the first place.
I’ve made a good amount of cash shorting SNAP, I can’t understand who is buying when they have provided guidance of decreasing DAU’s for at least one more quarter. I hope employees at SNAP are negotiating more stock or salary, they could do so much better at other firms.
Yeah -- I bought some puts at 5 expiring in January for a nickel apiece in August... It was pretty obvious there was nothing there and would drop like a stone -- the question was when the market would wake up. I honestly don't understand what the longs are betting on here, either.
Someone in my building has a magic leap and I got to try it yesterday and it was pretty impressive. We played angry birds and you could walk around the bird structure shooting birds at it and it perfectly tracked everything.
Granted I haven't tried any other AR or VR device but combine that with some CAD software, google assistant, and some leap motion style hand tracking and you're now Tony Stark building iron man.
I played with one too, but my take away was the opposite.
- It was dark, it looked like I was looking at a screen with sunglasses to the outside world.
- It didn't feel like I was looking at things in the real world.
- The FOV was pretty poor, I could see the edges on the sides and above.
- The battery life was short and the device was expensive.
Successful AR has obvious applications and will be huge, but the Magic Leap device falls way short of the hype [1] and I'm not convinced they'll be the ones to pull it off.
If you have a chance you should try VR (like the HTC Vive) - current VR is actually impressive.
Sure, let's say this new decision is the actual right one to make. It took him only two days to realize his mistake. What could he realize in two days that he couldn't in the (hopefully) weeks it took him to make the initial decision? Either they weren't diligent enough in making the initial decision, or they didn't like how someone (or their stock price) reacted to the decision and turned back. Both are bad.
SNAP IPO should herald the death of dual share class listings. They sold billions in equity to the public, but gave the shares 0 voting rights. So now investors have no recourse to push for changes at the board level.
S&P is now excluding such share structures from companies it considers for the S&P 500, so I would anticipate that this will get much rarer among public companies.
Interesting. Not saying I don't believe you, but I'm interested in what a company might perceive to be the value of being part of the S&P 500. Is it just a reputation boost? Or is there something concrete?
There is a massive value. It means that all SP500 tracking ETFs ($SPY, $VOO etc) have to buy your shares. It's a huge boost to your share price, especially with the rise of passive investing.
I always thought of SNAP shares as 'baseball cards'.
In the baseball card mania of the 90s, it was said they go up and down in value as the player does well and poorly. But, hey are completely devoid of inherent value.
I'm told SNAP shares would still get you some % if the company is bought, but I figure if someone does by SNAP they'll just purchase the voting stock from the founders and leave SNAP out there hanging around.
What makes you think inherent value of stock is tied to voting rights?
If in the future Snapchat pays dividends, won't the non-voting SNAP shares still have dividends paid out at the same rate as everyone else? It was my impression that this (along with other profit-sharing mechanisms like buybacks) was what drives the inherent value of stock.
Its my impression that dividends are set per share class. What if SNAP only pays dividends on profit to the Series B and C? So how would members of class A petition the company to give dividends to them? What recourse does the Series A holders have? Since the Series A have no power to enforce dividends, the granting of dividends would be tantamount to charity, and thus very unlikely.
Normally, you wouldn't do that because the stock owners would vote in a new board of directors, or they'd just vote in a dividend.
Perhaps if SNAP's money problems get too dire the founders would open up class A to more rights in order to sell them to raise money. My guess since people still trade the baseball cards, they wouldn't need to.
There's nothing illegitimate about raising money without selling voting rights. You want voting rights, want to play active investor? Buy another stock.
Sure, you can do that too. The comment you're replying to is arguing that all these options are legitimate, and buyers are adults who can buy something that matches their investment theses.
There are all sorts of rules you have to comply with to be listed on a public exchange. One of them used to be equal voting rights. I am fine with buyer beware, but it is really important to understand that "buyer beware" is not the philosophy that the NYSE / NASDAQ was built on.
Evan thinks he's steve jobs. Lost god knows how many users of Snapchat because he felt compelled to completely redesign the app himself and looks like he off course when Instagram started copying Snapchat's features. A lot of these companies that aren't profitable rush to become public without a proper business model and end up getting crushed ( eg: HMNY company of movie pass) It's no surprise that Snapchat is doing so poorly and lots of us could have called this ahead of time. I really don't see this company being around in 2-3 years.
Seems like every wanna be Steve Jobs completely misses the point of what made Steve Jobs great, but then use all the bad parts about his personality to justify doing horrible, stupid, crazy things.
Jobs never changed his vision - build stylish easy to use appliances of the future. What drove Next down was the same philosophy that made Mac lineup so popular mid 00s when the technology finally caught up to Jobs vision
It's obviously inappropriate, but not beyond what a young executive might do. Startups need to move quickly, changing your mind after 2 days is normal, it's just the politics (and optics) that are affected.
It's kind of a rookie move ... but in a way, maybe it's the rookies advantage.
Evan can get away with doing this because he's young.
Consider that an older exec would have not changed his mind out of fear of 'looking bad' even if it were not the right thing for the company.
This isn't good, but it's not a big deal at all.
Of course this assumes he mad the right decision in the end ...
It's not about being young, it's about being inexperienced. You can make a parallel to Trump, whose supporters give him a lot of leeway on "inappropriate" decisions because he's not a politician.
Being inexperienced isn't a good excuse for being a bad CEO (please give any evidence you have of him being an effective one). Realizing two days after you make an important public decision that you should have made a different one is a failure, regardless of if you got it right the second time.
Founding a company doesn't mean you should be CEO.
Yes I agree with all of that, but founding a company does give you incredible impetus.
Because Snap is a consumer facing company - we hear about this all the time.
Tons of startups do stuff like this - we just don't hear about it.
AirBnB, Stripe etc. are all making clumsy decisions daily, even some occasional big ones - but it's just not newsworthy. Neither is this item frankly, it's just kind of fluff. Nice to know but not news.
This kind of mistake is well within the entitlements of a Founder/CEO for example, I'd imagine the board won't have much to say about it. He knows he kinda screwed this up surely.
Rather than focus on the bad focus on the good part. He got someone he thought was better and decided to go with that. From a business perspective and if you remove the short term way it looks (or his reputation impact) it is a good move. Of course a writer for a blog or news site doesn't see it that way. Because of course (to take an extreme) if you just started working at the local paper and the New York Times offered you a position you'd turn it down, right?
Back in the day a long long time ago I remember someone who had taken a job at Sun. Two weeks later he left because Apple came through with an offer and he really wanted to work for Apple. I thought it was really rude because I would have never had the guts to do that. I would have felt obligated to stay at the job that I had because that is the way I was raised. But when you consider that Sun would have let him go at the drop of a hat if it suited their business purpose it actually made sense and I learned from that event and seeing what happened later because he went with Apple.
I sort of feel like this is par for the course with SNAP. It seems to me to be a rather scummy company that got lucky despite its original intentions of encouraging people to send nudes (which is pretty sleazy IMO). The CEO as far as I can tell has never said or done anything that I would consider noble or respect worthy. His emails before he was in the public eye really show his true character. Obviously his word is worth less than nothing. Can’t wait for the company to die, just bummed that little snot got rich from it.
I get that there is a widely held belief that startups eventually reach a point where they need veteran leadership. The kids built the thing but they need adult supervision in order to become a real company. But I find myself wondering what the logic is behind hiring a 40 year old to design the strategy for a company who's primary demographic is in their teens and twenties. Clearly this is a strategy that has worked before but I'm curious why more orgs don't try the opposite. If you won't listen to what your customers want (which Snap has not) why not hire a young executive who more closely aligns with the demographic your catering to.
Isn't that just reductio ad absurdum? Of course Nickelodeon shouldn't be run by kids, but there can be a benefit to having leadership that can empathize and understand your customer base better.
He is a billionaire married to a VS supermodel. At this point, he's more likely to squander all his money and make reality TV appearances to make ends meet, than turn Snap around.
I don't think the board has much say. The co-founders have control over all stockholder decisions and even if they were fired (which would only happen if they turned on each other) they would still exercise the same control of stockholder decisions. So I don't think the board really has any leverage...
Maybe the handling of the situation was unprofessional and I bet there are ways to avoid these fake start promotion situations, but I think at this stage you gotta play your cards. Either you save face and do the politically correct decision (promoting a good employee, but ultimately an employee with no new insights or inputs) or you take a risk for the company knowing that you're about to make a decision that could be decisive for the company's future but that may have an impact on the impressions people have about your decision-making abilities.
Given that Snap is running out of cash and cred, I think it makes sense to do the latter. It also seems that Snap may be looking for a buyer pretty soon and some of their recent moves indicate that they are trying to create a story on why Snap would be a good an asset for Amazon.