TechCrunch
Editor’s Note: Semil Shah works on product for Swell, is a TechCrunch
columnist, and an investor. He blogs at Haywire, and you can follow him on Twitter at @semil.
Last year, as 2012 ended, I scanned the early-stage startup
landscape and tried to identify one company that was a breakout for the
year — I ultimately selected Stripe, and explained why,
here.
I liked the thought-exercise so much I decided to do it again this
year, and it didn’t take much deliberation to choose Snapchat — in my
personal opinion, the clear breakout consumer product of 2013. The
framework is provided
courtesy of Fred Wilson, a high-level litmus test that, when applied, starts to make the improbable seem obvious in hindsight:
Clearly the Snapchat founders
are smart enough to build something on their own, to iterate on their
vision for a product, and to navigate the choppy waters of the
early-stage app ecosystem and investment market. Once Snapchat made it
through Series A and the 2012 Christmas “
present” from Facebook, the company’s CEO
Evan Spiegel assumed the mantle of “David” against Zuckerberg’s “Goliath” and became the person who embodied this character.
The Right Idea: How many times have you been
presented with the option to sign up to a new service by using Facebook
Connect alongside terms of service disclaimers including “
We will not post any information to Facebook”? Snapchat’s value proposition is essentially the modern, mobile,
digital reflection
of those types of disclaimers. Even with family over the holidays, when
pictures are taken, you hear more than just one person blurt out “Don’t
post those to Facebook!” The idea of Snapchat — to allow people to
share images without posting to the web or Facebook — was definitely the
right idea.
The Right Product: Building on the idea of Snapchat
above, the actual product, like Instagram, unbundled one of the most
important parts of Facebook — mobile photographs. However, once
Instagram became a
part of Facebook, and once those images helped build Instagram user profiles on the web, one could argue mobile-only Snapchat
unbundled
the forced permanence, faux-filtered finishes, and broadcast nature of
Instagram to put people and faces at the center of images and to share
them with individuals or groups in a more private, time-sensitive,
mobile-only, intimate way.
The Right Time: In 2013, the two leading social
networks made big moves — Facebook transformed enough of its business to
mobile to convince Wall Street that
big
profits could continue to roll in, and Twitter finally went public and
is performing well even with spikes in trading volume. At the same time,
however, mobile
messaging
apps, especially those from Asia, grew so big, dominant web platforms
finally took notice, seeing them as a new platform threat. All of these
companies combined could one day represent nearly one trillion dollars
in public and/or private valuations, so as the market recognizes this, a
property like Snapchat can easily be perceived to be worth much, much
more than we imagine today.
The Right Market: Mobile. Mobile. Mobile.
User-generated pictures taken and viewed on mobile devices. A
demographic centered around mobile-native teens and expanding rapidly. A
communications app with network effects that can spread globally
because the medium is universal. Oh, and mobile, mobile, mobile — a
shift so huge, it could still be one of the most
underhyped trends in technology relative to its scale.
And, there you have it — Snapchat is the “breakout” company of 2013.
I’m not going out on a limb with this one! In about a 12-month
timespan, the company grew
exponentially, became one of the most dominant mobile photo-sharing networks,
rebuffed multibillion dollar acquisition offers from the two dominant web companies, and closed increasingly bigger Series A, B, and C
financing rounds from some of the most successful investors at each stage, including the most recent round led by one of the world’s
leading tech hedge funds. While the future of Snapchat is
uncertain
— will they be able to sell ads, deliver ads without ruining the user
experience, capitalize on in-app purchases, or sell itself in early
2014? — the app remains at the top of the charts and shows
no sign of slipping. For all of these reasons, Snapchat is 2013’s breakout.
