Snapchat’s father or mother Snap grew to become the most recent tech firm to announce an enormous spherical of layoffs, confirming ongoing rumors yesterday that it was reducing 20% of its world workforce, affecting a minimum of 1,200 folks.
The explanations for Snap’s large scaling again train are maybe apparent, because it’s the identical financial the reason why numerous different companies have laid off employees this yr — the corporate stated the cuts may put it aside $500 million in prices yearly. The markets appeared to love the information, too, with Snap’s shares leaping round 15% at one level yesterday when it introduced the cutbacks, earlier than settling at round 9% up over the day gone by’s closing worth.
Whereas the mass redundancies understandably garnered the lion’s share of the headlines, buried in amongst this information was Snap’s plans to chop further prices by means of “refocusing” its enterprise, which incorporates ceasing investments in sure merchandise. A part of this entails winding down two standalone apps, certainly one of which is Zenly, a social mapping app that it acquired for north of $200 million 5 years in the past. Your entire Zenly group has been laid off, whereas their non-compete clauses have been waived.
Whereas it’s not unusual for firms to shutter apps years down the road, significantly throughout cost-cutting “restructuring” efforts, the choice to shut Zenly utterly is shocking, as a consequence of the truth that it’s nonetheless a extremely popular app in its personal proper, even when it does sit in Snapchat’s shadow and doesn’t generate a lot direct income.
There’s a map for that
Zenly was based out of Paris in 2011, occurring to lift $35 million in funding earlier than Snap (then known as Snapchat) swooped in with its mega-million-dollar bid. In a nutshell, Zenly develops an app that permits customers to see the place buddies are on a map and navigate their approach to one another.
However Zenly isn’t only a utility. It may be outlined as a social app that revolves round a map. If you open the app, you see a map with all your folks. If you happen to see that a number of buddies are hanging out collectively, you’ll be able to message them and request photographs as a way to see what they’re doing proper now. Whereas many “social” apps encourage you to remain in your mattress and scroll, Zenly urges you to attach with your folks and spend extra time with them.
Zenly screenshot
Zenly has continued to function as a standalone entity because the acquisition, and it’s simple to neglect that Zenly is owned by Snap in any respect, with the unique improvement group nonetheless based mostly out of Paris, and no apparent Snap branding anyplace on Zenly’s app or web site.
Just some months again, Zenly rolled out an enormous replace that added a number of new options, together with the power to seek for locations. Customers may additionally pin locations to “their world”, corresponding to their favourite bars, eating places, gyms, libraries, retailers and extra. This represented Zenly’s largest replace in years because the app grew to become a form of fashionable Foursquare — customers may uncover locations based mostly on the place their buddies usually go. When Zenly launched the app replace, co-founder and CEO Antoine Martin additionally revealed he was shifting on from the corporate, with Snap CEO Evan Spiegel entering into the function.
And a month later, Zenly revealed that it was taking up the mighty Google and Apple by introducing its personal mapping information and engine, the results of a gargantuan venture it began some three years earlier.
Zenly’s new maps
So Zenly was exhibiting no indicators of stagnating, and if something, it seemed prefer it had the potential to be certainly one of Snap’s prized possessions if it may solely work out methods to flip it right into a money-making machine.
The information appears to again this up, too — Zenly claimed some 35 million month-to-month lively customers earlier this yr. Further figures supplied to TechCrunch from Information.ai for this story inform us that Zenly has seen almost 160 million downloads throughout Android and iOS since its inception, 3 million of which got here final month alone.
Whereas Information.ai’s numbers additionally present that Zenly is often among the many high 20 downloaded social apps globally, digging deeper into market-specific metrics reveals that it usually out-performs each single different social app. In Japan, for instance, Zenly is often within the high 5 or 10 apps, nevertheless it usually rises to pole place forward of Fb, WhatsApp, Discord, and home-grown market chief Line, as this iOS chart from August 19 exhibits.
Zenly iPhone downloads for Japan on August 19, 2022
Elsewhere, Zenly is a continuously a top-five social app in Russia and Belarus, a top-ten social app in France, Indonesia, and Thailand, and it hovers across the higher echelons within the app charts in lots of different markets globally.
In fact, different burgeoning social apps corresponding to TikTok and BeReal are main the cost in Snap’s core goal markets together with the U.S., which can be partly why Snap is much less enamored by Zenly’s enduring recognition in locales elsewhere. However nonetheless, a well-placed supply informed TechCrunch that Zenly has constantly grown its consumer numbers on a quarter-by-quarter foundation because the acquisition, and there’s little proof that this trajectory was going to stop any time quickly — and that’s tough to disregard.
Snap resolution
So why has Snap chosen to drag the plug on Zenly, quite than attempting to nourish its evident recognition in main markets in Europe and Asia? And why not promote the app to a different firm that might do one thing helpful with it? A clue lies in Snap’s personal phrases from yesterday’s announcement. In a SEC submitting, the corporate stated that it could be winding down Zenly to “deal with Snap Map,” a location-focused social product that it launched approach again in 2017.
Though Snap Map isn’t constructed instantly on Zenly’s know-how, it’s simple to see why having two location-based social merchandise may very well be deemed pointless, particularly when certainly one of them needs to be supported financially as a standalone product outdoors the primary Snapchat consumer.
“Going ahead, we are going to focus our mapping efforts on a single service, the Snap Map inside Snapchat,” a Snap spokesperson informed TechCrunch. “We thank the [Zenly] group for his or her many contributions, and the Zenly group for his or her assist.”
This exhibits that Snap isn’t abandoning social-mapping, which signifies that promoting Zenly to a third-party wouldn’t be prudent from a contest standpoint. Snap confirmed this rationale to TechCrunch, explaining that it has made important investments in Zenly since 2017, nearly doubling the scale of the group within the course of, and that it finally didn’t discover a path to significant income. Moreover, given its continued deal with Snap Map, the corporate stated that it could not be in Snap’s strategic pursuits to let Zenly slip into the arms of one other firm.
It’s maybe not an excessive amount of of a stretch to say that Zenly’s recognition may very well have labored towards it right here — any firm that did resolve to purchase Zenly would have a major, oven-baked world group to construct on from the get-go. The dangers right here had been finally too nice for Snap.
Internally, Snap stated that Snap Map has greater than 300 million month-to-month lively customers, with the potential to join every of them with 30 million companies which might be listed within the app — lots of which pay to advertise their itemizing. As an apart, although, it’s not clear what number of of those lively customers are literally there for the mapping and site options — many use Snap Map merely to see when their buddies had been final seen on-line.
Snap Map companies
In abstract, Snap thinks it already has the entire maps/location factor lined in Snapchat, it doesn’t have the cash-flow to proceed funding Zenly’s progress, and it’s not ready to let one other firm take over the reins as means to guard its enterprise pursuits.
Different cutbacks
It was an identical destiny for Voisey, a U.Okay. startup Snap acquired for an undisclosed quantity in 2020, and which is now being discontinued on September 5. Much like how Snap is pulling again from Zenly to deal with Snap Map, the corporate revealed that Voisey — which has been described as one thing akin to “TikTok for music creation” — will make approach for Snap to focus solely on Sounds, a music function it launched inside Snapchat two years in the past.
Elsewhere, Snap confirmed that it’s discontinuing its investments in a number of options and companies together with Snap Originals and Minis. And its mini-drone venture Pixy, which Snap solely introduced in April, can be going the way in which of the dodo simply as as stories advised just a few weeks again.
This helps to focus on simply how shortly the tide has turned for Snap. Within the house of 4 months, Pixy has gone from an thrilling (if perplexing) new {hardware} venture to lifeless within the water, whereas Zenly has gone from the crest of a wave to the brink of extinction.
We noticed a few of this coming although. Snap’s lively customers could also be persevering with to develop, however that is not mirrored in its monetary efficiency, which is due largely to the present financial local weather. At its Q2 earnings again in July, Snap wrote to its buyers:
Whereas the continued progress of our group will increase the long-term alternative for our enterprise, our monetary outcomes for Q2 don’t mirror the size of our ambition. We aren’t glad with the outcomes we’re delivering, whatever the present headwinds.
On high of that, Snap stated on the time that it could curtail its working bills, and gradual its charge of hiring. The corporate additionally declined to present any steerage on its future monetary efficiency as a consequence of “uncertainties associated to the working setting.”
So it was anticipated that we might see some casualties emerge from all of this. But it surely’s nonetheless a tragic story in every kind of the way, not least for these instantly impacted by the layoffs.
Whereas Zenly could have slipped below many individuals’s radars — particularly within the U.S., the place it has comparatively few customers — it’s undoubtedly a serious European success story. Zenly impressed a brand new technology of European entrepreneurs, had a big impact on the French tech ecosystem, and solidified Snap’s repute in France. Zenly’s founders proved that it was doable to construct a European social app with tens of thousands and thousands of customers — and BeReal exhibits that that is nonetheless doable right now.
In the fitting setting, Zenly may have gone on to better issues, so it’s a serious travesty that it’s assembly such a sudden and premature demise.
