In the years since Snap’s founding, a litany of descriptors has been deployed to characterize CEO Evan Spiegel. “Arrogant” was the most recurring one, but as Fast Company learned in 2015, investors and sources close to Spiegel said he could be also cocky, brash, and sometimes even “his own worst enemy.”
We’ve seen how those character traits manifest themselves on more than one occasion. During Snap’s first earnings call in May, Spiegel scoffed at the possibility that Facebook might pose a threat to Snapchat, even when 300 million people were already using a Facebook-owned rival service, Instagram Stories, daily. In fact, Spiegel went so far as to liken Facebook to Yahoo. “At the end of the day, just because Yahoo, for example, has a search box, it doesn’t mean they’re Google,” he said.
His overconfidence isn’t the only thing that makes industry watchers bristle. A big frustration investors have had with Spiegel is that he doesn’t disclose much about Snap’s strategy or offer much in the way of forward-looking statements. He also tends not to make too many public appearances, presumably because he’d rather steer clear of probing questions.
But on yesterday’s earnings call, when Spiegel had to explain yet another quarter of disappointing revenue and stagnant user growth, things were different. Spiegel was more direct, almost conciliatory in the face of questions about Snap’s future prospects. Case in point: Spiegel has insisted for years that Snapchat is aimed at people who can figure out how to use the app. Its lack of user-friendliness was a feature—a badge of honor, really—and thought to be the key to its cachet with younger users. But on the call yesterday, the CEO conceded that Snapchat being “difficult to understand” and “hard to use” is hindering its growth. He then revealed that the app is being redesigned to change that.
Among other things, the redesign is an admission that the company’s user acquisition strategy hasn’t quite panned out. Snapchat gained only 4.5 million users last quarter, and Spiegel conceded that, if it wants to grow, it needs to bring more older users into the fold. The undertaking will also introduce a more personalized feed for content discovery, which sounds like a variation of a Facebook-like algorithmic news feed. Spiegel says the update would personalize the Stories experience for each user, “leveraging the tremendous benefits of machine learning.” But if Snap’s best hope for beating Facebook is to become more like Facebook, how does it do that without alienating Snapchat’s loyalists?
It gets worse: While disclosing that excess inventory of Spectacles put Snap out $40 million, Spiegel said he overestimated how popular the video-sharing glasses would be, based on the initial buzz. He also said Snapchat had “neglected” creators on the platform and would “build more distribution and monetization opportunities” for them come 2018.
Still, while these missteps paint a troubling picture, it’s hard to picture Spiegel making some of these admissions even a few months ago. “I guess we’re just not afraid to make changes in the long-term interest of the business,” Spiegel said on the call. “So I would expect us to continue learning as we grow the business and making changes that we think are in the best interest of growing the user base, growing revenue and, ultimately, providing our customers with a great product experience.”
Maybe Spiegel knew investors wouldn’t stomach his usual hubris when Snap’s earnings report was so grim. Since its IPO in March, Snap has faltered in terms of both revenue and user growth. Its first two earnings reports were less than stellar, and this one was even worse. Or, perhaps, he has realized that being at the helm of a public company also means needing to reevaluate his leadership.
At Vanity Fair‘s New Establishment Summit last month, Spiegel stood behind the decision to take Snap public. But he acknowledged he did not fully grasp what that would mean, and he didn’t anticipate the importance of communication. He continued:
“What’s really interesting is when you go public, you really need to explain to a huge new investor base how your business works. At the same time, there’s also all these new regulations about what you can and can’t say and how you can communicate. I think one thing we’ve been going through this year is how to communicate the Snap story.”
I’m not sure Snap—or Spiegel—is clear on what that story is at the moment. But if Spiegel is serious about embracing change at Snap and not relying solely on his instincts, then perhaps the company can figure it out before it’s too late.