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From: Glenn Petersen10/4/2017 5:32:28 AM
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Snap has sold more Spectacles than Apple sold iPods in their first year, says CEO, but investors still 'fearful'
  • Snap CEO Spiegel spoke to author Walter Isaacson at Vanity Fair's fourth annual New Establishment Summit in Beverly Hills, California.
  • Spiegel's comments on Tuesday indicated that Spectacles unit sales are now higher than the iPod's after a year — a figure he's proud of, given that Apple's iPod had about 143,000 net unit sales in its first full year, 2002.
  • "I think investors are fearful, and fear is a powerful motivator -- they're fearful we'll never be profitable, or they're fearful that competition will kill us or something like that," Spiegel said. "But I think those are kind of normal fears for any start-up."
Anita Balakrishnan | @MsABalakrishnan
CNBC.com
October 3, 2017



Getty Images
Evan Spiegel, co-founder and CEO of Snapchat
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Snap has sold about 150,000 of its camera glasses, called Spectacles, CEO Evan Spiegel said on Tuesday.

Spiegel spoke to author Walter Isaacson at Vanity Fair's fourth annual New Establishment Summit in Beverly Hills, California. But while Spiegel said the sales figure far exceeded internal expectations for the product, Isaacson argued it seemed like the device wasn't catching on.

Snap, which makes the ephemeral messaging app Snapchat, has rebranded itself as a "camera company." But at least as of May, it seemed like its much-hyped camera device wasn't making a mark on Snap's business, which is funded mostly by advertising on Snapchat.

In May, Snap said its $130 augmented reality and camera glasses generated a little more than $8 million in revenue during the quarter — out of total revenue of $150 million — which would have indicated sales of about 61,500 units of the Spectacles if they were sold at full price.

Spiegel's comments on Tuesday indicated that Spectacle unit sales are now higher — a figure he's proud of, given that Apple's iPod had about 143,000 net unit sales in its first full year, 2002. For Snap, the glasses are a way to build expertise in the hardware field, in anticipation of greater adoption in the next ten years — "so many things" are coming for Spectacles, he said.

But Spiegel conceded that he's had trouble selling parts of his long-term vision to investors, not just when it comes to Spectacles.

"One of the things I did underestimate was how much more important communication becomes," Spiegel said. "When you go public… you really need to explain to a huge new investor base, right – instead of having 10 new investors, you have 10,000 – you have to explain how your business works. And at the same time you need to do that, there are also all these new regulations about what you can and cannot say and how you can communicate. So I think one of the things we've been going through this year is how to communicate the Snap story."

Spiegel had an awkward exchange with Wall Street analysts in August, when a hot mic caught an analyst describing how it was difficult to understand Spiegel's answer to a question. While Snap's IPO saw big gains out of the gate, shares have fallen more than 34 percent over the past six months.

"I think investors are fearful, and fear is a powerful motivator – they're fearful we'll never be profitable, or they're fearful that competition will kill us or something like that," Spiegel said. "But I think those are kind of normal fears for any start-up – and the really successful companies just grow through that. And that's why we've just tried to stay focused on the business this year and execute and deliver results."

--Additional reporting by Leanne Miller

https://www.cnbc.com/2017/10/03/snap-spectacles-how-many-have-been-sold.html

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From: hollyhunter10/12/2017 7:44:39 PM
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On watch for breakout at 16.86.

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From: Glenn Petersen10/22/2017 11:00:55 AM
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There is perhaps no better example of this dynamic than what has happened to Snap, the company that makes the disappearing messaging app Snapchat. Although it is one of the most innovative consumer-focused internet companies — Snap created a whole new paradigm in social networking, and pioneered the idea that the camera is the future of human communication — it has been battered by the giants.

How the Frightful Five Put Start-Ups in a Lose-Lose Situation

Farhad Manjoo
New York Times
OCT. 18, 2017



Credit Doug Chayka
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The tech giants are too big. But so what? Hasn’t that always been the case?

As the men who run Silicon Valley will be the first to tell you, a company’s size doesn’t matter here. For every lumbering Goliath, there are always one or two smarter, faster Davids just now starting up in some fabled garage, getting ready to slay the giants when they least expect it.

So if you’re worried about the power of the Frightful Five — Amazon, Apple, Google, Facebook and Microsoft — just look at how IBM, Hewlett-Packard or monopoly-era Microsoft fell to earth. They were all victims of “ creative destruction,” of an “ innovator’s dilemma,” the theories that bolster Silicon Valley’s vision of itself as a roiling sea of pathbreaking upstarts, where the very thing that made you big also makes you vulnerable.

Well, maybe not this time.

The technology industry is now a playground for giants. Where 10 or 20 years ago we looked to start-ups as a font of future wonders, today the energy and momentum have shifted almost completely to the big guys. In addition to the many platforms they own already, one or more of the Five are on their way to owning artificial intelligence, voice assistants, virtual and augmented reality, robotics, home automation, and every other cool and crazy thing that will rule tomorrow.

Start-ups are still getting funding and still making breakthroughs. But their victory has never been likely (fewer than 1 percent of start-ups end up as $1 billion companies), and recently their chances of breakout success — and especially of knocking the giants off their perches — have diminished considerably.

The best start-ups keep being scooped up by the big guys (see Instagram and WhatsApp, owned by Facebook). Those that escape face merciless, sometimes unfair competition (their innovations copied, their projects litigated against). And even when the start-ups succeed, the Five still win.

Because today’s giants are nimbler and more paranoid about upstart competition than the tech behemoths of yore, they have cleverly created an ecosystem that enriches themselves even when they don’t think of the best ideas first. The Five run server clouds, app stores, ad networks and venture firms, altars to which the smaller guys must pay a sizable tax just for existing. For the Five, the start-up economy has turned into a heads-I-win-tails-you-lose proposition — they love start-ups, but in the same way that orcas love baby seals.

There is perhaps no better example of this dynamic than what has happened to Snap, the company that makes the disappearing messaging app Snapchat. Although it is one of the most innovative consumer-focused internet companies — Snap created a whole new paradigm in social networking, and pioneered the idea that the camera is the future of human communication — it has been battered by the giants.

After failing to buy Snap several years ago, Facebook repeatedly tried to copy its key innovations. This year, when Facebook lifted Snapchat’s Stories feature for Instagram, WhatsApp and Facebook’s main app, it seemed to deliver a death blow.



Joey Levin, the chief executive of IAC, an internet and media company that looks for opportunities above, beneath and between the giants. Credit Audrey C. Tiernan
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Facebook isn’t the only behemoth trying to feed off Snap’s carcass. In January, Snap signed a cloud hosting deal with Google. It agreed to pay Google $400 million a year for the next five years. Note that Snap booked only about $330 million in ad revenue in the first half of this year. In other words, it’s paying more than half of its revenue to Google.

Oh, and do you know who its largest competitors in the internet ad market are? Surprise! Facebook and Google.

The small guys won’t concede any this, of course. Unbridled optimism fuels start-up world, and many investors and start-up executives I talked to in recent weeks argued that with the insane amounts of money pouring into start-ups, the Five don’t have the whole game won.

They said the Five’s platforms had made starting companies cheaper and easier, and pointed to several successful start-ups that managed to elude the Five’s clutches in the last few years: Netflix, Uber and Airbnb. And when you look at business-focused companies that aren’t household names, you come up with dozens more, from Slack to Stripe to Square.

“In a lot of ways I’d say it hasn’t changed,” said Joey Levin, the chief executive of IAC, an internet and media company based in New York. “I’ve been around the internet long enough, and the first thing we used to ask in every meeting when I started was, ‘Why won’t Microsoft do your business?’ Then six years later it was, ‘Why doesn’t Google do it?’ Now it’s a combination of why can’t Facebook, Google, Apple or Amazon do this?”

Mr. Levin’s position is interesting. Even if you may not have heard of it, IAC has been battling giants online for a long time. The company grew out of the media tycoon Barry Diller’s television holdings of the 1990s; over the last two decades, IAC created a string of digital brands that tried to find some foothold outside the fiefs of the giants. Among them are Expedia, Match.com, Tinder, Ask.com and Vimeo.

Some of these companies became the biggest brands in their categories, while others were also-rans that came up short against the day’s tech giants. In many cases, though, IAC made money by shrewdly navigating the giants. Sometimes it worked with the behemoths, other times it competed with them, and always it looked for opportunities above and beneath and between the giants, like a clever pigeon picking up crumbs around a picnic table.

IAC’s latest gambit is Angi Homeservices, a company that combines two big brands aimed at home repair and refurbishing, Angie’s List and HomeAdvisor. That company competes directly with some of the Five — both Google and Amazon have services meant to help you find people to install things your house.

Chris Terrill, the chief executive, told me that Angi Homeservices had a dedicated team working on providing a service that’s superior to anything the giants can build. But he also said his company was eager to team up with one of the big guys — for instance, on one of their voice-assistant platforms — because working with one of the Five could ease its path into the big leagues.

“We think that a smart voice provider will say, ‘If I want to win at all costs, we’ll go get the very best partner’ — and that’s us,” Mr. Terrill said.

In some ways, IAC could be a model for the internet company of tomorrow. It clearly aims big and isn’t going for second place. But it has also internalized a kind of working method that recognizes the Five as more-or-less permanent fixtures of the internet. It’s not betting on their demise; rather, it’s betting on their continued success. If Angi is to win, so will one or more of the Five.

IAC’s executives recognize the danger of a digital marketplace that is so heavily dependent on big guys. “I think the opportunities are still there, but I do worry that some of the biggest players are going to stifle that competition by trying to do and own too much themselves,” Mr. Terrill said.

I asked another IAC veteran, Dara Khosrowshahi — who until recently was the chief executive of Expedia — whether he believed the internet was still an open field for innovation, or whether the Five were closing it off.

“I’m mixed as it relates to that,” he said. “I fundamentally think innovative ideas can still survive and thrive, but the Googles and Facebooks of the world have so much more intelligence as to mass consumer behavior that they probably have an unfair advantage in identifying these early fast movers — and are willing to pay prices that are extraordinary for them.”

In August, Mr. Khosrowshahi was appointed chief executive of Uber, where he will have to deal with the giants more directly. Though his company is the most highly valued start-up of our age, its success seems far from assured. Many of its problems are of its own making, and Mr. Khosrowshahi is determined to fix them.

But like Snap, Uber is at the mercy of the Five. Alphabet, Google’s parent company, is an investor in Uber. But Alphabet’s autonomous-car company, Waymo, is also a competitor to Uber. On top of that, Waymo has sued Uber, alleging theft of trade secrets.

The future of Uber, of ride-hailing and of autonomous vehicles in America is hazy. But here’s one thing that seems a sure bet: Whether Uber wins or loses, Google will end up doing just fine.

Email: farhad.manjoo@nytimes.com; Twitter: @fmanjoo

A version of this article appears in print on October 19, 2017, on Page B1 of the New York edition with the headline: A Frightful Stranglehold On Tech Start-Ups.

nytimes.com

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