Evan Spiegel’s Imperious Style Made Snapchat a Success—Until Users Fled
Earlier this year, Snap Inc. SNAP -1.58% chief Evan Spiegel was pressing his team to launch a redesign of the company’s Snapchat app. The executives and designers repeatedly responded with an urgent message: We need more time.
Mr. Spiegel had unexpectedly dropped the redesign plan on them in late 2017. After a visit to China, he decided the messaging app needed an overhaul inspired by trends he saw there. It was a quintessential Spiegel decree, say people familiar with the episode—a gut decision without seeking input from most of his team, presented as a done deal.
It was a debacle. When the redesign made its debut in February, users widely panned it. Snap lost users for the first time in its history over the next quarter. Its revenue, which comes mostly from advertising, continued to rise. But its share price has fallen roughly 76% since its February peak, reaching an all-time closing low of $4.99 Friday and reducing Snap’s market capitalization from nearly $25.5 billion to about $6.5 billion.
Snapchat’s popularity among young people and celebrities once helped give its owner a peak valuation of about $31 billion after its March 2017 initial public offering. The messaging app, which lets a person send a friend “snaps”—photos and videos that can disappear seconds after the recipient views them—once looked capable of becoming a viable social-media competitor to Facebook Inc.
The redesign mess adds to troubles swirling around Snap and raises questions about whether Mr. Spiegel’s management instincts can help it pull through. His style—trust instincts, take control of details, ignore naysayers—paid off during Snap’s meteoric rise after its 2011 founding.
Mr. Spiegel has publicly said it is his “stretch” goal for Snap to be profitable next year.
But Mr. Spiegel has lost credibility with some on Wall Street, says Youssef Squali, lead internet analyst at investment bank SunTrust Robinson Humphrey , who projects Snap will run at a loss until 2021. Of Mr. Spiegel’s decision-making, he says: “He is doing this not just to make money, but to try to prove that he is right.”
Snap Chairman Michael Lynton calls Mr. Spiegel “a brilliant, responsible and thoughtful leader,” adding that “Evan’s decisions on how best to grow Snap are exactly what has created such a positive user experience.”
A picture of Snap’s troubles emerges from interviews with current and former Snap employees, advisers and people who have worked with the company and Mr. Spiegel. Former employees say they fear talking publicly about their experiences, because Snap’s lawyers have threatened workers with jail time if they talk to the media.
Mr. Spiegel is an intensely private man who says little publicly about his company. That may be hurting Snap, says Chris Paradysz, CEO of digital-marketing firm PMX Agency, which has bought ads on Snapchat for clients. “Advertisers want to hear from Evan,” he says. “Leadership matters in a time of transition, and Snap is still in a time of transition.”
Unlike many tech executives, Mr. Spiegel, 28, hasn’t relied heavily on data for most of his decisions. He considers himself a designer, say some former employees, and often responds better to presentations rooted in emotional responses to the company’s products and strategy rather than numbers.