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Snap’s IPO has major challenges, but they have a plan

(BUSINESS NEWS) Snap is losing a whole bunch of money based on their IPO, but don’t worry, they have a plan.

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Trouble ahead?

Uh oh, Snap is losing a bunch of money. Like, a lot a lot. Pro tip for those who also weren’t paying attention: Snap is the company that owns Snapchat. Despite being a compulsive user, I only just learned this. I feel like someone I’ve known as Robert their whole life is now insisting on going by Rob and it just isn’t sticking.

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Unfortunately, I’m kind of worried about them now. Snap’s recently released S-1 has many drawing comparisons to Twitter, but not in a nice way. Like Twitter, Snap is losing leverage and its growth rate is slowing. Chart lover Ben Thompson at Stratechery throws down some comparisons of Snapchat to Facebook and Twitter at the time of their IPOs.

Thompson looks at Daily Active Users in relation to the cost and revenue of each user at the time of each company’s IPO. Unsurprisingly, Facebook, Twitter, and Snapchat’s daily active users have all steadily grown since their onset.

IPO standings


At the time of their IPO, Facebook was winning at the not losing money game. Though the company wasn’t gaining much leverage, it wasn’t losing it either. While Facebook’s total cost per user has increased since their IPO, average revenue per user has has also gone up.

According to the graph, Facebook had to spend a bit more per user, but its profits would continue to grow so long as either average revenue per user or total users increased overall. Lucky for Facebook, both of those things happened.


Twitter also had a flat cost of revenue at the time of its IPO, but its total costs were higher than Facebook. However, Twitter wasn’t able to grow revenue per user or increase the total number of users in a meaningful way.

User growth slowed and costs never flattened. Thompson notes, “had the company simply kept its pre-IPO cost structure it would be in far better shape today.” At the time of their IPO, Twitter and Snap are losing money on users.


For Snapchat, costs per user have surpassed revenue per user. Snapchat now pays more per user than Facebook or Twitter at the time of their IPOs. Snap needs to grow users faster than costs or figure out how to grow revenue per users.

Snap’s S-1 states their strategy is investing in product innovation through their camera platform.

The game plan is to engage users who they can then monetize through advertising. Click To Tweet

Snap’s strategy

Snap points out that as their user base grows, they will incur additional costs.The more people join, the more content is consumed and shared.

Snapchat isn’t fun if there’s no one to send snaps to, so user growth is exponential as new adopters and veteran users convince friends to download the app.

This means additional employees are required, as well as increasing computing infrastructure and development costs.

However, they have a plan: television advertising money. According to the S-1, worldwide advertising is expected to increase by over $1 billion in the next three years. Mobile advertising is predicted to increase nearly three times. Snap notes that people’s focus has shifted from television to mobile screens, particularly in its core demographic of Daily Active Users.

Snap is confident that its concentration in the US and access to high quality ad units make it desirable for advertisers. If Snap captures the best customers by delivering innovative products, even if those innovations are costly, they will profit. That’s banking pretty hard on the idea that TV advertising money can successfully tap into mobile, but we’ll see.

Snapple

Thompson points out that Snap’s focus on innovation is essentially Apple’s go-to strategy. However, Thompson says the problem with this approach is that it didn’t work out for Apple initially. When Apple first took to the market with Mac computers, they didn’t stand a chance against Windows. Microsoft had leverage by playing on already established standards in computing, creating backwards compatible software and tapping into IBM as a sugar daddy.

Likewise, Facebook currently holds queen bee status over Snapchat for the simple fact of its market saturation. While both companies managed to digitize offline relationships, Facebook has a tighter stranglehold on marketing.

However, Snap’s camera company might be what can put them ahead.Snap said they envision the camera screen as a “starting point for most products on smartphones.” In fact, Apple introduced a quick swipe feature allowing users to access their cameras without having to unlock or open up the camera app.

Like Apple, Snap thinks beyond form and function, instead focusing on delivering what the user doesn’t even know they want.

Five years ago I had no idea that my favorite app would be something lets me send out disappearing messages, but here I am preaching to anyone who will listen about the glory of Snapchat.

Snap cares

And bless Snap, because they really do care about all of us selfie addicted kids out there. Their S-1 states, “We believe it’s always worth trying to build something that will empower people to express themselves, live in the moment, learn about the world, and have fun together — even when it’s not clear that what we build will be successful or make money.”

This is why I love Snapchat.

Even though there are bumps in the road–some of those sponsored filters are really obnoxious–at its core, Snapchat believes in communication innovation.

They know they’re working with something revolutionary and are willing to take risks to continue serving their loyal consumers. I’m rooting for Snapchat, and apparently so are investors. They’re valued at $18.5 BILLION dollars, so let’s all cross our fingers and hope for the best.

A special thanks to Ben Thompson for keen analysis and wicked awesome chart skills.

#vivasnap

Lindsay is an editor for The American Genius with a Communication Studies degree and English minor from Southwestern University. Lindsay is interested in social interactions across and through various media, particularly television, and will gladly hyper-analyze cartoons and comics with anyone, cats included.

Business News

The best jobs in America, 2018 edition

(BUSINESS NEWS) Is your job on the list of the best jobs? Is this your year?

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Whether you love or hate your job, like any other human, you want to know how it ranks on the list of all occupations. And also like any other human, you know that the tech industry is going to dominate any ranked list of this nature.

And of course, you’re right.

Indeed’s 2018 list of The Best Jobs in the United States, the top 25 are mostly tech jobs.

The jobs themselves range wildly in terms of salary, required education level, field, and availability, though all fall above the $75,000 per year mark. As is to be expected, a large number of the jobs in question are located in the tech field, though you might be surprised to see several other fields holding prominent spots as well.

One such field is construction, though there are a couple of caveats in the field’s growth itself. As job persuasions such as construction management and construction estimator make their way onto the list of the top 25 jobs of 2018, the respective hiring departments are forced to contend with decreasing searches for construction jobs as the year has progressed.

While the results should speak for themselves, it’s clear that anyone looking to hire in the construction field will have a bit of pandering on their hands.

Tech jobs such as full stack developer and computer vision engineer are still at the top of the list – a position which hasn’t changed much from last year – and the actual number one spot, while not quite as tech-oriented as past years, is commercial project manager.

Indeed notes that the position of the role of machine learning engineer is especially surprising (spot number 4) given its number 17 spot on last year’s list.

Naturally, the rise in self-driving technology and the interest in AI has most likely influenced the sudden jump this year; if you’re someone with the proper education and skills in the machine learning department, this should be your year.

A couple of outliers on the list include plumbing engineer (spot number 14), registered nurse in the infusion field (spot number 24), and optometrist (spot number 7). As Indeed points out, healthcare roles in 2018 have made an unexpected appearance on this list; naturally, such positions fall on the “more education” side of the spectrum, but their involvement makes for a nice contrast with the normal tech backdrop.

The full top 25 list:

  1. Commercial project manager
  2. Full stack developer
  3. Computer vision engineer
  4. Machine learning engineer
  5. Preconstruction manager
  6. Construction superintendent
  7. Optometrist
  8. Data scientist
  9. Chief estimator
  10. Development operations engineer
  11. Agile coach
  12. Construction estimator
  13. Senior talent acquisition manager
  14. Plumbing engineer
  15. Project superintendent
  16. Staff pharmacist
  17. Head of sales
  18. Commercial real estate agent
  19. Construction manager
  20. Project architect
  21. Product owner
  22. Senior clinical specialist
  23. UX researcher
  24. Registered nurse – infusion
  25. Partnership manager

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Business News

How the Lean concept can have the biggest impact on your bottom line

(BUSINESS) Using the Lean business concept and asking the non-sexy question of “What’s dumb around here?” your business will outpace your competitors in no time.

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Entrepreneurs love solving problems. That’s what they’re good at doing. In fact, the more complex, difficult and messy the problem, the more the entrepreneur will enjoy the challenge. Entrepreneurs are especially good at solving problems that nobody knew were there. Think about Steve Jobs: He knew that we needed a pocket MP3 player before we even knew what it was.

While entrepreneurs are coming up with the next “big” thing, we need the non-entrepreneurs in our organizations focused on solving the small problems in our company with the same enthusiasm. Imagine if every one of your team members were consistently looking for opportunities to improve your systems, processes and service delivery. Those subtle changes made in the non-sexy parts of the business usually have the biggest impact on the bottom line.

This is a business concept called Lean, in which a company changes their processes to create the most benefit to the customer using the least amount of resources possible. Lean is commonly used in the manufacturing industry, but its principles can be used in any business to change the way of thinking and doing things.

I recently witnessed a great example of how Lean principles were used to improve one of my clients, LuminUltra – a leading provider of microbiological testing hardware, software and services. The company serves industries that need to know quickly and accurately what’s living in their water. At a recent quarterly planning session at the LuminUltra offices in Fredericton, Canada, COO Charlie Younger shared a powerful story about the company’s manufacturing facility and challenging the status quo.

During the expansion of the company’s manufacturing facility, one of the team members was lamenting to Charlie about how much time it took to complete a lengthy step of the manufacturing process – one specific quality check that was very time-consuming. He remarked that in the history of the company they never had a single machine fail the test. Charlie’s first thought was, do they even need to perform this specific test again?

After more discussion with colleagues, the team realized that the other quality checks performed earlier in the manufacturing process would always identify a defective unit. With this knowledge, the manufacturing team asked for permission to perform minimal testing to still provide assurance with less work. When presented with the information, the company leadership agreed that it was a great idea and would save time and money as well as improve the employee experience. But the bigger question was: Why hadn’t anyone ever questioned this lengthy step of the manufacturing process before?

Charlie, having run Lean programs in the past, has seen this issue before: People continue to do what they’ve always done even if they think there is a better way. He thought this would be a great opportunity to use a fun, simple but elegant technique to capture other status quo breakers – in other words, he decided to use the same principles for changing the company’s production process to make other company decisions.

With that, he posted a whiteboard in the manufacturing room with the title “What’s Dumb Around Here?” and encouraged team members to capture possible “dumb things” to add to it. These topics are discussed and vetted during their Lean process meetings to determine if they can be improved.

When I discussed the new process with Charlie, he noted, “First, you have to create an environment where people are willing to question the status quo. We have always been highly focused on quality and accuracy, so the team thought it was outrageous to openly question a quality check we had been performing for years.”

He continued, “You have to help your management team be open to receiving ideas that might seem crazy and not overreact to the suggestions. Instead, simply ask them to explain their logic. More often than not, the front line knows a better way to do things but does not know how to navigate the change. The beauty of using Lean techniques is that you now have an easy navigation path to discuss, approve and roll out changes. Suddenly, you have an energized front line solving problems with minimal involvement from management – how great is that?”

While LuminUltra continues to grow their product line and expand into new markets, it expects that its implementation of Lean principles will help it make subtle but important modifications to processes that will positively affect its bottom line. The CEO, Pat Whalen, remarked, “If we can produce our products faster and more cost effectively and get them into the hands of our customers faster, we can have an even bigger impact on the water sector with our microbiological monitoring products. I need all of our team members thinking how we can improve every single day. The water sector needs us.”

Every visionary, big-thinking entrepreneur needs a team that challenges the status quo. How are you encouraging your team members to identify, “What’s Dumb Around Here?”

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Business News

Verb develops your team’s talent while making a major social impact

(BUSINESS NEWS) Any sized team can improve their talent, but add in a dash of social good, and Verb has the platform to rule them all.

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More organizations are looking to offer training opportunities for their employees (but with an emphasis on more efficiency, cost effectiveness, and impact than traditional classroom instruction) – and there are a number of solutions. Organizations can seek to leverage those same on-demand resources that consumers are using (Like Lynda.com) or using their own internal corporate learning solutions to host content (like Cornerstone On-Demand, Accord, or other LMS (that’s uh – Learning Management System, non-talent TD folks)) providers, and hope by doing so they develop employees and solve the variety of skill gaps that are emerging for a millennial and post-millennial workforce.

Verb seeks to offer a flexible learning solution that also solves a secondary challenge: getting employees to be more engaged with work.

The product offers subscription style learning, offering focusing on the core skills like communication and leadership skills. Specific skill development is bestowed upon employees through four types of learning elements: articles, activities, courses, and impact programs. This suggests that the learning is focused not only on content and theoretical learning, but also activity based and impact styles of learning to help employees transfer those skills into the workplace.

The standout of this learning solutions it that it seeks to drive in something that a lot of young professions seek – purpose.

Verb connects with social impact organizations to facilitate learning opportunities and promote development. A great example from their blog is a Summer partnership with United Way for Greater Austin (check it out) where they conducted a five-week leadership program that taught local nonprofit professionals how to communicate their organizational strategy and mission more effectively with pitch decks.

Adding in purpose is an emphasis on mentoring, where social entrepreneurs can become impact partners and connect with brands to help improve their visibility, awareness, and credibility.

Social entrepreneurs have a real opportunity to generate their visibility and gain more attention, companies like Sproutel (which have this awesome story about Jerry the Bear – you’re gonna cry if you watch it!) or TOMS both have gained some attention via Verb.

The benefits here are pretty clear – organizations can get a learning solution that helps them develop their employees more effectively and can collect learning metrics that help justify their expense and demonstrate impact.

The most highly regarded quality is mentoring opportunities created to connect them with social impact organizations – and those social entrepreneurs benefit from their visibility. From a learning professional – the opportunity to have experience learning, mentoring, and an engagement opportunity seems like a rare bundle – and one that can be particularly valuable for large and small organizations.

Talent development is a significant investment, and Verb looks like a pretty awesome solution that can nestle in beside other talent development strategies.

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