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Opinion, Technology
So, Snapchat’s IPO is a big story in the technology world right now. The IPO started at a value of US$17 per share, with stocks closing at US$24.48 last Thursday, a whopping 44 percent increase, making the company’s value US$28.3 billion. Though tech stock prices post-IPO can be volatile as shown by Twitter, which is trading at 40 percent lower than its IPO price, it is evident that Snap has done well for itself on day one and has pulled something of a coup here. Let me elaborate on the coup part: Snap’s great coup Snap was a complicated company to decide on. With overt dependence on other tech giants through contractual commitments, huge burn rates, widening net loss figures, and the volatile nature of the advertising industry, here were the major concerns that plagued investors: 1. Existing social media sites have the muscle and the necessary offerings to clone Snap’s important features. The recent launch of WhatsApp Status and Instagram Stories, for example, saw Snapchat’s growth in DAU slow down.. Also, the notion that individual content producers find the reach of Instagram to be better is a major concern. Scott Galloway, a marketing professor at NYU, puts it into perspective: “Mark Zuckerberg wakes up in the morning thinking about Snapchat and goes to sleep thinking about Snapchat. Facebook is so clearly going after them.” 2. Snap is not popular in emerging economies. Apart from its competitor, Snow, which is quickly establishing itself in Asian markets, the fact that pictures, videos, and the app itself consume a lot of data might be a factor impeding its growth. These markets can boost the growth of a social media company as proven by Facebook and WhatsApp. 3. Snap’s investors (public) do not have any voting rights and by the company’s own admission, “no other company has completed an initial public offering of non-voting stock on the US stock exchange.” Though founders retaining a controlling stake in the company is not new, this is one of the first’s where shareholders (even as a group) have no say in running the company. Even if one of the co-founders leave, they would still have their say in decision making. 4. There is something nagging about the product itself. I have tried using Snapchat quite a few times but I doubt I will go back to it. For one, there was no network effect. But one of the larger issues for me was that I just couldn’t wrap my hands around the product and user interface. I thought it was a one-off thing, but I came across this line on The Economist: “The app makes little effort to help new users understand its appeal (a built-in user guide is buried deep within the app).”

But what went right for Snap?

How did it manage to ride a successful IPO when investors were being cautious about internet businesses and despite Twitter releasing its disappointing quarterly earning reports 20 days ago? Apart from the positive macroeconomic conditions and dearth in tech IPOs since Alibaba in 2014, Snap planned on a beautiful strategy and executed it perfectly. After tracking the company closely, here are a few points that I believe we can learn from it:

1. Build a big picture

  “We are a social networking app with our USP being disappearing of photos (by the way, people usually like to store them). We are targeting a user group which is not particularly known for having brand loyalty. Oh, we have a US$400 billion giant tugging at our user base and cloning our features.” vs “We aim to reinvent the camera, a device that has been around for centuries and is now an integral part of every smartphone, that same device which has given rise to several billion-dollar companies. Our camera application clicks around 2.5 billion snaps every day which is roughly around one-third of the world’s population. Oh, the latest device is also wearable.” Agreed. I exaggerated there. But in my defence, the first line is what the founders say. The rest reflect the thought process of investors on listening to that. Snap has consistently referred to itself as a camera company mentioning that they believe “reinventing the camera represents our greatest opportunity to improve the way that people live and communicate.” When you meet people who have to bet their money on you, it is better to sell them on what you could be than what you are. It shows that the founder has a vision going forward and also the kind of market opportunities they can use to achieve big returns.

2. Branding is analog

  Snap’s preparation to its IPO began with its release of spectacles. It brought its fans out onto the streets and created a treasure hunt equivalent with some writers calling it the best marketing campaign in history. The kind of frenzy and buzz it created made investors take note of the company and follow it keenly. In simple terms, it had created a brand for itself. Branding is a continuous activity. Too often, startups use it solely for customer acquisition and later focus on channels which they think yield maximum returns. If you are running a startup, have some hacks that will make people talk about your offering in their circles. It need not always be an expensive affair. Right from a quirky visiting card to creating engaging content, live and grow your brand.

3. Create FOMO among investors

  Snap was the first social networking company to reach London and meet European investors. They released an amazing video which talked about its philospohy, beginnings, culture, and the future. Throwing in information like “60 percent of the 158 million users create content everyday,” “users open apps 18 times per day on average,” and “users spend 25 to 30 minutes in the app every day” make an investor think about the kind of upside to the investment and push their own doubts to a corner (if-someone’s-coming-back-to-the-app-18-times-these-guys-are-doing-something-right kind of feeling). The recommendation from marketing executives from Universal Studios adds to the credibility and showcases the revenue opportunity. Most of the time, entrepreneurs let investors dictate the terms of the conversation. However, a founder owes it to his business and team to get the best possible value from investors. Reaching out to a large group of investors can help you refine your fundraising strategy, communicate your business model effectively, and create a positive vibe in general. These meetings might not translate into investments but they may help in building your company’s presence and show that the team is willing to take questions and challenges head-on.

4. Bet on your core audience

  Eighty-five percent of Snapchat’s 158 million daily users are between the ages of 18 and 34. One of the important points investors saw was that the younger generation doesn’t watch much TV, is paying for OTT content, are tech-savvy enough to install ad blockers, and hence, the only way to reach out to them via advertisements is through social media. Despite naysayers, the company noted in its S-1 that it’s focused on boosting the monetization of its specific user base by sparking more engagement, not by courting older users. And yes, to support that fact, Snap had a seven-fold increase in revenue in a year. Add to this the facts that worldwide advertising spend will grow by 18 percent from US$652 billion in 2016 to US$767 billion in 2020 (Snap mentioned this statistic quite a few times on their S-1) and that millennial users tend to spend, and you have shown your investors how your core audience can bring in the market to your doorstep. This teaches companies to bet on a demographic and ruthlessly optimize to suit your products to that one. Get your product market fit, identify who your customers are, and make them into loyalists while improving your offerings. Once you create loyalty, you can explore different groups more and increase your market presence. Snapchat has built an ecosystem around its offerings and has successfully showcased its plus points to investors.
What are your key takeaways from Snap’s IPO? Please share your views.
(Originally written for Tech In Asia, by Uday Marepalli.)

(Originally published on the author’s LinkedIn page. Bhat Dittakavi is a Serial Entrepreneur, Startup Mentor, Founder and CEO of Variance.AI.) During my experience in interacting with startup founders at TIE, T-HUB, CIE@IIITH, Symbiosis, KLU and elsewhere in India, I could see brimming passion as a common denominator across the founders. Founders are curious, risk-taking and aspirational in their pursuit of entrepreneurship.

Startup India is Promising

I sat through investor pitches by founders with prior experience from the corporate world. I judged the pitches of engineers, engineering students and MBA students having revenue Startups. I reviewed some exciting idea pitches by high school students. For a country that has more than 66% of its population aged below 32, this is a shot in the arm. India has become a breeding ground of tomorrow’s job providers. There are only a few Unicorns in India. It is a matter of time before some of the current Startups turn to a blessing of Unicorns.

The Proof is in the Revenues

It is also a trend that a set of founders find funding as the magic pill that solves all of their problems. They think a term sheet is a validation of their business idea. The true validation happens when these engineer-turned-founders understand what job customer wants done and make a product that customer hires to get that job done. Clayton Christensen all the way. Revenues are the true validation of any idea.

Indian Startup Hype Cycle

Millions invested in eCommerce Startups during the past few years blinded some founders that investments are the panacea. This is the reason why Startup wave in India is going through its own hype cycle. It is nearing the trough of disillusionment now. The good news is that it means an upward slope of enlightenment will shortly follow.

Passionately Inquisitive

Founders are known to ask questions and seek inputs. Somewhere down their journey as seekers, startup founders tell themselves “enough of seeking, we made good progress and let us not waste our time”. That could be a dangerous precedence as they get busy tackling low-hanging challenges, worse if there are irrelevant ones, while putting off chasing the challenges that matter. Good things happen in life when you become a constant seeker. There are mentors out there willing to help you. Are you seeking?

Six S.I.M.P.L.E. Frameworks

I have put together a S.I.M.P.L.E. framework that helps startup founders succeed. These instruments help founders ask the right questions that really matter.
  1. Speed
  2. Innovation
  3. Management
  4. Pivot
  5. Leadership
  6. Economics

1) Speed

Speed = Being ahead in the race within and in the race without 
Whether your startup succeeds or not depends on its speed of execution. How fast does it get off the ground? How fast and frequently does it roll out the product for customer reviews? How fast does it implement the feedback from customers? How fast does it learn from its mistakes? A design or utility has to be patented fast before others do. Speed gives a startup the luxury of failing fast yet outrun its competition. Speed helps a Startup win the race. Stealth mode slows a startup as it hardly gets any feedback from the people that matter most for its success. One may steal your idea, but not your passion and belief. Key stakeholders of a startup are all outside the building. Get out. Spread the word. Listen. Get your idea ripped apart. Get the product ripped apart. Come back to the building. Revise the product faster and get out again. Repeat. Speed lies between a good idea and finding scalable business model. Speed lies between scalable model and scaling. Enemies of speed: Perfection, Stealth mode, Procrastination

2) Innovation

Innovation = Desirability + Feasibility + Viability Innovation is a by-product of an urge to solve a compelling problem for a customer. The quality of innovation is directly proportional to the degree of pain induced by the problem. Even a small incremental change in existing solution, product or service can be labeled innovation. As long as the increment adds new value and customer pays for it, it can be called innovation. If a customer pays for it but doesn’t use it, such innovation can’t sustain. Just thinking about something new leads to just an idea. Doing something about it leads to innovation. Failure is an integral part of innovation. One shall embrace the failure. Innovation is at the intersection of desirability, feasibility and viability sets. It must be desirable by the customer, feasible by technology and viable by the market.
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Customers are very creative. Ideas of their own excite them. They desire to see their ideas implemented. They continuously push the envelope of what is desirable. They are not bothered about the feasibility. Not everything customer wants is technically feasible. Not everything a customer wants is market viable.


Research oriented technology institutions are good at pushing the technical feasibility higher. They take problems that are research-worthy and not necessarily customer-worthy mostly due to the timing. They are indifferent to customer desirability. Not everything technically feasible is desirable by the customers.


Market size, competitors, price points, customer segments, geographies and product characteristics determine the viability of an innovation. A solution desirable by customer and feasible by technology is not enough. Market viability is the key. Enemies of innovation: Solving the problem that doesn’t matter to customer.

3) Management

Management = Getting extraordinary things done by ordinary people  Wealthiest American of all times, John Rockefeller, once said “Good management consists in showing average people how to do the work of superior people”. First, hire the best team you can. Attitude takes precedence over aptitude while hiring. Then it all boils down to how you get work done by having them wanting to do it. There are many definitions for management. This is the one I like the most. Management is the art of getting things done by people. Let us break this further down.


Art is defined as the application of human creative skills and imagination. Art expresses important ideas and or feelings. Art makes human to human connect. Good management is about making that human connect with people. Like art, management is about having others see what you see, your vision.


Things include all things that are tangible and intangible. Tangibles include both innovation and marketing that lead to business revenues and profits. Intangibles include values and culture that lead to trust and brand. Getting these tangibles and intangibles done by people require us to understand people first.


People are invaluable assets. They are true competitive advantage of any business. People are emotional. Appreciation and recognition are two important enablers that bring the best out of people. Management is about setting the objectives and getting them achieved by people. Encourage, stimulate and make them feel part of your vision and mission. Enemies of management: Touching the task of others, My way or highway.

4) Pivot

Pivot = Change in strategy without change in Vision (Eric Ries) Pivot = Change to a new direction based on feedback from marketplace. Let me define a startup before getting to pivot. Steve Blank defines Startup as “an organization formed to search for a repeatable and scalable business model under uncertainty.” I concur. Profitable, repeatable and scalable business model is the key. Pivot means change in business model based on new learnings. It is a structured course correction designed to test a new assumption about the product, strategy, and engine of growth. Pivoting helps Startup search a scalable model. Pivoting has to be the second nature of startup entrepreneurs.  
Image Source:   There are many kinds of pivots. As per Eric Ries, a pivot can be of type zoom in (small set of features), zoom out (a large set of features), customer segment, customer need, platform, business architecture, value capture, engine of growth, channel and technology. Enemies of pivot: Big bang development, Betting on sunk cost.

5) Leadership

Leadership = Team gets wins + Leader gets failures Leadership is about doing the right things, leaders show the path and walk the talk. As a leader, you lead by example. As a leader, if you can’t stand critical feedback, your team member can’t stand it either. When you lead by example, you make it easy for others to follow you. This is how you turn today’s followers to tomorrow’s leaders. Leadership empowers others to do things at their full potential. A good leader listens more and observes more. As a leader, you get the cues from what’s happening around you. Leaders become the change they wish to see in the world.
Enemies of leadership: Indecision, Taking credit for wins and attributing others for failures.

6) Economics

Value Captured > Total Costs Customer LTV > CAC (LTV: Life Time Value, CAC: Customer Acquisition Cost) Having just an idea doesn’t entitle one to be an entrepreneur. Ideas are dime a dozen. Take the top 1000 funded ideas of 2016 and you can pick an idea to emulate and customize for your market. Being technologist isn’t enough to be called an entrepreneur. Applying a technology to an idea without gauging the market is like shooting in the dark. Being a marketer isn’t enough to be called entrepreneur, though it is a critical piece. An entrepreneur is the one who understands unit economics and ecosystem economics.
There are idea providers, technology providers, capital providers and even customer providers. None can provide the entrepreneur with economics. An entrepreneur must get his economics right to deserve the title. A business model describes how a startup creates, delivers and captures value. Value capture is as important as value creation. Value capture is not complete unless cash hits your bank. If you are in the business of serve first and collect later, pivot now. Revenues are no good if you can’t collect the money.
There is a reason why 8 out of top 10 billionaires from India are banias, the trading caste that understands the unit economics the best. Enemies of economics: Free Offerings, Not having economies of scale

Indian Startup Ecosystem, Startups
Even before the announcement of Snapdeal’s restructuring could simmer down, the closure of Stayzilla’s operations came as a blow. For a casual observer, although it might seem that Snapdeal and Stayzilla are on a solid ground, grapevine has it that the inability of raising capital is the real reason behind these set of circumstances. In what we could call as one of the most unfortunate events, the magnitude of the situation has largely affected the employees of both the companies, leaving them in chaos. While Snapdeal has laid off 500-600 employees, Stayzilla’s employees have turned unemployed, overnight. The repercussions of this episode may allow us to believe that there is no iota of hope. On the contrary, however, there is more to the surface. As we know, every industry hits a certain low before taking off. There is no isolated case where a business hasn’t struggled while grappling for success. Such is the nature of this industry where rises and falls are a commonplace scenario. For instance, when the music industry and record labels were losing money due to services like Napster etc., iTunes came along, saving the day. When curveballs are thrown at a business, it surely hits an inflection point, but if the dilemma is, where does it go from there, then we must look at several companies that have exemplified the ‘rise of Phoenix’ allegory. Industries face a downtrend, following which, people and companies come together to create something better and unconventionally, many stories with the survival of the fittest are made implicit throughout!     In the wake of the downsizing of Snapdeal and Stayzilla shutting shop, PayTM emerges as a saviour. Vijay Shekhar Sharma, founder of PayTM tweeted inviting the employees who were handed pink slips. As a matter of fact, an established Venture Capital firm too fostered a new hope when it tweeted asking the laid-off employees to send in their resumes. Needless to mention, these gestures have created a glimmering optimism in the Indian Eco-system.     The impact of growth and shutting down of businesses, though overwhelming, is deep-seated in every business. Often the most developed nations too cannot dodge this. But in between all the turmoil and the final silver lining, we’re sure of one thing–India’s Startup ecosystem has come of age. And for what it’s worth, this is a great nod towards something incredible that’s about to happen.