Libby Bideau, owner of Brentwood-based Libby Pilates, was surprised to hear that her small business appears on the Snapchat Map.
The feature is one of many products Snap is planning to use over the next few years to carve out a path to profitability and generate long-term returns. Since June last year, the Santa Monica company headed by Evan Spiegel has been populating its Map with small businesses like Bideau's, hoping to eventually convert them into paying advertisers.
Snap is betting that restaurants, boutiques and the millions of other small businesses across the world will purchase ads and help grow the company into a behemoth, much like they have other big tech companies such as Facebook and Google's parent Alphabet.
"[The Map is] a multi-billion dollar platform over the long term," CFO Derek Andersen told investors last month. "It represents a logical on-ramp to Snap's advertising platform for millions of small businesses around the world."
Maps and listings have attracted big advertising dollars for other tech firms. Morgan Stanley has projected that Google Maps will earn $11 billion by 2023. And Yelp, the publicly traded listing and reviews platform, brought in over $1 billion in 2019 before the pandemic reduced its 2020 income to about $873 million.
By comparison, Snap's 2020 revenue, the bulk of which derived from ads inserted in between user-uploaded videos and on the company's curated-content platform, was $2.5 billion.
Until recently, Snap's Map was somewhat of a hidden feature that savvier Snapchatters used to track friends' locations and post place-based pictures. Last summer, Snap added the Map to its home screen toolbar as part of a substantial redesign. Founder and CEO Evan Spiegel and others inside the company see big potential for the Map, particularly in conjunction with tools like AR that could distinguish it from listings used by competitors like Google and Yelp.
But trying to get businesses to buy in this late in the game will be a challenge.
"I don't know anyone that uses it and I don't want to learn a new program," Bideau said, noting that she doesn't believe her clients, who range from "30-somethings to 70-somethings," fit Snap's demographic.
But Snap has hinted that it plans to use Maps differently than its competitors.
The self-styled camera company has its eye on using AR to upend retail shopping, and integrating that experience into Maps. With AR try-on technology, for example, consumers can use their phones to overlay a product like a pair of sneakers or lipstick on themselves to see how it looks without ever having to leave home.
This week, Snap acquired Berlin-based Fit Analytics, a firm that makes the so-called Fit Finder, to help online customers pick the right-sized clothing. That kind of function could make Snapchat an attractive marketing tool for businesses, who often see higher product-return rates from ecommerce sales.
Gucci and Champs Sports have forayed into Snap's advanced retail tools, letting consumers get a visual feel for footwear through Snapchat's AR lenses. But smaller businesses with less money to spend on advertising have been slower to hop in. And if Snap is to be truly successful, that's exactly who it will need to lure in.
Elton Graham is the general manager of LA Apparel, a clothing store in South L.A. that advertises on Snapchat's Stories section, where users share disappearing messages and watch curated content from Snap's Discover platform. Graham hasn't advertised on Snap's lenses or Map, but he's open to experimenting.
"As a small or medium-sized enterprise it's really important to have that discretionary budget to always be testing," he said. "Otherwise you'll get stuck in the past."
Others echoed Graham's cautious openness to advertising on Maps and said Snap's self-service advertising platform has improved over time, which the company has highlighted in its investor calls.
"I've definitely seen an improvement in terms of the ease of use," said Geoffrey Miles, head of marketing for direct-to-consumer brand Bev. "I think Facebook mastered that years ago in many ways, and Snap has taken some cues."
Snap executives have said it's still very early days for the Map as a utility feature. Already, though, Snap claims that over 250 million users engage with the Map every month and that it includes over 35 million listings. These are populated with data from user location check-ins and third-party sources like TripAdvisor, a company spokesperson said. Businesses can suggest edits to their listings or propose additions to the Map.
Resistance from small business owners like Bideau to embrace the new tool is not lost on Snap. Executives have emphasized the need to educate would-be advertisers. Andersen, Snap's CFO, has said Snap's operating expenses will grow in 2021, and that much of that cost-increase will come from expanding the company's sales team.
Snap also recently partnered with the nation's largest newspaper publishing chain, Gannett, to train the newspaper publisher's salesforce on selling ads and running marketing campaigns on Snapchat. In return, Snap will gain access to the owner of USA Today's network of over 100,000 small businesses across the U.S. and Canada.
Snap's need to evangelize itself to grow is common among tech businesses looking to bring on advertisers with relatively smaller budgets. "That takes some front-end time," said KeyBanc analyst Justin Patterson.
But the clock is ticking as the list of competitors angling for these same small business dollars is growing. TikTok recently announced an event later this month to help small and medium-sized businesses learn about advertising on its own app.
Snap's Map is also under legal attack.
New York-based social-media mapping firm YouMap filed suit last year against Snap, claiming that Zenly, a company Snap acquired in 2017, stole a number of YouMap's technologies and that Snap had violated trade secrets law by incorporating those technologies into Snapchat. A judge recommended in February that the case be dismissed because YouMap did not sufficiently specify the technologies it alleges were stolen, but the case remains open.
Editor's note: This story has been updated to add Snap's revenue figures.
- Snap Shares Sink Despite Revenue Gains in Q4 - dot.LA ›
- Snap Beats Expectations, Up 17% Year Over Year - dot.LA ›
- Snap Partners with Headspace For Meditation Tools - dot.LA ›
- Snap Shares Soar, But Its Success Mean More Advertising? - dot.LA ›
- Snap and LACMA Partner on a Series of Citywide 'Monuments' - dot.LA ›
- Electrify America Invests $200M in Southern California - dot.LA ›
- Snapchat Rolls Out Updates to Its AR Shopping Feature - dot.LA ›
Subscribe to our newsletter to catch every headline.
While discussing the venture capital world, and his upcoming technology conference in Santa Monica, The Montgomery Summit 2022, March Capital co-founder and managing partner Jamie Montgomery doesn’t necessarily contradict this formula for success, but adds a new attribute to the mix that’s sometimes left out: curiosity.
Montgomery’s a believer that there’s no one right way to go about things, and no surefire process for success. Sometimes, the best company emerges from not just the best data and team but the most creative approach. “If something isn’t clear, invert,” Montgomery explained. “Then invert again. Soon the subject becomes clear.”
The best investors and leaders have an innate inquisitiveness about the world around them, and seek out opportunities not just based on market trends but genuine observations about problems in desperate need of solutions.
“You sort of have to be a very heuristical thinker,” Montgomery said. “Sometimes I find some people I talk to are very smart and interesting, and I think, “That person’s very thoughtful. They’re going to be a good investor.’ Sometimes you meet people and you think ‘Well, they come across smart, but they’re always preparing what they’re going to say in response to what you have to say, they’re not really listening.’ Being a good investor, you’ve got to be a good listener. You’ve got to figure out, what’s the signal and what’s the noise? Filter out the noise and say ‘What’s real?’”
Thoughtfulness, attentiveness and curiosity are typically the sort of attributes that we think of as innate, as opposed to skills you can improve via on-the-job training. Montgomery noted, “I always ask entrepreneurs why rather than what. You get a more interesting answer.” Reading and research and investigation can help, but innate curiosity remains an essential ingredient in business success.
“I think, to be an investor, not just a VC but an overall investor, one benefits from an incredible amount of reading and knowledge,” Montgomery explained. “You have to have a voracious appetite, so it’s really a high-level curiosity. Some people have it, some don’t.”
One subject that’s on Montgomery’s mind these days is quantum computing, and its potential impact on cybersecurity, a major area of focus for March. His process starts by asking core questions about the next 5-10 years and what they’ll look like, before even considering potential solutions.
“If you’re investing, you have to look at something that’s inevitable,” Montgomery explained. “Is it gonna happen or not. If it’s inevitable, then the question is, is it imminent? And is it investible? Start with inevitable. Eventually you’re going to have quantum computing, and that’s gonna create an existential threat to cybersecurity. Is that imminent?... What is the post-quantum cyber world like, with all this information that’s been siphoned out of America by China… what do they have and how do we prepare for a post-quantum cybersecurity? It’s almost existential.”
This holistic question-based approach also drives Montgomery as he plans and organizes the annual Montgomery Summit, the largest such event of the LA tech calendar year (Montgomery refers to it as the “Rose Bowl of Conferences.”)
He expects around 1,200 people to attend this year – the event’s big return post-pandemic – for panels and sessions that don’t just cover areas in which March Capital specializes, but a vast and diverse variety of subjects and topics, designed to intrigue and inspire curious minds.
Over 175 speakers in total have signed on for the 19th annual Montgomery Summit, to be held on May 24 and 25, from the worlds of technology, economics, geopolitics, public policy, the sciences, and beyond. Montgomery gets animated as he tells me about the voluminous range of topics being covered, from the Federal Reserve’s response to inflation to the war in Ukraine to the stories behind companies like Bill.com and CrowdStrike. One session will feature Chapman University Presidential Fellow Jack Horner, one of the world’s leading paleontologists and a key inspiration for the “Jurassic Park” character Dr. Alan Grant.
“It’s the interaction, the entrepreneurs with the investors and the executives,” Montgomery told me. “It’s fantastic, it’s enjoyable, it’s fun, and it’s candid. There are no big egos. The speakers will actually come and talk to you, they don’t come in the back door and leave through the back door. You actually can go to any one of seven sessions, and it’s going to be interesting, and they’re all short. 25-45 minutes each.”
The shorter 25-45 minute sessions help to stave off boredom and mean that attendees can sample a wider range of subjects and sessions than they might at other conferences. It helps keep things moving and makes them fun, a theme Montgomery returned to a few times in our discussion.
“There’s a lot of conferences that are very professionally run or research-driven or they’re very commercial. People come here and they’re gonna have a blast, right?”
The Montgomery Summit runs May 24th-25th at Santa Monica's Fairmont Miramar Hotel & Bungalows. Find out more information on their website.
- The Montgomery Summit One Year After COVID Struck - dot.LA ›
- March Capital Scored a Billion Dollar Return on Crowdstrike - dot.LA ›
- March Capital's Jamie Montgomery on Philanthropy - dot.LA ›
