Parent of Snapchat snap became the latest tech company to announce a massive slew of layoffs, confirming lingering rumors yesterday that it would cut 20% of its global workforce, affecting at least 1,200 people.
The reasons for Snap’s massive downscaling exercise may be obvious, as they are the same economic reasons why countless other companies laid off workers this year — the company said the cuts could save the company $500 million in costs annually. The markets seemed to like the news too, with Snap’s shares jumping around 15% at one point yesterday as it announced the cuts, before settling for about 9% higher than last year’s closing price. day.
While the mass layoffs understandably made the lion’s share of headlines, under the news were buried Snap’s plans to cut additional costs by “refocusing” its operations, including halting investment in certain products. Part of this involves phasing out two standalone apps, one of which is Zenly, a social map app it bought for $200 million north five years ago. The entire Zenly team has been fired, while their non-compete clauses have been lifted.
While it’s not uncommon for companies to close apps years later, especially during cost-cutting “restructuring efforts,” the decision to close Zenly completely is surprising given that it’s still a very popular app in its own right, even if it’s in the shadow of Snapchat and does not generate much direct revenue.
There’s a card for that
Founded out of Paris in 2011, Zenly raised $35 million in funding before Snap (then called Snapchat) barged in with its mega-million dollar bid. In a nutshell, Zenly is developing an app that allows users to see where friends are on a map and navigate their way to each other.
But Zenly isn’t just a utility. It can be defined as a social app that revolves around a map. When you open the app, you will see a map with all your friends. If you see several friends hanging out together, you can message them and request photos so you can see what they are up to right now. While many “social” apps encourage you to stay in bed and scroll, Zenly encourages you to connect with your friends and spend more time with them.
Zenly has continued to operate as a standalone entity since the acquisition, and it’s easy to forget that Zenly is owned by Snap in the first place, with the original development team still based in Paris and no apparent Snap branding anywhere on Zenly’s app or website. .
Just a few months ago, Zenly rolled out a massive update that added several new features, including the ability to search for places. Users can also pin places in ‘their world’, such as their favorite bars, restaurants, gyms, libraries, shops and more. This was Zenly’s biggest update in years, as the app became something of a modern Foursquare — allowing users to discover places based on where their friends often go. When Zenly released the app update, co-founder and CEO Antoine Martin also revealed that he would be leaving the company, with Snap CEO Evan Spiegel taking on the role.
A month later, Zenly revealed that it was taking on the mighty Google and Apple by introducing its own map data and engine, the result of a massive project it began some three years earlier.
So Zenly showed no signs of stagnation, and it looked like it had the potential to become one of Snap’s prized possessions if it could only figure out how to turn it into a money machine.
The data seems to back this up too – Zenly claimed some 35 million monthly active users earlier this year. Additional figures provided to londonbusinessblog.com from data.ai For this story tell us that Zenly has seen nearly 160 million downloads on Android and iOS since its inception, including 3 million last month alone.
While Data.ai’s numbers also show that Zenly regularly ranks in the top 20 downloaded social apps worldwide, a closer look at market-specific metrics reveals that it often outperforms any other social app. In Japan, for example, Zenly typically ranks in the top five or ten apps, but it often rises to pole position ahead of Facebook, WhatsApp, Discord, and market leader Homegrown Line, as this August 19 iOS chart shows.
Elsewhere, Zenly is often a top-five social app in Russia and Belarus, a top-10 social app in France, Indonesia, and Thailand, and it hovers around the top echelons of the app charts in many other markets worldwide.
Of course, other fast-growing social apps like TikTok and BeReal are leading the pack in Snap’s key target markets, including the US, which may be part of why Snap is less enamored with Zenly’s continued popularity in locations elsewhere. Even so, a well-placed source told londonbusinessblog.com that Zenly has consistently grown its user numbers quarter-to-quarter since the acquisition, and there’s little evidence that this trajectory would stop anytime soon — and that’s hard to ignore.
So why has Snap chosen to pull the plug on Zenly instead of trying to fuel its apparent popularity in key markets in Europe and Asia? And why not sell the app to another company that can do something useful with it? One clue lies in Snap’s own words from yesterday’s announcement. in a SEC filingthe company said it would be phasing out Zenly to “focus on Snap Map,” a location-centric social product it launched way back in 2017.
While Snap Map isn’t built directly on Zenly’s technology, it’s easy to see why having two location-based social products might be considered unnecessary, especially when one of them needs to be financially supported as a standalone product outside of the main Snapchat client.
“Going forward, we will focus our mapping efforts on a single service, the Snap Map within Snapchat,” a Snap spokesperson told londonbusinessblog.com. “We thank the [Zenly] team for their many contributions and the Zenly community for their support.”
This shows that Snap isn’t letting go of social mapping, meaning selling Zenly to a third party wouldn’t be competitive from a competitive standpoint. Snap confirmed this reasoning to londonbusinessblog.com, explaining that it has made significant investments in Zenly since 2017, nearly doubling the team in the process, and ultimately found no path to meaningful revenue. In addition, given its continued focus on Snap Map, the company said it would not be in Snap’s strategic interest to let Zenly slip into the hands of another company.
It might not be too long-winded to say that Zenly’s popularity may have worked against this – any company that did deciding to buy Zenly would have an important oven-baked global community to build on from the get-go. The risks here were ultimately too great for Snap.
Internally, Snap said Snap Map has more than 300 million monthly active users, with the potential to connect each of them with 30 million companies listed in the app — many of them pay to promote their listing. As an aside, though, it’s not clear how many of these active users are actually for the map and location features — many simply use Snap Map to see when their friends were last seen online.
In summary, Snap thinks it’s already covered the whole maps/location thing in Snapchat, it doesn’t have the cash flow to continue funding Zenly’s growth, and it isn’t willing to let another company take over the reins as a resource. to protect his business interests.
It was a similar fate for Voiseya UK startup that acquired Snap in 2020 for an undisclosed amount and will be shutting down on September 5. Just as Snap is pulling out of Zenly to focus on Snap Map, the company revealed that Voisey — which has been described as something akin to “TikTok for making music” — will make way for Snap to focus entirely on Sounds, a music feature it launched in Snapchat two years ago.
Elsewhere, Snap confirmed that it is phasing out its investments in a host of features and services, including Snap Originals and Minis. And its mini-drone project Pixy, which Snap only announced in April, is also going the way of the dodo, as reports suggested a few weeks ago.
This helps to highlight how quickly the tide has turned for Snap. In four months, Pixy has gone from an exciting (albeit mind-boggling) new hardware project to waterborne death, while Zenly has gone from the crest of a wave to the brink of extinction.
However, we saw some of this coming. Snap’s active users may continue to grow, but this is not reflected in its financial performance, which is largely due to the current economic environment. In its July Q2 earnings, Snap wrote to its investors:
While the continued growth of our community enhances the long-term opportunities for our business, our second quarter financial results do not reflect the scale of our ambition. We are not satisfied with the results we deliver, regardless of the current headwinds.
In addition, Snap said at the time it would reduce its operating costs and slow its hiring rate. The company also declined to provide any advice on its future financial performance due to “uncertainties related to the business environment”.
So the expectation was that out of all this we would see some casualties. But it remains a sad story in many ways, not least for those directly affected by the layoffs.
While Zenly may have slipped under the radar of many people – especially in the US, where it has relatively few users – it is undoubtedly a significant European success story. Zenly inspired a new generation of European entrepreneurs, had a huge impact on the French tech ecosystem and cemented Snap’s own reputation in France. Zenly’s founders proved that it was possible to build a European social app with tens of millions of users — and BeReal shows that it is still possible today.
In the right environment, Zenly could have done bigger things, so it’s a complete travesty that it faces such a sudden and untimely demise.