Technology is all over our lives. In the beginning, its impact was secluded to a relatively small fraction of the population. But now, its everywhere and anywhere. I find that analysing the grand strategy of Snapchat is quite revealing for understanding our society.
During the first decades of the newly born tech industry, innovation was easy. Once the biggest tech paradigms were sorted out, a path was cleared. Computers became smaller and faster. More capable of doing a wider array of tasks. More affordable too.
This was a fertile field for companies whose strategy focused on technology itself. Microsoft and Intel. But also the OEM’s enabled by the Wintel alliance.
That road has run its course and now the competitive landscape is shifting. Technology alone isn’t enough anymore.
The Dark Years of Technology
Before deep diving into the grand strategy of Snapchat, I believe we need to understand the context of the birth of the tech industry.
In the early decades of modern technology, only corporations could afford to purchase computers and other expensive equipment. Thus, only a handful of people knew how to run them. This sage group of people quickly became an elite within companies, having under their control one of the key aspects of day to day execution.
This elite is also known as IT departments, lords of computer and communication systems. Because of their deep technical knowledge, they decided what technology was useful or not within their companies.
OEMs tailored their offerings to suit their needs. Rather than deploying technology that took into account end users’s needs, IT departments focused on their own: ease of management.
As a consequence, the stability of corporate systems was prioritised. New equipment had to comply with the rules of the system or it could be rejected. User experience was largely ignored.
During these dark years, Harvard professor Clay Christensen wrote one of the most influential economic papers of our time: The Innovator’s Dilemma.
In it, Christensen argues that incumbents can focus too much on features their customers don’t need. This tends to lead to over-serving the market with too many features. Eventually, clients realise they are paying too much for products they barely use.
Kind of like using Excel to sum two plus two. Overkill.
Incumbents tend to focus all their efforts on improving their cash cow. They try to protect it from the outside with acquisitions and from the inside too, killing innovative projects that don’t fit in.
This situation opens up an opportunity for smaller competitors. Using technology and innovation rejected by the incumbent, they are able to build a better offering. They first appeal to companies that are not the incumbent’s customers, who use this to dismiss the new market entrant as a no-competitor.
After a while, some of the incumbent’s customers leave for the new company.
Professor Christensen’s B2B thesis has successfully demonstrated the effects of disruption theory. But it ignored a segment that would end up challenging corporate markets and the theory itself: consumers.
The Triumph of Liberal Arts Over Disruption Theory
Liberal arts were born in the ancient greek times. They were a set of subjects every free citizen had to master in order to qualify as such. They included mathematics, logic, rhetoric and geometry.
At its core, liberal arts study the human being. Not only the physical aspect but what makes us human. That is why they bring some kind of social science to the mix.
Modern liberal arts education involve art, religion, social science, literature, mathematics, languages, psychology, philosophy and natural sciences. Deep down it is a way of looking at the world around us.
I believe that liberal arts and humanities are becoming more and more important in today’s society. They help us understand who we are and why we do the things that we do. They try to decipher what is not measurable nor tangible.
There are not as many laws or dogmas to which cling our lives to.
Disruption theory focused on corporations and the rationality of their decision-making process. This theory was born at a time when corporate markets were the moneymakers, where consumers got largely ignored.
Under the perspective of the corporate markets, consumers are irrational and behave whimsically. This is not true. Consumer markets operate under a different set of rules that only make sense with a different set of assumptions.
In order to understand the grand strategy of Snapchat, one needs to see how the corporate and consumer markets operate:
- Corporate markets tend to optimise cost and price. Both are objetive measures, perfectly known to decision makers. Cheaper options tend to be favoured.
- Consumer markets optimise price and value. One is objective, but the other is subjective and rely on different attributes depending on the individual.
Despite this, those attributes can be universal: delight, convenience, purpose, originality, usefulness, aesthetics, etc.
The thing is, they can’t fit into an Excel formula, that is why they are so puzzling.
This is why disruption theory doesn’t work with consumer markets. Disruption theory explicitly says that an opportunity arises when an incumbent over serves the market. But you can’t over serve a customer that values delight, convenience or originality.
As John Kirk put it a while ago in a remarkable article:
Let me say that again. A company can not over serve their customers by providing them with too superior a customer experience. Too much is simply not enough.
A customer can’t have enough convenience. Will never say, “Oh, this is too convenient. I can’t have it anymore. I wish there were less convenient products than this one”.
Of course not.
That is the reason why liberal arts beat disruption theory and consumer markets behave in an apparently irrational way.
And that is why there are companies and strategies that understand this and know how to take advantage of it.
The Astonishing Fail of Google Glass
Last week we finally got a peek at the grand strategy of Snapchat. Ever since the rechristened Snap Inc. showed to the world their new Spectacles camera, people have compared them to Google Glass.
A clueless remark.
I remember when Google introduced Glass to much fanfare more than three years ago. A skydiver dropped from heaven to show everyone what Glass was able to do.
“The ultimate iPhone killer”, as was called by Adweek’s Christopher Heine and Sam Thielman:
Why Brands Are Already Looking at Google Glass, and Why Apple Should Be Worried. Experts say product could kill smartphones, alter marketing landscape for years to come.
Smartphones and the iPhone were going to disappear in a tidal wave of glasses. Every consumer would buy one for christmas a year later, in 2014. Goodbye iPhone!
Except this never happened.
Google’s headmounted display and camera experiment ultimately fell apart. But not (only) for the reasons tech pundits argued:
- At 1,500 dollars each, Google Glass was out of the market.
- A design that wanted to disappear ended up being all over the face of the wearer.
- Looking at the small HUD made the user look… weird.
- They were supposed to be worn for long periods of time.
- Largely ignored the fashion aspect of glasses.
Google Glass failed because it served Google’s own purposes instead of the consumer’s. Google needed a way to get hold of the physical world in order to index it. Just like it successfully did with its search engine and the web. Netflix business model showed us that being close to the user is key.
Google missed the social boat and hoped to obtain more data through Glass. But for that, the company needed to enlist users to its new project.
It all goes back to Google’s needs. Not the user.
Soon after Google Glass launched and the first “explorers” received their units, society started to reject them. They were weird and people around them didn’t know whether they were recording or not. “Glass-hole” became a common nickname for its wearers.
In 2015, Google shut down the consumer market prototype. To no one’s surprise, the company focused all its efforts in the enterprise.
The Grand Strategy of Snapchat
Google Glass will remain the best example of a tech company ignoring liberal arts in their product development efforts.
Contrast this with Snapchat’s announcement last week: Spectacles, the first hardware product of the company. Coincidentally, a wearable similar to Google Glass.
But where Glass failed, Spectacles have a much better chance at reaching their goals.
We can argue that they are way cheaper (130$ vs $1,500) and that’s what makes them attractive. This will certainly help the chances of the grand strategy of Snapchat (now just Snap Inc.), but is not enough. Spectacles are much better positioned in the consumer market than Glass because:
- Instead of trying to disappear, they embrace their place in our bodies in the form of a familiar item: sunglasses. Making them suitable for determined periods of time.
- There is no HUD to distract the user from what’s going on.
- The camera only records small 10 second videos, by tapping the side of the glasses.
- While recording, a light shows everyone around you what you are doing.
Snapchat is different from Google in that they understand the importance of liberal arts in tech products. Wearables, more than any other product, need to embrace our human nature in order to win.
Of course, and as Ben Thompson has argued, the ecosystem has to be in place too:
Much more significantly, though, Spectacles have the critical ecosystem and use case components in place: Snapchat has over 150 million daily active users sending over a billion snaps a day and watching an incredible 10 billion videos. All of them are exclusive to Snapchat.
This in turn clashes with Apple directly. With an independent hardware camera to take pictures and videos, Snapchat users won’t need to upgrade their smartphones (i.e. iPhone) as often.
And here we go full circle: the grand strategy of Snapchat is a way to get closer to the end user than Apple. An opportunity to provide more convenience as well as “coolness” to Snapchat users. Because you can’t get enough of both.
This is the reason behind the strategic importance of Apple Music. Apple is at the risk of disruption by an unlikely competitor that erodes the use case of the iPhone, AKA Apple’s cash cow.
Fortunately for Apple, they are already working in another product in desperate need of some liberal arts secret sauce: the Apple Car.
Going forward and as technology becomes more personal, only the tech companies that understand the importance of liberal arts will have a chance at succeeding.