Jumping Giants

Jumping Giants

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The world of social media platforms was once a fertile ground for new ideas and businesses. Originally a place for any budding entrepreneur to have an idea, launch a platform and make millions of dollars on user base alone; it is no longer the hotbed of opportunity it once was.

If you intend to be at play here you better be serious, you better be prepared and you better come with a darn good strategy.

Stubborn is not a strategy

Having great ideas and executing them brilliantly is an excellent strategy that can net you success, fame and, in some cases, considerable fortune. Look at Instagram for example; practically an overnight success that made each of the 14 founding employees, including the founder himself, millionaires. In fact, the founder, Kevin Systrom, netted $400 million from the deal.

Instagram was just a photo editing application that had suddenly gotten a massive whack of users in a very short space of time, but not one stitch of revenue. All that for $400 million? Seems like a good deal to me!

So, why then when Facebook came knocking, did Snapchat knock them back? The deal wasn’t big enough? Was Snapchat going to become bigger than Facebook? What were they thinking?

In a seemingly stubborn move, Snapchat knocked back Facebook’s VERY generous advances. Interesting strategy.

Public Proof

In further evidence of the stubborn strategy, Snapchat went public on the NYSE as Snap Inc, the holding portfolio company including three other products: Spectacles, Bitmoji and Zenly. The March IPO listed Snap at $17 per share, which skyrocketed on the first day of trading, March 2nd, to $24.48. The high of $29.44 was seen on March 3rd, only two days after the initial days trading.

The rise of around 50% was seen in the first two days trading and the stock has never traded above since. In fact, on the 10th of July, the stock dipped below its initial offer price for the first time, closing at $16.99. It’s been downhill since, with the stock price being $13.52 at the time of writing (August 4th, 2017).

It could be argued that the stubborn strategy was always to go public and show the big boys (Facebook namely) how it’s done by raising north of $3 billion in cash and building the only social network in the world that could rival the original – Facebook.

The proof seems to be in the pudding though, with a continually deflating stock price indicating – if nothing else – decreasing confidence. How does that $400 million look now?

BFG?

No, not the gun from the famed computer game, Doom, but rather the Big Friendly Giant, Facebook.

Positioned in the marketplace as the ‘do good’ business of the world, the most socially responsible brand on the planet, Facebook is also ruthlessly commercial. The purchase of Instagram and the offer for Snapchat being the obvious examples.

See, if you haven’t been living under a technologically devoid rock for the last year, you would have heard of Instagram Stories. Chances are you’ve probably at least seen a few and maybe even used it yourself. You may even have seen disappearing images in Facebook Messenger.

Do these features sound familiar? I’d hope so. Because what you’ve just experienced is again an example of Facebook’s commercial ruthlessness. If you were so big that you could make, develop or do anything, what would you do? If you can’t buy ‘em, copy ‘em. Which is precisely what they did when they couldn’t buy Snapchat – they just copied them, and continue to do so.

Big Friendly Giant? Or just Big Giant? Despite the socially responsible facade, if you intend on playing in the social media world in any competitive way, you’d do well to pay close attention to Facebook.

About The Author: Daniel Martin

Daniel is the type of person you can believe in, he does everything with conviction and is highly driven to always be achieving a little bit more. In his spare time he loves to work on and take fast cars out for a spin.

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