Snap has this week announced that it will reduce the size of its workforce by approximately 20%. In a blog post, the company’s CEO, Evan Spiegel outlined a number of reasons for the job losses, citing that Snap’s current year-over-year QTD revenue growth of 8% is well below what the company was expecting earlier this year.
In a message to Snap employees, Spiegel stated: “Unfortunately, given our current lower rate of revenue growth, it has become clear that we must reduce our cost structure to avoid incurring significant ongoing losses. While we have built substantial capital reserves, and have made extensive efforts to avoid reductions in the size of our team by reducing spend in other areas, we must now face the consequences of our lower revenue growth and adapt to the market environment.”
As a result, Snap will now restructure its business to increase focus on our three strategic priorities: community growth, revenue growth, and augmented reality (AR). Any projects that do not directly contribute to these areas will be discontinued or receive substantially reduced investment, according to Spiegel, who added: “We have worked thoughtfully and deliberately to find the right balance between focusing our investments while continuing to innovate.”
Affected projects that Snap has decided to no longer invest in include Snap Originals, Minis, Games, and Pixy, among other areas. The company has also started the process of winding down the standalone applications Zenly and Voisey. The scale of the changes will vary from team to team. However, the overall size of Snap’s workforce will remain larger than it was at this time last year, according to Spiegel.
For workers in the US, Snap states that it will provide at least four months of compensation replacement, as well as financial assistance to enroll in COBRA. Outside the US, the company will follow local processes required in each country and tailor compensation and benefits to reflect local norms with the intent to provide similar levels of support, regardless of geography.
“The extent of this reduction should substantially reduce the risk of ever having to do this again, while balancing our desire to invest in our long term future and reaccelerate our revenue growth,” Spiegel noted.
Promotions and new positions at Snap
However, with the layoffs come some promotions, as well as the creation of three new regional President positions, as Snap reorganizes its team to better meet the challenges of the current macroeconomic environment and to make as much progress as possible, as quickly as possible, in the areas of the business that it is able to control – namely by improving coordination and prioritization across its engineering, sales, and product teams.
As a result, Snap has promoted Jerry Hunter to Chief Operating Officer. Hunter will lead the company’s monetization efforts across its three operating regions (EMEA, APAC, and Americas), as well as Snap’s Growth, Partnerships & Content, AR Enterprise, and SMB teams. He will also continue to lead the Engineering teams that currently report to him.
Snap is also realigning its regional operational leadership by creating a new President role in each of the Americas, EMEA and APAC regions. The company’s three regional Presidents will provide in-market leadership, lead cross-functional efforts across the business, oversee local operational needs, and lead Snap’s go-to-market strategy.
Ronan Harris, Vice President and Managing Director of UK & Ireland at Google, is joining Snap as President, EMEA, beginning in October. Ronan will join Snap’s executive team and report to Jerry. The company is still currently searching for Presidents for its APAC and Americas regions however.
Spiegel ended by stating that he would be giving a presentation detailing the changes to the entire Snap team this week, and will distribute his annual letter to staff on Tuesday next week.
For more information on Snap, please visit the company’s website.
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Image credit: Snap, Inc.
