Music business

Snap Inc. will cut its workforce by approximately 20%

Social media company Snapchat has revealed that it plans to lay off around 20% of its employees.

Evan Spiegel, CEO of parent company Snap Inc., sent a memo to employees Wednesday, Aug. 31, confirming the news.

In its memo, Spiegel wrote that Snap Inc. was “restructuring our business to focus more on our three strategic priorities: community growth, revenue growth and augmented reality.”

Spiegel added that “projects that do not directly contribute to these areas will be halted or receive significantly reduced investment.”

As a result, the memo continues, Spiegel writes that Snap Inc. has “made the difficult decision to reduce the size of our team by approximately 20%”.

The memo continues: “The magnitude of these changes will vary from team to team, depending on the level of prioritization and investment required to execute on our strategic priorities.

“The magnitude of this reduction should significantly reduce the risk of having to start over, while balancing our desire to invest in our long-term future and re-accelerate our revenue growth.”

News of Snap’s plans to lay off around 20% of its employees is part of a larger trend of layoffs in the tech sector.

Crunchbase estimates that, at the end of August, 39,000 workers in the US-based tech sector alone have been laid off so far in 2022.

The software giant Oracle, for example, was recently reported consider cutting thousands of jobs around the world as part of a billion-dollar spending-cutting exercise.

ByteDanceShort-lived video streaming platform TikTok was also reported last month to have started to lay off some of its staff in the United States and to prepare to lay off in Europe.

We also learned earlier this month that SoundCloud had begun the process of reducing its own global workforce by approximately 20%.


Elsewhere in Spiegel’s memo, he writes that Snap is revamping its team “to better meet the challenges of the current macroeconomic environment and make as much progress as possible, as quickly as possible, in areas of our business that we are able to.” to control”. ”.

He added: “In particular, there remains a significant opportunity to improve coordination and prioritization between our engineering, sales and product teams.”

In an effort to “realize this opportunity,” Snap is promoting Jerry Hunter to chief operating officer, effective today.

Hunter will lead Snap’s monetization efforts in EMEA, APAC and Americas, as well as our Growth, Partnerships & Content, AR Enterprise and SMB teams. He will also continue to lead the engineering teams currently reporting to him.

Snap is also creating a new president position in each of the Americas, EMEA, and APAC regions.

You can read Evan Spiegel’s full memo to Snap employees below:


Dear Team,

Thank you for your patience as we worked through our financial planning and reprioritization process for 2023. Our forward-looking revenue visibility remains limited and our current year-over-year revenue growth of 8% is much lower than what we expected earlier this year. As we continue our work to re-accelerate revenue growth, we must ensure Snap’s long-term success in any environment. For planning purposes, we have modeled a series of outcomes, some of which assume weak revenue growth will continue into next year, and have developed our 2023 plan to generate free cash flow even in a low scenario. growth.

The investments we have made in our business to date assumed a higher rate of revenue growth based on our broad opportunity and proven track record of execution, including 2x growth in Snapchat community size and 10x revenue growth in the last twelve months since our IPO in 2017. Unfortunately, given our current low revenue growth rate, it has become clear that we need to reduce our cost structure to avoid incurring significant ongoing losses. Although we have built up significant capital reserves and made considerable efforts to avoid shrinking the size of our team by cutting expenses in other areas, we now face the consequences of our lower revenue growth. and adapt to the market environment.

We are restructuring our business to focus more on our three strategic priorities: community growth, revenue growth and augmented reality. Projects that do not directly contribute to these areas will be discontinued or receive significantly reduced investments. We have worked thoughtfully and deliberately to strike the right balance between focusing our investments while continuing to innovate, and have made the decision to discontinue our investments in Snap Originals, Minis, Games, and Pixy, among other areas. We have also begun the process of shutting down standalone apps Zenly and Voisey.

As a result, we made the difficult decision to reduce the size of our team by approximately 20%. The magnitude of these changes varies from team to team, depending on the level of prioritization and investment required to execute on our strategic priorities. The magnitude of this reduction should significantly reduce the risk of having to start over, while balancing our desire to invest in our long-term future and re-accelerate our revenue growth. Overall, our team size will remain larger than it was this time last year.

We will miss the many kind, smart and creative team members who have helped Snap grow, and I am deeply sorry that these changes are necessary to ensure the long-term success of our business. The friendship and camaraderie we all share as a team makes these changes especially painful, and we will do everything we can to treat our team members who leave us with the respect and gratitude they deserve.

Team leaders will notify their affected team members as soon as possible and provide detailed guidance. In the United States, we will provide at least four months of compensation replacement, as well as financial assistance to enroll in COBRA, so that team members have until the end of the year to find new opportunities while receiving compensation and health benefits from Snapshot. Outside of the United States, we will follow local processes required in each country and tailor compensation and benefits to reflect local standards with the goal of providing similar levels of support regardless of geography. We will also provide an outplacement support service and launch an opt-in talent pool to help departing team members pursue new opportunities.

We recognize that these changes may have a particularly severe impact on team members who rely on work permits to live outside of their home country, and we will provide those affected team members with support and additional flexibility to minimize disruption to their immigration status.

We are also reorganizing our team to better respond to the challenges of the current macroeconomic environment and to progress as much as possible, as quickly as possible, in the areas of our activity that we are able to master. In particular, there remains a significant opportunity to improve coordination and prioritization between our engineering, sales and product teams. In an effort to realize this opportunity, we are promoting Jerry Hunter to Chief Operating Officer, effective today. Jerry will lead our monetization efforts across our three operating regions (EMEA, APAC and Americas), as well as our Growth, Partnerships and Content, AR Enterprise and SMB teams. He will also continue to lead the engineering teams currently reporting to him.

Jerry has repeatedly demonstrated operational rigor at scale, leading our business through several challenging transitions, including building our advertising platform, rebuilding our Android product, optimizations to our infrastructure, and most recently, significant investments in our platform integrity team. I think promoting Jerry will result in both better execution in the short term and faster innovation speed in the long term.

We are also realigning our regional operational leadership by creating a new President position in each of the Americas, EMEA and APAC regions. Our three regional presidents will provide market leadership, lead cross-functional efforts across our business, oversee local operational needs and drive our go-to-market strategy. Ronan Harris, vice president and general manager of the UK and Ireland at Google, joins Snap as president, EMEA, from October. Ronan will join our leadership team and report to Jerry. We are currently looking for chairs for our APAC and Americas regions.

I’ll give a presentation detailing these changes to our entire team tomorrow morning, and plan to follow up with “Ask Evan” shortly after. My annual letter to the team will be distributed on Tuesday next week and our strategic planning process for 2023 will follow.

Changes of this magnitude are never easy, and we must act decisively to face this moment as a team. I am proud of the strength and resilience of our team as we overcame the myriad challenges of growing our business in a highly competitive industry during uncertain and unprecedented times. Thank you for your dedication, hard work and commitment to our community.

Eva


Last month, Snapchat launched a new Creator Fund, which it says is designed “to recognize emerging independent artists for the essential role they play in creation.”

Starting in August, Snap is announcing that it will pay out monthly grants of up to $100,000 independent artists who distribute music on Snapchat through DIY distributor DistroKid.The music industry around the world