Announcing: StartupQ8 Event for February 2015

We’re excited to announce the first StartupQ8 Event of 2015! Join us on Monday, February 2nd as we welcome two well-traveled entrepreneurs who will share their experiences with us.

The first segment will feature app developer Mazyad AlAbduljalil, a long time member of the StartupQ8 Community. He has developed apps from Kuwait to San Francisco, and will share his insights into how to build a mobile app MVP. Also this month, Mohammed AlBesharah, founder of Jaribha, will talk about the challenges he faces as an entrepreneur building a crowd-funding platform in Kuwait. As always,Global Investment House has graciously agreed to host the talk.

See you guys Monday Feb 2nd at 7:20 pm!

Schedule:

7:20 – 7:30 Intro
7:30 – 8:10 Mobile App MVP with Mazyad AlAbduljalil
8:10 – 8:20 Mini-break
8:20 – 9:00 An interview with Mohammed AlBesharah
9:00 – 9:20 Networking

As always, the event will be in English and it is open to everyone. Register for FREE on our Meetup.com page for more details.

See you there!

Ephemeral Messaging: A Trend That Won’t Disappear

This article appeared in Khaleejesque Magazine, POP Issue, published January, 2015. A PDF copy of the article is available here. It is published on this blog with the consent of the author and magazine. All credits and copyrights are reserved to Khaleejesque, 2015. Click here to subscribe to Khaleejesque, or follow them on Instagram @Khaleejesque 

Author: Hashim Bahbahani

Print Artwork: Lulwah Al-Homoud

6 min read.

When Reggie Brown walked into Evan Spiegel’s room at their Stanford fraternity, Kappa Sigma, little did the then 19 year old Spiegel know that he was about to hear a statement that would kick start one of the most important trends in software technology this decade.

Brown had said back then: “I wish there was an app to send disappearing photos.”

Over the following three years, Spiegel and his team developed Snapchat into the leading mobile application for sending disappearing messages (or, as they are more technically referred to: ephemeral messages).

Today, Snapchat processes over 400 million disappearing photos, videos, and text messages on a daily basis. The application boasts approximately 100 million monthly active users, and sits comfortably among the top ten apps both in the App Store and in Google Play (US).

Snapchat’s soaring popularity has caused a stir in the world of technology.  Everyone wants to build an ephemeral messaging app and serve it up with a twist. In the past year alone, three semi-popular ephemeral messaging startups raised over $43 million (namely: Wickr, Frankly, and Cyber Dust) while Snapchat alone raised $200 million. “Blink” is another startup in the same category that was acquired by Yahoo for an undisclosed amount; Facebook introduced its second attempt at an app for disappearing photos; and Apple is rumored to be introducing a self-destruct feature for its native messaging app, iMessage. The ephemeral messaging trend has also infiltrated the GCC startup scene, with one startup in particular gaining traction. That startup is “Vonce”, an application that allows users to send 14 second voice notes that disappear after being played once. Vonce was created in Kuwait by Saleh Al-Musallam who has previously developed an Instagram analytics application called “Instafan” which has over two million downloads  to date.

In short, an obsession with sending disappearing multimedia messages has taken over the world of internet software technology. However, some experts still maintain that communicating via disappearing messages is a fad that will unlikely continue beyond a few years of popularity.

Don’t be fooled. The signs point towards a clear conclusion: ephemeral messaging is here to stay.

The first sign is Snapchat’s latest valuation. Snapchat garnered investment at a value of $10 billion dollars this year (in other words, investors believe that Snapchat is worth $10 billion); a valuation that clearly reflects the tremendous confidence that Silicon Valley elites and venture capitalists have in the future of ephemeral messaging. In the past four decades, every startup that has been valued at ten figures or more has gone on to establish a new field in technology. Take, for example, Facebook, Google, Yahoo, Twitter, and Amazon; Silicon Valley rarely gets such big bets wrong.

The second sign is in the reason claimed by most people as to why they use ephemeral messaging services. Users believe that ephemeral messaging is the form of cyber communication that most closely resembles the characteristics of “real” in-person or over-the- phone interaction. Uttered words are seldom recorded, and the images we perceive with our eyes are rarely saved and replayed. They are fleeting moments. Ephemeral messaging apps, like Snapchat, transmit the temporary, unrecorded nature of real life interactions to the digital world creating unaltered moments captured and shared in real time. This in itself spells a valuable proposition in this age of social technology.

The third sign is apparent in the technological up-build around ephemeral messaging applications. For any new communication platform to prevail, technology must be built upon a platform that allows a more diverse usability.  Extensive horizontal features, such as video, captions, commentary, and event streaming are being developed on ephemeral messaging platforms. Additionally, new areas of integration are being explored on apps in this category. For example, a few months ago Snapchat announced “Snapcash” (in association with payment service provider, Square), a feature that allows Snapchat users in the United States to transfer money with a simple “money text” via the texting feature.

The possibilities of ephemeral messaging are vast and diverse.

“Snapcash” has sparked a debate as to what the next big step for ephemeral messaging might be.  It is my opinion that electronic commerce is the logical upcoming destination. The temporary nature of disappearing messages could strongly encourage “quick deals” and impulse purchases. Given that most users of ephemeral messaging apps are college and high school students, the platform has the ideal demographic looking for coupons, deals, and promotions.  In fact, a study conducted by Sumpto, a marketing company that surveys 50,000 influential college students on social media (as described by renowned business website, Business Insider, who have also quoted the study) shows that 58% of US college students would likely purchase a product from a brand that sent them a Snapchat coupon. The same study also indicates that 67% of the college students would most want to receive brand promotions on Snapchat. It is therefore not surprising to find that brands like Taco Bell, MTV UK, and 16 Handles have already effectively executed Snapchat based coupon campaigns.

There were two missing links for commerce to be viable on Snapchat: payment processing, and a checkout process. The former seems to be ready for integration with Snapcash. The latter is simple enough for the Snapchat team to develop. Thusly, Snapchat might lead the way in what could be dubbed “the new e-commerce”, Ephemeral Commerce. Perhaps it would be centered on the concept of taking advantage of a deal and clicking “buy” within ten seconds, or the deal disappears forever. There are, of course, many wrinkles to be ironed out before such an idea becomes a reality, but the foundation for it already exists.

The GCC market could be a perfect fit for “ephemeral commerce”. The GCC has a young population (54% of the population are under the age of 25) that is heavily engaged with social technology and e-commerce. In addition, relative to the Middle East in general, the GCC has an above average consumer purchasing power. These factors have made the Gulf an enticing opportunity for discount-deal startups such as Yabila (Kuwait) and, more importantly, Groupon (Dubai). Groupon is a group discount website based in Chicago. Groupon launched in the Emirates in mid 2011, and has been growing exponentially in that market ever since. Groupon’s success in the Gulf will encourage other deal-based startups to launch in the region. As such, if an existing ephemeral messaging giant like Snapchat develops an “ephemeral commerce/ deals” application, the GCC can be a market in which the concept can thrive vastly.

If electronic commerce is seamlessly and properly integrated with ephemeral messaging, it could create a new exciting angle for varying fields and activities in commerce. Effectively, such a move could cement ephemeral messaging in the technology framework for many generations to come.

Whether it is in commerce, marketing, communication, or otherwise, ephemeral messaging has the potential to disrupt existing fields of technology. Industry giants are beginning to fully understand that potential. It is not a hidden fact that in late 2013, Spiegel had a closed door meeting with Mark Zuckerberg, CEO of Facebook.  Zuck, as he is commonly nicknamed, made Spiegel a $3 billion cash offer for Snapchat. Spiegel turned down the offer. Had he said yes, he would have netted $750 million in cash, at the age of 22. It takes more than guts to turn down such an offer; it takes remarkably strong conviction in the future of your technology, supported by a plethora of data and quantitative analyses.

To most aptly conclude: ephemeral messaging isn’t disappearing any time soon.

Khaleejesque-POP Issue- Jan 2015 Artwork credit: Lulwah Al-Homoud

Khaleejesque-POP Issue- Jan 2015
Artwork credit: Lulwah Al-Homoud

Khaleejesque-POP Issue- Jan 2015 Artwork credit: Lulwah Al-Homoud

Khaleejesque-POP Issue- Jan 2015
Artwork credit: Lulwah Al-Homoud

This article appeared in Khaleejesque Magazine, POP Issue, published January, 2015. A PDF copy of the article is available here. It is published on this blog with the consent of the author and magazine. All credits and copyrights are reserved to Khaleejesque, 2015. Click here to subscribe to Khaleejesque, or follow them on Instagram @Khaleejesque 

Announcing: StartupQ8 Event for November 2014

Here at StartupQ8 HQ, we always try to put together events that are educational, insightful and fun for our entrepreneurial community. This month’s event is one we’re particularly excited about, more so than usual.

Ask any early-stage entrepreneur you know what accelerator they would join if they can join any accelerator in the world, and the overwhelming majority will give one of two answers: Y Combinator or TechStars. While the former has a very impressive portfolio, it is TechStars that has stronger mentorship, smaller classes and more ecosystem emphasis.

We’re thrilled to announce that TechStars Managing Partner Mark Solon will speak at this month’s event. Mark isn’t your typical Silicon Valley VC. He has helped build successful businesses and develop communities in smaller towns such as Boise and Boulder. He is visiting Kuwait with Kevin Tapply, and is going to share his insight on startup fundraising.

Speaking of successful businesses, our entrepreneurial chat this month will feature a founder who was not content to just develop a top ten downloaded app for Kuwait, so he went and built one with 3 million users (and growing) from all over the Arab world. We’re pleased to welcome Abdur-Rahman El-Sayed, co-founder and CEO of Waveline Media, as our entrepreur interview. He has been instrumental in building three great products: Yabila, Nabd, and Elektron Games. If any entrepreneur has real insight into how to scale an app in the Arab World, it is him.

Since this is a milestone event, we are co-hosting it with other tech related communities in Kuwait: Google Developers Group, who have kindly allowed us to encroach on their usual meetup time, and KW Tech Meetup, who will showcase some up-and-coming Kuwati startups during the event. The event is on Wednesday November 19th, starting at 7:00 pm in Global Tower.

Schedule:

7:00 – 7:05 Welcome
7:05 – 7:55 Mark Solon on Fundraising
7:55 – 8:50 Abdur-Rahman El-Sayed interview
8:50 – 9:15 Startup Demos
9:15 – 9:30 Networking

As always, register on our Meetup.com page and we’ll remind you to attend. We expect a strong attendance so get there early. See you all there!

“Square” and What Makes a Startup Investible

3.5 minute read

If you are unfamiliar with the world of Venture Capital and startup financing, the tech news headlines you read a couple of weeks ago (on October 5 specifically) would have left you scratching your head in puzzlement. The headlines read something like: “Square Raises $150m at a $6b Valuation (Despite Recording a Loss of $100m)”. It’s the part in parentheses that causes the confusion.

The actual amount raised is reported to be somewhere in the range of $100m to $150m, but that’s irrelevant. What’s relevant here is how Square, the mobile payment processor, was able to convince investors to put that much money at such a high valuation despite losing $100m in 2013. This becomes even more puzzling when one takes into consideration that Square’s valuation was set at $5b in late 2013, before the losses were reported. Subsequently, the payment giant was able to increase its valuation for this round (1 year after the $5b round) despite leaking all that cash.

In fact, most startups get financed despite reporting losses.

So, back to Square and all the confusion behind their latest round of funding. The short explanation is that VC’s tend to look at two main criteria when deciding if a startup is worth the high risk of an early investment:

  1. Growth. If “Location, location, location” is the cardinal rule of retail, “Growth, growth, growth” is its startup counterpart. Take a look at Square’s hyper-growth up until March, ’13.*
Square payment processing growth until March 13

Square payment processing growth until March 13

Today, Square’s growth has “slowed” down in relative terms. However, in the last year, Square’s processing rate has multiplied 6-7 times. The company expects to process $30b in payments in the next 12 months.

Most startups, like Square, lose money because they are financing growth. That could mean hiring, acquisitions, product development, or/ and research. Square has been doing pretty much all of the above. Investors will be happy to keep pouring money in as long as growth persists because they understand that at one point the company can capitalize on its investment in growth (in other words, start reaping the rewords). A highly “uninvestable” startup would be one that burns through cash without recording any real growth, probably because of a lack of product-market fit (it’s that reason 95% of the time, despite what some founders might argue).

 

  1. Operational profitability. Growth is pointless if the company can’t ultimately turn a profit. Thus, a startup has to prove that its current (or proposed) core revenue model can be profitable. In Square’s case, the subject has been debated since day one. However, recently Square has made it clear that it makes money on every transaction- around a very healthy 33% gross profit. How much remains from the 33% once other costs are subtracted is an issue of operational efficiency, not profitability. As such, if the company chooses, it can wipe away that 33% margin with heavy investments in growth, and drive net profit towards the negative.

An understanding of these two factors provides a more accurate interpretation of Square’s financial health; namely, that the $100m net loss is a reflection of continued investment in growth, not lack of profitability. Some would argue that the valuation and burn rate of Square have exceeded required growth rate, and as such have turned the company into a black hole for cash. That argument is plausible, but does not contradict the growth investment analysis proposed in this post.

When weighing up an investment, a VC will also take into consideration the possibility of monopoly , product range, market size, and competition. In addition, a certain class of VC’s look at different criteria from what was aforementioned because their strategy revolves around “flipping” a startup and exiting before any profits are made. These topics will be covered in later posts.

 

Slice of Advice

Focus on creating a product that has market fit in order to drive growth and profitability; only then will your startup be investible.

 

 

* http://wallstreetflaneur.com/the-mobile-payment-threat-whos-to-fear/#axzz3GhEJUZ4S

The Coffee Meetup is moving to a new home

The StartupQ8 Coffee Meetup is moving to a new home.

After getting feedback from you guys, we realized we needed to change things up to make the coffee meetups more engaging and productive. Therefore, we will no longer do it in a coffeeshop. Instead, we will be holding the meetup at Sirdab Lab in Dasman Complex. Start time has also moved up to 7:00 pm.

This week, we’re happy to have Hala Fadel as our coffee meetup guest. For those unaware, Hala is the chair of the MIT Enterprise Forum of the pan-Arab region, runs the prestigious MIT-EF Arab Startup Competition. Past meetups with visiting guests were incredibly well attended, and we look forward to more of the same.

Details here: http://www.meetup.com/StartupQ8/events/210675732/

See you guys tomorrow..

When: Monday, October 20, 2014 7:00 PM and every Monday thereafter (except holidays and Monthly Event Mondays)

Where: Sirdlab Lab
Dasman Complex (Google Map is on our meetup page)

 

Announcing: StartupQ8 Event for September

This Monday, a new StartupQ8 Event is upon us. We’re happy to welcome a guest from abroad this month, as well as one of Kuwait’s leading developers and entrepreneurs.

The first segment will feature Jason Saltzman, entrepreneur and CEO of AlleyNYC, an entrepreneurial hub in New York City. He will share some stories and advice for entrepreneurs in Kuwait. The interview segment will feature a long awaited guest. Bashar Abdullah, founder of 7ojozat.com and tathkarti.com, will share with us his experience building these two platforms.

The event is on Monday September 29th, starting at 7:30 pm in Global Tower.

Schedule:

7:30 – 8:10 A chat with Jason Saltzman
8:10 – 8:20 Mini-break
8:20 – 9:00 An interview with Bashar Abdullah
9:00 – 9:30 Networking

As always, register on our Meetup.com page and we’ll remind you. See you all there!

Design Thinking – A creative process …

The success of a startup is highly dependent on its ability to solve a problem or to meet a market need. In order to find the right solution you need to be empathetic and understand your customer which sounds easy but in reality it really really isn’t! Many startups fail because they don’t have enough customers, so building a product that people want is a massive challenge. I wish there was a magic formula that would enable founders to build solutions that people want but unfortunately that formula doesn’t exist. There isn’t a single method or article or workshop that will give you the correct answer. However, what we can do is tackle a problem using different tools and methods and we can keep on trying till we get it right. One of these tools is “Design Thinking”, personally I have always been an analytical thinker but  about three years ago I was introduced to design thinking as a creative way to solve problems especially in the startup world and I found it interesting. I was happy to know that there was a practitioner who was looking to do an indepth design thinking workshop in Kuwait, we will be hosting her workshop at Sirdab Lab in collaboration with Nuqat but I also wanted to interview her for our StartupQ8 community. Below is Yara’s interview, Enjoy :)

What is design thinking?

Through out his book “Design Thinking,” Nigel Cross claims that everyone is capable of designing, from kids to elderly, each in their unique manner. Cross refers to design as a plan to create something, from a building blueprint to a stick figure. The evidence from different cultures around the world, and from designs created by children as well as by adults, suggests that everyone is capable of designing.

So design thinking is something “inherent within human cognition; it is a key part of what makes us human.” Design thinking is rooted to the way designers connect with people (users and consumers), how they come to a problem from the people’s perspective, and how they create meaningful experiences for them. Design thinking is about methodology as much as it is about culture. Thus designers have to make sense of the place they are in to discover opportunities and be inspired by them.

Nigel Cross defines design thinking as “the study of the cognitive processes that are manifested in design action.” He supports the previous statement by stating that design thinking “is better understood as an activity of the problem-solving process.”

How can it help startups?
A startup is a company working to solve a problem where the solution is not obvious and success is not guaranteed. Design thinking is a combination of analytical (the present facts) and creative (the envisioned future) thinking. Design thinking can be adopted in startups as an approach to break down the current context, know the target audience involved, and then envision the best solution accordingly. Design thinking allows testing early hypotheses before launching the final product to the market, this saves time and resources, and could result in successful project results.

People are now more savvy than they were 5 years ago, so they won’t put up with a poorly designed product or service if there’s a better alternative out there. If we really want to win customers over, we need to think beyond the product and services, we need to think about how to create a tailored, harmonic and enjoyable user experience for our customers.

Can you provide case studies or examples where design thinking has had tremendous value?
Businesses, like IDEO, a pioneer today within the service design sector, and others, are embracing design thinking because it helps them come up with more innovative ideas, thereby better differentiating their brands, and bring their products and services to the market faster. Non profits organizations are also beginning to use design thinking as well to develop better solutions to social challenges. Today, the government in the UK is using design thinking to solve social challenges. The beauty of design thinking is its flexibility to tackle all kinds of challenges.

Procter and Gamble initiates design thinking workshops to bring together employees from across the consumer-products giant, including R&D, market research, and purchasing, to show the impact of visualization and prototyping when solving real problems for the company. Others companies like Philips, Apple, General Electric, Volkswagen, and even universities are adopting design thinking as a problem solving and teaching method.

Which methods do you follow and why?
Since design thinking is a fairly new methodology in today’s market, there has been various and constant research around it. Today, design thinking has bridged various disciplines such as business, sociology, science, and various others. For this reason, many of the methods used within design thinking come from its multi-disciplinary background.

I use creative methods likes Personas that allow designers and creators to give life to the users I am targeting. Customer Journey is another effective tool that follows Personas to map out the overall experience of the user using a certain service or product. Such tools give birth to empathy and connection to the user, thereby creating human-centered solutions. I also follow my heart and gut instincts, they always mean something. Methods like Role Play are great at envisioning solutions and connect with the user. Group building methods are also effective to build a holistic team composed of different personalities and competencies.

What are the steps of design thinking and can you briefly explain each step?
Every design thinking process starts with a challenge, problem, or case study acting as the main issue from which user research and context starts. Like any challenge in whatever context, one must understand the current situation, context, people related, and exterior factors; let’s call this first phase, (1) Collect Information. After getting a general overview on the situation and people involved, one must dig deeper to extract specific user needs and circumstances. Design thinking is based on human centered-design, working to cater the needs of the users or consumers involved. Usually after this step there is a river of information about the situation and the people around it. This is where the second phase, (2) Connect the Findings follows, in an attempt to connect all the findings and make sense of them. This will lead to spotting patterns, habits, and norms that naturally form themes or working areas where one can move to third phase (3) Extract Opportunities. The trick in this phase is to generate as many ideas as possible, preferably the most innovative and out of the box. Generating ideas is usually done through brainstorming in groups consisting of people from different backgrounds, this gives birth to eclectic and innovative ideas under one roof. Only a few ideas usually make it to the next phase, ready to be implemented. After filtration and evolution to reach the most promising idea, phase four, (4) Execute a Solution, follows. This is when the idea chosen is morphed into a tangible and visible product or service. Here quick prototyping and iteration is encouraged to call for feedback from users until the desired solution comes to life. Such phase are set in order, however that doesn’t mean that one can’t go back and forth to reassure findings and dig deeper; design thinking is a cycle.

Whats the difference between analytical thinking and design thinking?
Unlike analytical thinking, which is associated with the breaking down of ideas, design thinking is a creative process based on the building up of ideas. As Baeck & Gremett put it, “analytical approaches focus on narrowing the design choices, while design thinking focuses on going broad, at least during the early stages of the process.” Analytic decisions are great for breaking things down into smaller parts, which is necessary for a math problem. But intuition (design thinking) is about looking at patterns and wholes, which is needed when making quick decisions about whether something is real or fake, ugly or pretty, right or wrong. Testing intuition against analysis, Pratt and co-authors Erik Dane, of Rice University and Kevin W. Rockmann, of George Mason, found that people can trust their gut and rely on intuition when making a broad evaluation in an area where they have in-depth knowledge of the subject, also referred to as domain expertise. In design thinking, designers do not make any early judgments about the quality of ideas. As a result, this minimizes the fear of failure and maximizes input and participation in the ideation, brainstorming, and prototype phases. “Outside the box thinking and wild ideas” are encouraged in the early stages of the process, since this style of thinking is believed to lead to creative solutions that would not have emerged otherwise.

Are there tools we can actively use to enhance our creativity process and ideation?
Brainstorming is an effective tool, used by many. However, the trick to it is to allow people from different disciplines and backgrounds to brainstorm together, without pre-judgments and second thoughts. Brainstorming encourages the right brain to express the crazy ideas that can be bought closer to reality later on in the process. The working environment is very essential when it comes to a group of people working together to find a solution. Creativity can’t be forced is one is not at ease to express and be heard either by their college or even boss. Another trick to ideation is visuals, we are all creative people if we are given the right tools and environment to draw our ideas out.

Can you please tell us more about your upcoming workshop and the learning outcomes?
Luckily, the coming weekend, September 18, 19, and 20, I will be conducting a workshop entitled Design Thinking: The Process of Startup Success at Sirdab Lab, Dasman, in collaboration with Nuqat. Such an opportunity will allow me to share my learning and experience of using design thinking as a creative and innovative problem solving approach. It is an open workshop for everyone who would like to experience, hands-on, the power of using creative methods to learn more about the consumers needs, create and analyze a complete experience for them, test hypotheses, work in multidisciplinary groups, and most important of all HAVE A PRODUCTIVE & FUN WEEKEND. Remember design thinking is not just for those who work in the creative and marketing domain, on the contrary design thinking should be practiced by all. Today in countries Denmark, UK, and Holland, design thinking is being taught to doctors and nurses to help them design better experiences for their patients.

Whats the difference between analytical thinking and design thinking?
Unlike analytical thinking, which is associated with the breaking down of ideas, design thinking is a creative process based on the building up of ideas. As Baeck & Gremett put it, “analytical approaches focus on narrowing the design choices, while design thinking focuses on going broad, at least during the early stages of the process.” Analytic decisions are great for breaking things down into smaller parts, which is necessary for a math problem. But intuition (design thinking) is about looking at patterns and wholes, which is needed when making quick decisions about whether something is real or fake, ugly or pretty, right or wrong. Testing intuition against analysis, Pratt and co-authors Erik Dane, of Rice University and Kevin W. Rockmann, of George Mason, found that people can trust their gut and rely on intuition when making a broad evaluation in an area where they have in-depth knowledge of the subject, also referred to as domain expertise. In design thinking, designers do not make any early judgments about the quality of ideas. As a result, this minimizes the fear of failure and maximizes input and participation in the ideation, brainstorming, and prototype phases. “Outside the box thinking and wild ideas” are encouraged in the early stages of the process, since this style of thinking is believed to lead to creative solutions that would not have emerged otherwise.

A little about Yara Al Adib…
I have recently came back to Kuwait, one of the places I call home, from Milano, Italy, where I was doing my Masters in Service Design and Social Innovation at Politecnico di Milano. My stay in Europe for three years has opened my eyes to many things I didn’t previously see and comprehend when I was back at American University of Beirut studying Graphic Design. I now see beyond the graphics printed or pixels projected, today I see the meaning behind each color, layout, and choice made.

I am a multi-disciplinary designer that mixes a bit of graphic, service, product, strategy, and experience design to create a holistic and comprehensive outcome. I always start with putting myself in the shoes of the person I am designing for and from there I mix and match and test until I reach a human-centered and innovative outcome.

Yara’s Contact Information:
email: yfa06(at)aub(dot)edu(dot)lb
portfolio: be.net/YaraAlAdib

About Yara’s workshop: sirdab-lab.com/designthinking 

Snapchat Vs Facebook (Part 2): The Real Advantage Of Being A Startup

4 minute read

 

In Part 1 of the “Snapchat Vs Facebook” feature, I briefly described the scene of battle between the two companies, and how Evan Spiegel and his Snapchat team won the war.

 

But Part 1 didn’t tell the whole story. Although Snapchat’s decision to focus on a core feature set was instrumental to its success, there is another equally important strategic insight that put Snapchat on the course to grabbing market share from Facebook (and Instagram). Simply put, Evan Spiegel understood that customer perception is the only thing that mattered when it came to why a customer favored one product over another identical product that preformed the same function. The key word there is “perception”; that customer might not be right, and the company might refute any customer claims, and make a substantial effort to alter that perception. Ultimately, however, customer perception is hard to influence.

The story of another well-known startup can shed more light on the importance of customer perception. Chatroulette, a website that randomly paired people in a video chat, experienced the good and bad of customer perception.

When Chatroulette became a hit in 2009, most experts doubted that the website would take off because users would fear that the website would store the video chats, and as such there was a trust issue between users and the company (person) running the platform. However, despite what experts predicted, the site continued to grow to the point where it had thousands of daily users logging in and video chatting endlessly.

How did Chatroulette gain the trust of users so quickly? It didn’t. Chatroulette had poor design, shady exterior, and a primitive interface. As such, users thought the website’s runner lacked the technical ability and prowess to store user information or videos. The customer perception was that this website is so basic that there is no way it was set up to source videos, hack their cameras, or infringe on their cyber privacy.

Ultimately, however, user perception changed. People started to perceive Chatroulette as a dangerous and unregulated outlet for perverted individuals. That perception lived on for too long, and by the time Chatroulette installed methods and regulations (banning explicit material and so on), it was already too late. Chatroulette user engagement dropped dramatically, and the website eventually faded into oblivion.

In Facebook’s case, Evan Spiegel understood that after seven years of global popularity, the social network was no longer a small startup operating out of a living room. Facebook has become a multi-billion dollar cooperation, with powerful means and capabilities. In that light, customers now perceived Facebook as a “big-brother” type of website that stored and leveraged user data for advertisement, and, perhaps, more. It is not uncommon to hear people talk about Facebook as a sort of “intelligence” operation with strong ties to the CIA and FBI (mainly, that Facebook was providing governments with private information disclosed by users).

While there is no evidence of such ties or any “spying” activities, Facebook continuously refutes these claims and unremittingly publicizes a thorough privacy policy. However, these efforts could not overcome the stronghold of customer perception.

Spiegel understood that Facebook Poke (Facebook’s answer to Snapchat) would not succeed because customers could not trust that Facebook wouldn’t “steal” ephemeral pictures and messages. Unsurprisingly, Snapchat came out with a strong, clear, and simple policy: “We do not store pictures, videos, or messages anywhere”.

Snapchat was new; there was no prior customer perception to fight and overcome. It could create and shape the way users viewed the company and the app, and it did that successfully.

As mentioned in the conclusion of part 1, Evan Spiegel understood that he had won the war with Facebook before it had even started. A more accurate analysis is that Facebook had entered a war it simply could not win.

 

Slice of Advice

As a startup, the biggest advantage you have is that you are completely new to customers. Understand how your customers perceive the competition (both negatively and positively), and assess any advantages to be gained from that perception.

 

Announcing: StartupQ8 Event for August

The next StartupQ8 Event is on Monday August 11. This month we wanted to focus on bringing you lessons that benefit you, and think we found something good. 

The first segment will feature Dan Clarke, Director of Search at Caliber, who will share his insight into developing effective organic digital marketing strategies. He will discuss creating effective SEO campaigns and content.

Also, we’re pleased to welcome frequent contributor and founding partner of SmallQ8, Hashim Behbehani. He will talk about the three lessons you need to learn to get to your startup’s goal. As always,Global Investment House has graciously agreed to host the talk.

See you guys Monday August 11 at 7:30 pm!

Schedule:

7:30 – 8:10 Organic Digital Marketing feat. Dan Clarke
8:10 – 8:20 Mini-break
8:20 – 9:00 A Startup’s Goal feat. Hashim Behbehani
9:00 – 9:30 Networking feat. pizza

As always, the event will be in English and it is open to everyone. Register on our Meetup.com page and we will remind you about it.

See you there..

This Might Be the Solution for Crashed Planes!

With many planes crashing all around the world, I was wondering if there is a better way to save people lives onboard. So I thought to myself “when a military jet get hit, the pilot can jump from the plane using the ejecting seat with the parachute.”

 

Can we use a similar technique for civilian planes?

Screen Shot 2014-08-06 at 3.57.27 AM

What do you think?

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