Business Model Analysis: A Deep Dive into Snapchat's Success Story

This case study examines Snapchat's business model, tracing its evolution from a simple messaging app to a major player in the social media landscape. It delves into the company's founding, funding rounds, and valuation, highlighting its focus on user experience and privacy as key differentiators. The analysis covers Snapchat's target demographics, network effects, and innovative features like disappearing messages and filters, which have driven its popularity among youth. The case study further explores the impact of Snapchat's success on competitors like Instagram and Facebook, and the company's shift from simply existing to leading innovation in the social media space. The assignment analyzes the company's value chain, its ability to build a strong network, and its strategies for brand engagement and advertising. The case study underscores the importance of adapting to market trends and maintaining a strong user base.

Running Head: New Business Model
Snapchat
New Business Model

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Introduction
Snapchat is an American technology and social media company founded on September 2011
by Evan Spigel and Bobby Murphy in Venice. The company currently has 4 in house products
namely: Snapchat, Spectacles, and Bitmoji & Zenly. The company has been in discussion
since its inception. The company was initially founded as a camera company, due to its
gaining popularity; it earned its reputation as a social media company, giving companies like
instagram, Facebook and watsapp a run for its money. Mark Zuckerberg, Founder & CEO of
Facebook wanted to acquire Snapchat, but the owners were aware of its popularity and
thus declined the offer at a very nascent stage. Since then, the company has been just
gaining uncontested popularity, forcing many social media giants to follow footsteps of
snapchat.1
From Capital to Value design:
Snapchat was funded by Bridge funding and light speed ventures as seed funding, post that
the company raised some $ 13.5 MN in Series a funding round which made the valuation of
the company to $ 70 MN. By 2016 the company has completed 4 rounds of funding at was
sitting at a figure of $ 1.2 Billion. Facebook at that time offered Snapchat $ 3 Billion, it was a
good amount, considering the valuation, but the owners denied it and now they are sitting
at a valuation of $ 22 Billion. The company never showed the signs of defeat or giving up to
the pressures of Silicon Valley and are going strong with 173 Million daily active users. The
owners believed in the business model and its target audience, they knew with the
positioning, they are sure to succeed, and money will come eventually, this led them to
work on value designing and move forward from capital.2
From Value chain to network:
1 Vaterlaus, J.M., Barnett, K., Roche, C. and Young, J.A., 2016. “Snapchat is more personal”: An exploratory
study on Snapchat behaviors and young adult interpersonal relationships. Computers in Human Behavior, 62,
pp.594-601.
2 Billings, A.C., Qiao, F., Conlin, L. and Nie, T., 2017. Permanently desiring the temporary? Snapchat, social
media, and the shifting motivations of sports fans. Communication & Sport, 5(1), pp.10-26.

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Snapchat describes itself as a fun messaging app which is target to the youth, the chosen
demographics is for the age bracket of 16 to 40, and the company has penetrated the
market excessively well, with youth using Snap as a daily jargon among friends. Snap me,
add me on Snap are some of the common phrases the youth is using, Snap streak, snap
filters are some of the most popular features which the audience is connected to, hence
building a network amongst its users. Collaborating different features in one single product,
packaging and giving the solution to the audience is the differentiating factor for snapchat.3
From Having to Being:
Snapchat has changed the entire landscape of social media, by introducing its
revolutionizing features. The predominant idea behind snapchat was to maintain the
privacy, a user once views a picture or a video, and it gets automatically deleted and is not
stored even in the cloud. This idea stuck with the youth and thus people started using
Snapchat. Later the company kept on innovating new product and features to engage the
audience. Brands, seeing the youth moving onto Snapachat, diverted their branding strategy
towards Snapchat, and now it’s like mayhem, every brand is advertising on Snapchat. Thus
the company gradually moved from just having to being the leader in innovation. Instagram,
Facebook and watsapp are taking inspiration from Snapchat these days and are copying its
product to keep up with the growth trajectory of snapchat.4
3 Piwek, L. and Joinson, A., 2016. “What do they snapchat about?” Patterns of use in time-limited instant
messaging service. Computers in Human Behavior, 54, pp.358-367.
4 Sawers, P., 2012. Snapchat for ios lets you send photos to friends and set how long they're visible for. May, 7,
pp.1-5.

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