Goodwater Capital, a two-year-old, San Mateo, Calif.-based early-stage venture firm, has been trying to stake out new territory for itselfby publishing a steady stream of research and tools that help inform both competing firms and startup founders. One of those pieces of research was a detailed snapshot of the tech company Snap, which Goodwaterpublished in early February, shortly before the company went public. (We wrote about it here.)
Three months later, armed withfresh survey data of 3,000 Americans across the country who Goodwater recently polled using a third-party service, firmco-founder Eric Kim who isnt a shareholder says hell be listening for three things on Snaps very first earnings call tomorrow:
1) Snapchats competitive response to Facebooks steady stream of attacks on its core platform.
Snapchats storiesplatform has maintained market share over the last six months, but during that same period, Facebook has converted a whole lot of non users into users of its own [stories] platform, notes Kim. While Snapchat had and still has 12 percent market share of the story user base, Facebook has now grabbed 14 percent market share, withInstagram Stories now claiming 200 million daily active usersversus Snapchats 158 millionusers.
It matters howSnap plansto respond, of course, because Facebooks success andSnapchats futureare more directly correlated than Snap might like. Which raises the second issue that Kim will be focused on, and that is:
2) Snaps daily active user outlook.
The expectation for this quarter is that Snap will add anywhere from seven to nine million users from the previous quarter, says Kim. What Goodwater seesin its survey data might concern shareholders, however.
Fifty-nine percent of respondents under age 30 said they use Snapchat, and 81 percent said they use Facebook, so the[two platforms] arent mutually exclusive, he notes. Thats the good news. Here comes the problem: For survey respondents underage 30, 46 percent said they expected to increase their usage of Snapchat going forward; of those over age 30, just 10 percent said they expect to increase their usage of Snap.
When it comes to users ages 30 and up, the numbers forFacebook are farmore encouraging, notes Kim. To wit, 65 percent of people under age 30 who were surveyed said they plan to increase their use of Snapchat going forward. But almost an identical percentage 64 percent said they expect to increase their use of Facebook.
Wait, you might wonder: How cananyone draw conclusions based onasurvey of 3,000 people when thebroader population of the U.S. is roughly 300 million? We asked Kim that very question. Noting thatGoodwater employs several data analysts, he insiststhat it is directionally correct.
Which leads us to the third thing to which Kim will be paying close attention tomorrow, and that is:
3) Whats happening on the monetization front.
You knew that one was coming. What we think is key, and well be looking for, is what Snapchat is working on that caters to advertisers, says Kim.
For the most part, he observes, Snaps ad dollars are coming primarily through advertisers experimental budgets. Thats okay, of course, but its not going to reassure shareholders. What might comfort them is knowing whats in the pipeline, along with learningwhether some ofSnaps newer products including a new self-serve ad managerand an API technology that it unveiled last fall are enjoying some traction. Thats a very important part of the story, Kim says.
Kim adds that one last thing hell be curious to see is who does the talking tomorrow. If its [Snap CFO Drew Vollero] doing a lot of hand-waving about financial and user growth, the market will be sorely disappointed, says Kim.
If [CEO] Evan [Spiegel] is on the call, he says, and hes talking about product strategy and Snaps anti-Facebook strategy, thatis (yes) another story.