Day: November 17, 2013

Lately, the burning question that has entered everyones mind has been..who is Evan Spiegel? Only a few years ago, he came up with an idea to develop an app that combined instant messaging with pictures, with the hopes of targeting a young customer segment. Now, his idea has transformed into the popular app known as Snapchat. So why has Spiegel’s name been circulating around the public? Recently, the 23-year-old Snapchat CEO rejected Facebook’s $3 billion offer to buyout his company, which would have been Facebook’s largest acquisition yet, with Instagram ($1 billion) currently being their largest acquisition. In response to the media’s speculation of this rejection, Evan Spiegel has provided a response to the public, saying that he is waiting until early next year before considering any offers as he believes that the number of Snapchat users will grow and create a higher company valuation. With the high hopes of growing Snapchat to a company valuation of $4 billion, the opportunity cost of time is that the company may have hit its user capacity by next year. So the real question is, who lost out on the deal, Facebook or Snapchat?

Winnie Ng’s Reply:

Though I agree that Microsoft has been harsh on cultivating the best employees and “weeding out the weak”, I am personally a bit skeptical that completely removing the employee ranking system will have a more positive effect on the performance results of employees. The reason I think this is because I feel that employees work better when they are given an incentive to work. Through the ranking system, employees are more motivated to perform better, in my opinion, as most employees don’t want to be perceived as less competent than their coworkers. So instead of completely removing the employee ranking program, I think that Microsoft should reward their excellent employees and provide constructive criticism (and encouragement) to those that are less capable.

Only a month ago, Twitter flew out of its nest and into the New York Stock Exchange. Many financial journalists and investors predicted that Twitter would fall short in demand, similar to when Facebook first initiated its IPO. However, Twitter has surprised many investors by actually soaring up the stock market, from its original price of $26 to $46. This is not just a simple luck of the draw, Twitter’s strategy from the beginning was to not follow in the footsteps of Facebook, who overpriced their initial stock price. Instead, their strategy was to give themselves a modest valuation and enter the stock market at $26, versus Facebook’s $49. In addition to setting a reasonable market share price, Twitter had prepared for its IPO by finding new key partners in the TV advertising economy. By doing so, Twitter was able to gain more public recognition through advertisements and attracted new investors. By doing a CPEST analysis for the company, we can see that Twitter has thoroughly evaluated its competitors as well as the social culture that exists today. Twitter chooses to differentiate itself from its competitors such as Facebook and Pinterest through its unique short messaging and hashtag system.