Snapchat Will Be More Valuable Than Instagram


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I am always on my phone. My friends hate it. My family hates. I hate it. I can’t put my phone down, and the two apps I spend the most time on are Snapchat and Instagram.

We live in a mobile age and whether we like it or not, we’re becoming much more attached to our phones. The businesses that will dominate in the future will eventually become mobile only, not mobile first. Facebook is doing great things with mobile. So is Tinder. But Snapchat and Instagram are starting to distance themselves from the pack.

In December 2014, Citigroup estimated Instagram to be worth $35 billion. That’s just a few short years after Facebook acquired Instagram for $1 billion. What once seemed like an outrageous amount to pay for a mobile app with no revenue, now seems like a steal.

via Money American

via Money American

 

Around the same time, Snapchat raised $485 million of venture capital at an estimated valuation of $20 billion. That’s nearly seven times the amount Snapchat turned down from Facebook just a year earlier. It’s not just an app for sexting, as so many foolishly label it. It’s the real deal.

To put in perspective how far ahead of the pack these two are, the aforementioned Tinder is valued around $750 million.

I wrote shortly after Snapchat turned down Facebook that I was bullish on Snapchat. Fifteen months later, I still am. The reason being, I think Snapchat cracked mobile engagement between brands and users.

Just last month I wrote a post, reaffirming my belief that Snapchat is a growing juggernaut. In the post, I outlined three things I think Snapchat is doing well, Stories, Sponsored Stories, and Live Events. And since my post, Snapchat has launched Discover, a feature that allows users to “discover” video and written content from major brands (like CNN, ESPN, Comedy Central). Together, these features are adding up to be a powerful way for brands to connect with users.

YouTube Preview Image

 

The reason I think Snapchat will be more valuable than Instagram is the same reason why I think Snapchat has figured out mobile engagement. Snapchat is inherently interactive, while Instagram is still a holdover of the disruptive advertising model. That’s why Snapchat’s ads, no matter how expensive they are, will ultimately be more valuable than Instagram’s sponsored posts.

In order to view a snap, even from a friend, you have to voluntarily click the message and continue to hold down your finger. Truthfully, that’s asking a lot of a user. But, if the user does follow through with this action, the information gleaned from the message is much more effective (I don’t have facts to back that up, poke holes as you wish). Instagram still uses the old fashion model of inserting an ad into your organic stream of content. You have no choice but to see it. But you don’t have to pay close attention to it and can quickly scroll past it. Which ad unit do you think is more effective?

Discover is a feature that has huge monetization potential behind it. Discover can be what Pages was to Facebook. It will be a reason for brands and marketers to leave Twitter and leverage Snapchat. Think about the possibilities if Snapchat allowed any brand to open a Discover account and produce editorial content on a daily basis? What if they charged brands for the right to do so? Unlike Facebook and Twitter that shove ads down your throat via the timeline, users can choose to watch a brand’s content…on-the-go, the way they like to consume content.

I can definitely see a world where people open up Snapchat first thing in the morning. They can check their friend’s snaps (because personal stories are becoming the new status update). Then they can head over and read the daily headlines from their favorite publications. Snapchat gives the users the power to choose, something no other mobile app does right now (if you can think of an example, let me know).

Pitch Perfect 2 trailer.

Pitch Perfect 2 trailer.

 

Brands are starting to see the value. Take the movie Pitch Perfect 2. At the end of their trailers, they’re starting to push Facebook AND Snapchat. Not Twitter. I followed the account and they’re doing really creative things to engage users before the movie comes out. Whether it’s exclusive content, crowdsourced snaps, or fun and personal snaps like your friend would send you, they’re all effective.

In 2013 I predicted Snapchat would be acquired for ~$10 billion. I was wrong about that, but I wasn’t wrong to be bullish on the app. Since I’m a glutton for punishment, I’ll make another prediction. I think Snapchat will eventually go public and its opening market value will be $100 billion. If you want to keep up with me on Snapchat, my username is JessePaul.

[Money Image Courtesy of Money American]

It Just Takes One


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Today is the Academy Awards (aka the Oscars). It’s the moment where Hollywood crowns individuals for their achievements in film. Often, it’s the pinnacle of a person’s career, or what defines them. This got me thinking about the parallels entertainment has with tech (there are many). But today I’m reminded that it just takes one victory to erase all  your past failures.

Failure sucks. But it’s a necessary step toward success. No one is successful right away. There are dozens, hundreds of failures along the way. Many times these failures are only apparent to the individuals. Every year at the Oscars there’s someone who comes out of  “nowhere” to win the golden statue. To viewers, we’re excited to see this actor picked out of obscurity and into the limelight. From that moment on, they will always be known as Oscar winner [First and Last name]. But as viewers, we also don’t understand the struggle that person went through to get to that stage.

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Lupita Nyong’o 2014 Oscar Acceptance Speech

 

Same goes for entrepreneurs. We fail on a daily basis. Whether it’s a sales call, a marketing tactic, or the entire company going under, we fail. I wrote a post a while ago about “Your First Company Won’t Be Your Last.” In it, I gave examples of famous entrepreneurs that had started several unknown companies before their major success. We see someone’s current and biggest success and think very highly of them. But we don’t see the years of rejection and failure it took to get to that level.

A fictional example I like to refer back to from time-to-time is Toby Ziegler from the West Wing. Toby was the Director White House Communications for Jed Bartlett’s presidency. He was also an integral part of President Bartlett’s two presidential campaigns. By all definitions of the word, he was a success. Yet, when we look back at Toby’s resume before Jed Bartlett, he was…a failure.

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Toby Ziegler on West Wing.

 

Toby Ziegler’s fictional resume includes work on a city council campaign, two Congressional races, a Senatorial, and gubernatorial race. All resulting in defeat. He was a “loser.” But it just took one victory to change all of that. The 1998 Presidential Election was his first win on a campaign and that’s how people remember him. (Yes, I know it’s fiction, but the lesson still applies.)

Failure sucks, but it’s going to happen. You have to fight through it. The difference between people who are “successes” and those who have failed is that they didn’t give up. They fought through the shit that others couldn’t. You’re closer to success than you think. As Winston Churchill famously said, “If you’re going through hell, keep going.” Because it just takes one victory to change the perception of all your past failures.

My Journey Trading Stocks


Robinhood App

Robinhood App

Up until this year, I never bought a stock (not including 401k or mutual funds). But I’ve been very interested in investing money into a few particular stocks. I don’t follow the stock market religiously, or different industry trends, but I do keep my eye on specific tech stocks. I have felt for some time that I have a keen eye for tech stocks that are being undervalued.

I told people to buy Netflix when it dropped to $84 and Facebook when it was trading at $27. They’re both trading at $466.10 and $75.74. But since I’m poor and wasn’t buying the stocks…no one cared. Now, I’m putting my money where my mouth is…sort of.

I’m still cash poor. Almost all of my money is invested in Prepare.io (my company). I try to save as much money as I can in my Betterment account, but I’ve recently been able to invest a few hundred dollars in the stock market with the help of the Robinhood app. I’m going to chronicle my journey trading stocks on here from time to time. It will be a fun experiment.

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I use Robinhood over apps like ScottTrade for two reasons. One, they don’t require you to deposit a minimum of $500. Second, its commission free trading. This is much more conducive to someone like me who is just dabbling in trading stocks and doesn’t want to commit that much money to start. So I deposited a very modest $225 into my account.

My options for trades are very limited with my budget. So stocks like Google, Amazon, and Tesla are out of my range (BTW: I’m bullish on Tesla and think they’re a steal while they hover around $200). But there are a handful of tech stocks I was watching that I could buy.

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The initial stocks that I was looking at were Twitter (TWTR) and Apple (AAPL). I felt that both were undervalued by analysts and would rebound. I watched the price for a few weeks after I opened my account and deposited my cash. I was waiting for the stocks to drop a few dollars in value before buying. Again, I was investing a nominal amount of money that wouldn’t hurt me if I lost it all, so I could only buy a share or too. So when the time was right, I bought one share of Apple at $107.98 (1/16/15) and two shares of Twitter at $37.57 (1/20/15). Six days later (1/26/15) I bought two shares of Lending Club (LC) at $19.24.

On February 5, I sold my two shares of LC at $20.61 a share. I wasn’t feeling like there would be much of an upside with LC. I’m looking for really undervalued stocks that can bump. I’m not buying stable stocks for dividends. I made a very modest profit of $2.74 on my two shares. Not great, but at least I didn’t lose money.

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A day later, I sold my two shares of Twitter. In the wake of its quarterly earnings report, Twitter’s stock popped. I felt that I should take advantage of this and sell now. I sold at my two shares at $47.92. Total profit: $20.70. It’s currently sitting at $48.19 a share.

I am still holding on to my Apple share. I know how pathetic that sounds, one share. But for me buying Apple was more or less for my own personal satisfaction. I am very bullish on Apple and I wanted to buy when I thought their stock was low. Apple is currently trading at $127.08, on paper I’m up $19.10. But I don’t plan on selling anytime soon.

I’m not a professional trader. Nor do I aspire to be. This is fun for me and validates my opinions when I say a stock is undervalued, even if it’s for my own personal satisfaction. I have arguments with my friends who are professional investors, who think my strategy is risky and unsustainable (it probably is). But I’m enjoying it and plan on updating you as I progress. We’ll see if I can turn my $225 into something more significant over time. My current account value is $267.97, with just my single stock of Apple and cash. Let’s see if I can finish 2015 with at least 15% growth.

The stocks that I’m keeping an eye out for are Tesla (which would require me to add some more money), Yahoo, and Box.  Tesla is the most promising in my opinion. I may have missed the low at ~$195, but low $200s is good IMO. I think eventually it will reach $300+. Yahoo and Box are wait and see. Yahoo is trending down. I’d like to wait to see if it drops below $40. Box is just off it’s IPO. I’m still trying to figure out where that price will be, but I did like it at $16, I just had all my money tied up at the time. I’ll probably wait until it drops below $20 again.

*This is not stock advice, just my opinions and what I’m doing with my money.

Building the Dream


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I’ve been debating for a long time whether or not to share the story behind Prepare.io. While it’s not even launched yet, I’ve endured a great many ups and downs. There are a lot of reasons why I’ve chosen not to write about them. Most notably, I’m scared at any professional backlash that may come from it. But having given it a lot of thought, I decided to say “fuck it” and write about it.

I created a publication on Medium where I’ll publish these stories. In the future, I hope to add in contributing stories from other entrepreneurs who have gone through similar experiences. Maybe these stories will help someone else, maybe they’ll just turn into my own therapy sessions. Either way, I’m going to be writing them over on Medium.

Feel free to “follow” my Medium publication, Building the Dream. << Shameless plug

Here’s my first post, which has a more in-depth introduction as to why I’m publishing these stories.

TalkAnything – Interview with Josh Trujillo


Screen Shot 2015-02-04 at 12.04.53 AMThis week I’m chatting with Josh Trujillo, an accomplished comic book author. Josh is the author of Love Machines. Josh and I discuss when he discovered he had a passion for story telling, how that lead to him getting into the comic book business, and the challenges he faces building his brand.

You can support Josh’s Kickstarter campaign to fund an anthology of 16 comic book stories from over 30 creators about our favorite RPG characters… and how they died.

Follow Josh on Twitter or the Death Saves (his Kickstarter book) on Facebook.

 

What is Growth Hacking?


via Tim Homuth Slideshare

via Tim Homuth’s Slideshare

The hot word in startups right now is “growth hacking.” Which is usually followed by the question, “What is growth hacking?” It’s defined (by Wikipedia) as, “a marketing technique developed by tech startups, which uses creativity, analytical thinking, and social metrics to sell products and gain exposure.” Every startup is looking for a “growth hacker,” a term coined by Sean Ellis. Sean was the first marketer at Dropbox and currently serves as CEO of Qualaroo. Essentially, it’s a role that helps companies find ways to grow.

I’ve been reading about growth hacking for a while. During this period, I’ve read a lot of debate regarding what exactly is growth hacking? There seems to be two camps. One that believes it involves specific tools and techniques to gain growth anyway you can. The other side believes it’s a fancy buzzword for marketing. In my limited experience, I believe growth hacking is more than a buzzword for marketing.

To me, growth hacking is a mentality. Yes, you are going to utilize digital marketing strategies and tactics, but it’s more than that. Growth hacking goes beyond getting the word out and increasing vanity metrics like followers, subscribers, and engagement. Growth hackers obsess about the customer, their behaviors, and why or why not they make a purchase. Some marketers may call themselves a  social media, content, or email marketer, but a growth hacker deals with all of these marketing disciplines, plus other skills, like design and development.

Perhaps there are two ways for me to describe the difference between a marketer and a growth hacker. One is macro vs. micro and the other is creativity. A marketer might segment their audience and marketing strategies into broad categories. For example, you might be targeting men for your product and you’ve split men up between 18-25 and 26-34 year olds.

A growth hacker take segmenting further. Growth hackers get so granular, they build out individual personas. By mapping out personas so precisely, you can start to understand why a 30 year old man who’s a director at a media giant might not buy your product vs. the 30 year old man who’s a VP at a funded media startup. More traditional marketing segmenting might put those two in the same bucket.

Creativity for growth hackers is different than advertising creatives. It’s not just about thinking of creative tag lines and stories to attract attention. Creativity to a growth hacker is all about finding new, creative ways to reach their audience. Traditional marketing channels might be falling short of expectations and it’s up to you to find a way to make the connection between your product and potential customer.

Over the next few weeks, I’m going to add layers to this growth hacking lesson. I’ll look at different tools and tactics, but I’ll also discuss when you should focus on growth and how you can build a growth engine.

If you don’t come back for the next posts, just remember this: growth hacking is a mentality.

*For what it’s worth, I hate the term growth hacker. I hate that we add “hack or hacker” to everything right now. It has become a buzzword that’s abused misused by many. I think there are very few actual growth hackers (let’s call them growth marketers from now on) out there. I am working my butt off to translate my digital marketing skills and burgeoning product development knowledge into growth skills. But it takes time and I’ve transitioned to the role of growth in just the past year. So these posts are one part general knowledge and one part my personal experience. 

Balance Your Life


In my opinion, there are three major components to everyone’s life. Personal. Professional. Health. To be truly successful, I think you need to balance your life and address all three. Maybe this is apparent to most, but it hasn’t always been apparent to me. Professional has always been my biggest concern, but I haven’t achieved what I’ve wanted to thus far (but I am going in the right direction). After a lot of thought, it’s my belief that I’m not excelling to my fullest extent professional because I don’t have enough balance in my life.

My most burning desire to is to build a successful and sustainable business. I want to create a culture that people love coming to every day. I hate when I hate work. I don’t want people to feel like that when they work for me. I want to build a product that people love and can’t help but tell others about. That’s what I think professional success is. I’m working towards building that. I feel like I’ve been talking about Prepare.io for years. Maybe I have. While you can’t see it, I’ve been making strides to relaunch it. But, I’m not yet successful yet. And that wears on me.

I think that one of my greatest weaknesses is that I’m not living a balanced life. I don’t get out enough. I’ve pushed out friends over the years, because I have to stay in. Do I do work? A little. But not as much as I could. That’s because my mind is somewhere else. Maybe I should have just gone to that party, even if it’s for just a little bit. I’d venture a guess that I’d get more work done if I just let myself go out. When I’d get home, I’d be more focused on my tasks at hand. Instead, I let different thoughts weigh me down, accomplishing nothing.

Health is something I’ve written about before. It’s been a constant battle for me since I started my first company. I’ve gained a lot of weight and developed really unhealthy habits. All in the name of “my company.” Well, I actually think it’s done more harm to my productivity than it has helped. Here I am, five years later, still fighting these battles with my health. Over the past few weeks I’ve put a renewed effort towards my health (again). It’s a long battle, but I need to make it a priority. A better diet and more exercise will make me feel better and I’ll become more productive. Just one hour a day. I have time for that.

I know I have the capabilities to reach my dreams. I’m making progress. I’m not just talking about it. But what I need to do is dedicate myself to balancing my life. I think that I’ll enjoy my life more, become more productive, and eventually reach my goals. If I don’t, I could be in danger of waking up one day, alone, out of shape, and still talking about a company that’s half built. That won’t be good for anyone.

TalkAnything – Interview with Justin Alexio


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The TalkAnything is back after a holiday hiatus. My first guest of the new year is Justin Alexio. Justin is a stand up comedian in LA and another buddy from dodgeball.

Justin is a really interesting character. This interview was different than what I originally planned. I tried to hit as many talking points as I could, but talking with Justin had a different flow than other guests. So I just went with it.

We discuss how he got into stand up, his journey to LA, and the experiences he’s had in stand up and improv. Justin was also in a national Adobe commercial, so we get to hear his perspective on booking a national commercial (it wasn’t like previous guest, Jon Weinberg).

Subscribe to The Building Years Podcast and follow Justin Alexio on Twitter.

*I had technical difficulties with my new fancy mics, so I had to revert to old Snowball mic. The sound isn’t awful, but you miiight here a slight difference in sound volume. 

Why Messaging Apps Will Continue to Grow


IMG_4624You’d think by now that we’ve hit a saturation point with messaging apps. Messaging apps have been around for years. Consumer tech is usually a zero sum game, yet more and more messaging apps have popped up over the years. But this influx of messaging apps has yet to bring much innovation. The biggest innovator in my opinion has been Snapchat (sorry GroupMe) with its disappearing message. So why are we seeing more and more messenger apps pop up in the US? Will there be a clear winner? What’s the reason why messaging apps will continue to grow?

Why So Many New Apps?

The US has always been behind when it comes to mobile technology. Look at us when it came to smartphone adoption vs. Japan.  We may have invented the iPhone, but we were still slow on massive smartphone adoption. But that has changed and now smartphones are ubiquitous. Now that structural component has been taken care of, we’re going to see more ways to connect/communicate be build on top of this mobile architecture.

Despite its long history, messaging apps have always been fragmented. The reason why this fragmentation hasn’t hurt mobile messaging apps, like it has other industries, is because the very nature of messaging apps are 1:1. They don’t rely on the same network effects that social networks need in order to become popular.

Traditional social media apps are pretty set at this point in time. I don’t see a MySpace-like dropoff with any of the Big Six (Facebook, Twitter, Linkedin, YouTube, Instagram, Pinterest). Much of that can be attributed to the lack of value any new social network can add. What can a new social network offer that the other six can’t? Not much feature-wise. Plus you’re forcing everyone to start over and rebuild their network of friends. It’s way too much work for no apparent added-value. Which is why new social networks like Ello will fail.

(FWIW: I think Ello had the misfortune growing too quickly, before its product was ready. I also believe that they overestimated how much people at scale hate advertising. They were catering to the vocal minority. While advertising can be disruptive, they can also be effective.)

How Can So Many Messaging Apps Thrive?

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Messaging apps are not handicapped by network effects because of their 1:1 nature. While a social network sucks if only two of your friends are on it, a messaging app can offer high utility with only two friends. That’s why there are so many apps out there enjoying success.

A quick search of messaging apps will come up with a long list. Line, WhatsApp, Kik, Kakao, Voxer, Viber, Snapchat, FB Messanger, WeChat, iMessage, Skype, GroupMe, and Google Hangouts all make the list. Even apps like Path, Vine, and Instagram have messaging capabilities. Each having varying levels of success across the globe, but most have extremely vibrant communities of users. These communities aren’t exclusive to one messaging app either, they often overlap.

Go back to the 1:1 value they provide, that’s why each app can survive without having a monopoly of users. Here’s a personal anecdote about my usage of these apps.

My Personal Messaging Usage

IMG_6165Including Path, Vine, and Instagram, I’ve downloaded twelve of these apps at one point or another, for a significant amount of time (not just to test the app). The apps that have survived on my phone ended up having the most friends (so network effects do play a role in longevity, but not in individual value). But that doesn’t mean I didn’t have great experiences with the apps that I eventually deleted.

WhatsApp, Kik, Voxer, Viber, and Path have all been deleted from my phone. But there was a time where I used Viber and Voxer daily. On each app I only had one friend. But I specifically downloaded the app because of that friend. So I would use each app religiously to stay connected to that person. That’s an experience you can’t duplicate with a traditional social network.

Snapchat, FB Messanger, iMessage, Skype, Google Hangouts, Vine, and Instagram are still used on a weekly basis (but for my own use, I exclude Vine/IG as messaging services). Of the remaining five apps, Snapchat enjoys 55% of my use, iMessage 40%, and the remaining apps are used on a need to use basis. I wrote in November 2013 is about the time my Snapchat usage surpassed iMessage. It hasn’t slowed either as more of my friends are now on Snapchat.

What Does the Future Hold?

IMG_6164Believe it or not, we’re going to see more messaging apps in the US. More international apps are going to grab hold to the US market and more startups are going to be pitching messaging apps. But the most interesting thing, in my opinion, will be when we see an explosion of brands getting involved on messaging apps in the next two years. I am still bullish on Snapchat and think that they’re really going to dominate this method of communication.

The reason is because of their story, live event, and sponsored stories features. Each offers unique perspectives for communication. But I’m confident they’re going to be really effective methods of storytelling for brands.

Stories

Stories are the ability for individual users to post consecutive Snapchat posts into one, (possibly) cohesive story. Stories can range from one, 8 second story, to one that’s 500 seconds long. This is a great way to broadcast content to users, push call to actions, and interact with your audience. I’ve only seen in on a personal level, but I’m just waiting for brands to start.

Sponsored Stories

These are clearly marked stories that are ads. But unlike traditional advertising that disrupts, Snapchat’s Sponsored Stories are opt-in. You have to physically press the story to watch it. I can recall two or three of these ads in my feed thus far, but I’ve watched every single one. And I haven’t hated them. The one I most remember was the clip for Inherent Vice.

Live Events

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I think that this is Snapchat’s most valuable feature. The way this story works is that if you’re in a geo-targeted area, you can include your snap in the pool of available snaps for the live event’s story. For example, tonight’s Golden Globe Awards ceremony has a live feed. So we’re able to see candid experiences from PAs, to direct comments from the stars. Compiled into one story, you get a unique perspective of the event. For the college football playoff, you were able to see the roller coaster of emotions each school’s fan base (and players) experienced from pre-game to the trophy ceremony. Live is events will be huge for Snapchat and they haven’t even monetized it yet.

Messaging apps still have a lot of growth to experience. They especially have huge potential for companies of all sizes. It’s uncharted territory, similar to Facebook/Twitter around 2009-2009. We’re going to start seeing brands leverage these messaging tools to have even more intimate connection with their customers. Mark my words, you’re going to see a commercial asking people to “Add us on Snapchat!” in the next two years.