It’s the Market, Not the Technology

I love technology. The amazing work of scientists and engineers has changed the world. But time and again, we are reminded that it is the market, the demand for and usage of technology and its implementations that matter, not the technology itself.

SnapChat has been getting a lot of bad press lately, including here. At its core, SnapChat is about the ability to communicate with someone digitally, comfortable that you retain control over the message. When you want it to disappear, it does.

Except, well, it doesn’t. Not really. It isn’t that the original encrypted but unreadable message lasts on servers forever and can be copied, but that even the system meant to make the messages and pictures go away don’t really work, due to a mix of poor software implementation and poor architecture.

And yet, according to AllThingsD, SnapChat is in discussion to raise another round of funding at a $3.5BN (!) valuation. Given that SnapChat has fundamentally failed in their mission to protect privacy, why are they getting even more funding barely a few months after the previous one… and at 4.5x the previous valuation?

The answer, of course, is the market. Despite the severe breaches, SnapChat’s usage has grown from 150MM daily pictures and videos to 200MM and now to 350MM, or a doubling in less than a year. Despite the leaks, there is great market demand for a service that creates controlled, short-term content. SnapChat not only tapped into that market; they became the first to do so, and even became synonymous with it.

SnapChat has technology problems, even serious ones. But hopefully they will use some of their investment cash to hire smart engineers, architects and (more importantly) technology leaders who will fix the issue. But they have the market, at least for the time being, and that is what counts.

If they continue to screw up, will they lose that market? Definitely. But it takes a long time to change a market. They have a grace period to fix the issues – and market those changes correctly, not hope nothing too public happens in the interim – and still hold onto their customers. As the figures show, usage is still growing.

To paraphrase Carville, “It’s the Market, Stupid.”

About Avi Deitcher

Avi Deitcher is a technology business consultant who lives to dramatically improve fast-moving and fast-growing companies. He writes regularly on this blog, and can be reached via Facebook, Twitter and avi@atomicinc.com.
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