Why Google – not Facebook – will buy SnapChat

Patrick D'SouzaIn this guest post, Patrick D’souza casts a critical eye at Facebook’s approach to buy SnapChat and suggests that the only way to defend market share in social media, is to attack it.

Facebook is ‘dead and buried’ apparently, if an article first published on Gigacom, that recently went viral, is to be believed.

According to the piece, young people have started to tire of the platform and move onto a host of messaging options that include Snapchat, Wechat, Line, Vine, Instagram and Twitter – all of which threaten the brand’s dominion in the social space.

What’s a brand to do when it faces such challenge?

I would take a leaf out of the book of a man called Fred Smith.

I only know of Fred because I learned about him when I was doing my Masters at the AGSM in Sydney in 2002.

Fred was no ordinary guy. He was born rich, but also admonished by his father who left him a fair fortune, to do something useful with it. Turns out, he did. He started FedEx, one of the first companies in the world to challenge the US postal system.

FedEx grew. FedEx succeeded. Until one day, an innovation that today costs less than a hundred dollars, and that has largely outlived its utility, burst onto the scene.

The innovation was called a Zapmail machine, and it was the first fax machine the world had ever seen.

Zapmail machines were huge at the time, and they were anything but cheap, their cost running into several hundred thousand dollars. But in an age, where industry profits were driven largely by document delivery, Zapmail machines threatened FedEx in a way none of its competitors ever had in the past.

Sensing Zapmail’s threat, Fred didn’t ignore it, instead he embraced it – buying and further innovating with these humongous machines which would later be sold for less than a hundred dollars retail.

It was a move that cost him, and FedEx, over a billion dollars in today’s terms. In the end, Zapmail machines never took off, document delivery gave way to package delivery and FedEx’s investment in Zapmail didn’t return a cent.

Yet, when queried on Zapmail, Fred Smith always maintained it was money well spent. Because in business he said, ¨I would rather lose to myself than someone else.”

When you’re the incumbent, with first right to a very lucrative legacy, your natural instinct is to try and protect it.  This is what Zuckerberg was trying to do when he flew to LA last month and wrote a 3 billion-dollar cheque to Snapchat’s Evan Spiegel – which Spiegel, incidentally, declined.

If Spiegel’s version of the story is true, Zuckerberg didn’t go about the purchase the right way. He used strong arm tactics by highlighting how Poke (Facebook’s identical mobile product) would launch in a few days and essentially “crush Snapchat” when its functionality was integrated into Facebook’s core platform.

I can imagine what Speigel would have been thinking. “You’re gonna buy my product, then kill it” – to avoid your business being threatened. It’s the worst possible argument to make to an entrepreneur.

Was Spiegel right to Hold out? I believe he was, and I think his company is more likely to be snapped up by Google than Facebook. The reason – Snapchat has only scratched the surface of its full potential with photos that disappear.

Think about the technology’s further business application. It can be integrated into email so confidential messages ‘self-destruct’ – seconds after people read them (Google enterprise server, are you there?).

Picture exchange between people on chat, dating and porn sites could do the same – avoiding embarrassment later. While estranged couples, using simple services like gmail, would have to worry less about angry exchanges being used against them in a court of law later.

The benefits of Snapchat are big to Facebook. But they are even bigger to Google, given the sheer width of the web, and services the company provides across it.

Zuckerberg’s mistake was the way he went about the acquisition. He didn’t bite the bullet, recognise the threat of Snapchat, and truly embrace it – even if that meant killing off his legacy (Facebook) or putting it at substantial risk – the way Fred Smith of FedEx did.

Ultimately, the only way to defend a territory, is to attack it.

Patrick D’souza is the former MD of OgilvyOne Malaysia and the founder of Insanity, a content marketing consultancy with a presence in Singapore, Sydney, Kuala Lumpur and Mumbai.


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