Snap Restructures into Small Teams to Boost Innovation

In a strategic shift, Snap Inc. is undergoing a major internal reorganization. CEO Evan Spiegel has announced the creation of "startup squads"—small teams of 10 to 15 employees—aimed at enhancing agility and competitiveness against larger rivals.

This restructuring comes at a critical time for the company. Snap, which employs around 5,000 people, is facing significant challenges. Advertising revenue growth stalled at just 4% in the second quarter, and daily active users in North America—its key market—declined by 2% to 98 million.

Despite these hurdles, there are positive signs. Snapchat+ subscriptions have become a bright spot, generating over $700 million in annual recurring revenue from more than 15 million paying subscribers. Spiegel highlights this as one of Snap's fastest-growing opportunities.

Additionally, Snap is intensifying its focus on augmented reality (AR) with its Specs glasses. Spiegel envisions these as a potential replacement for smartphones, calling it a "once-in-a-generation transformation towards human-centered computing." This aligns with efforts by competitors like Meta and Google, who are partnering with Ray-Ban and Warby Parker, respectively.

Spiegel acknowledges that Snap's current stock price reflects market doubt but points to "startup-style return potential" at its $12 billion valuation. However, this is a sharp drop from its peak market cap of over $116 billion in September 2021.

The move to smaller, more autonomous teams is designed to foster innovation and speed, reminiscent of startup dynamics, as Snap seeks to navigate a rapidly evolving tech landscape.