Joe Strolz exits Snap during tumultuous time

  • Strolz among several high profile executives in the U.S. and Canada to leave the company in recent months
  • Sales manager Phil Hsia and salesperson Susan Byng are now the senior staff members within the Snap Canada office
  • Snap stock had a rough 2018, but upcoming Q4 user numbers expected to show growth

Snap Canada country manager Joe Strolz is leaving the company after 18 months—the latest in a string of high-profile departures for the social media company as it grapples with a stalled user base and falling stock price.

Strolz became Snap’s first Canadian country manager when he joined from AOL in 2017, steering the company in the wake of its IPO and working to establish its presence in a digital market dominated by the Google/Facebook duopoly.

Strolz memo to staff

In an internal memo to staff that was provided to The Message, Strolz acknowledged that the company has been experiencing the “growing pains of transformation,” particularly around talent, product and tool changes, as well as CPM differences between its managed and auctioned inventory (a key area of focus for the brand).

However, Strolz noted that Snap achieved double-digit revenue growth last year, and said he is confident its Canadian office has a “winning go-forward team.” Strolz plans to remain with Snap during a transition period, departing at the end of the month. A Snap spokesperson told The Message via e-mail that sales manager Phil Hsia and salesperson Susan Byng are now the senior staff members within the Snap Canada office.

Strolz did not give a reason for his departure, saying only that his decision is “consistent with my ethos of being the CEO of your career.” He said that the company has transformed its core product, Snapchat, into a “credible performance and audience platform,” doubling the number of unique advertisers and quadrupling unique campaigns.

CFO among several key executive exits

On Tuesday, CFO Tim Stone left Snap after just eight months, with reports saying the company has no replacement. Stone’s departure was preceded by Monday’s resignation of VP of people and global security Jason Halbert, who was the subject of a damning 2017 article by The Information that highlighted the ex-military officer’s “unprofessional” conduct.

According to the report, Halbert—who The Information described as “infamous”—reflected a company culture that was “increasingly combative and paranoid,” leading to the exodus of several experienced executives and draining staff morale.

Snap’s other recent departures include chief strategy officer (and CEO Evan Spiegel’s top lieutenant) Imran Khan; CFO Drew Vollero; VP of content Nick Bell; Mark Randall and Sahil Sharma from its hardware team; and head of global strategic partnerships Elizabeth Herbst-Brady. Another top-level executive, former Time Warner executive Kristen O’Hara, left the company after just two months when Spiegel reportedly rescinded her promotion to the top sales role.

The analyst’s take

In a research note to clients Wednesday, Brian Wieser, senior research analyst with Pivotal Research Group in New York, said that one factor possibly contributing to Snap’s recent employee churn is a “dramatic” drop in stock price.

Snap closed at $5.76 on Wednesday, well down from a peak of more than $20 in February 2018. “We can guess that many employees were attracted to the company with promises of substantial compensation that would have depended on a much-higher stock price,” wrote Wieser.

Prior to Snap’s initial IPO, Pivotal calculated that the average Snap employee was granted $1.4 million in stock in 2016, more than double what the average Twitter employee received in the year prior to its 2013 IPO.

“To the extent that the company should have done a down round ahead of its IPO and generally tempered investor [and employee] expectations at that time it probably could have partially avoided these negative consequences,” he wrote.

Advertising remains a work in progress

In its third-quarter earnings report in October, Snap reported that its number of daily users had fallen for the second straight quarter, to 186 million, with revenue of $298 million, most of which comes from advertising (Snap reports its fourth quarter results on Feb. 5). Pivotal’s Wieser, however, noted that data from Nielsen’s digital content ratings suggests a “significant” uptick in users during the quarter.

During Snap’s third-quarter earnings call, Spiegel said that as much as 85% of Snap’s revenue was sold programmatically, up from 35% a year earlier. He said the company has a “ton of room” to bring more advertisers on board, but he could be viewing things through rose-coloured Snap Spectacles.

In September, eMarketer significantly downgraded its ad revenue forecast for Snapchat—from $1.03 billion in March to $662.1 million—specifically because it started selling most of its ad inventory programmatically. “Snap rolled out its programmatic ad platform in June 2017. While the transition to a self-serve format has increased the number of advertisers, it has also resulted in lower ad prices overall,” said eMarketer principal analyst Debra Aho Williamson.

Snapchat has continued to iterate its advertising product, with new additions for the holiday season including Collection Ads that enabled users to interact with up to four products in a single Snap Ad (Wish, eBay and Guess were among the initial testing group) and Product Catalogues, which allowed advertisers to generate a catalogue in the form of a Story Ad.

The company also added its Commercials ad unit (six second, non-skippable ads within premium content) to its programmatic offering, while the Snapchat Show Fashion Five Ways featured its first ever brand integration, for the Adidas Falcon sneaker.

“We really want to expand our ad products to all sorts of people all over the world, and the only way to do that was to move to self-serve in our problematic infrastructure,” Spiegel told analysts during the earnings call. “So we’ve really been focused on expanding the base of advertisers.” Its success will depend on making them more permanent than its namesake photos.

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David Brown