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Zenly is still very popular, so why is Snap shutting it down? – Technology Flow

Snapchat’s parent company Snap has become the latest tech company to announce massive layoffs, confirming rumors yesterday that it is cutting 20% ​​of its global workforce, affecting at least 1,200 people.

The reasons for Snap’s massive scaling back exercise are perhaps obvious, as countless other businesses have had the same financial reasons to lay off workers this year — the cuts could save $500 million a year in costs, the company said. Markets also seemed to like the news, with Snap shares jumping 15% at one stage yesterday when the cuts were announced, settling at around 9% above the previous day’s closing price.

While mass redundancies have grabbed the lion’s share of headlines, buried in the news are Snap’s plans to cut additional costs by “refocusing” its business, which includes disinvesting in some products. Part of that will be shutting down two standalone apps, one of which is Zenly, a social mapping app it bought five years ago for north of $200 million. The entire Genly team was fired, but their non-compete clauses were waived.

While it’s not unusual for companies to shut down apps over the years, especially during cost-cutting “restructuring” efforts, the decision to shut down Zenly entirely is surprising, as it’s still a very popular app in its own right. Unless it sits in Snapchat’s shadow and doesn’t generate much direct revenue.

There is a map for that

Zenly was founded in 2011 out of Paris, when Snap (then known as Snapchat) began raising $35 million in funding before going ahead with its mega-million-dollar bid. In a nutshell, Zenly develops an app that allows users to see where friends are on a map and navigate to each other.

But Zenly is not just a utility. It can be defined as a social app that revolves around a map. When you open the app, you’ll see a map with all your friends. If you see a bunch of friends hanging out together, you can message them and request photos so you can see what they’re up to right now. While many “social” apps encourage you to stay in bed and scroll, Genly encourages you to connect with your friends and spend more time with them.

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Genly screenshot

Zenly has continued to operate as an independent company since the acquisition, and it’s easy to forget that Zenly is still owned by Snap, the original development team is still based in Paris, and there’s no obvious Snap branding anywhere on the Zenly app or website.

A few months ago, Zenly rolled out a massive update that added several new features, including the ability to search for places. Users can pin their favorite bars, restaurants, gyms, libraries, shops and more to “their world”. This marks Zenly’s biggest update in years as the app becomes a sort of modern-day Foursquare — users can find places based on where their friends frequent. When Zenly released the app update, co-founder and CEO Antoine Martin also revealed he was moving on from the company, with Snap CEO Evan Spiegel stepping into the role.

And a month later, Genly revealed that it was taking on the mighty Google and Apple by introducing its own mapping data and engine, the result of a groundbreaking project launched three years earlier.

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Zenly’s new maps

So Zenly shows no signs of slowing down, and if anything, it looks like it could be one of Snap’s most valuable assets if it can only figure out how to turn it into a money-making machine.

The data seems to back this up too – earlier this year Genly claimed 35 million monthly active users. Additional statistics from Data.ai provided to Technology Flow for this article show that Zenly has seen nearly 160 million downloads across Android and iOS, 3 million of which came in the last month alone.

While Data.ai’s numbers show that Genly is regularly among the top 20 downloaded social apps globally, digging deeper into market-specific metrics reveals that it frequently outperforms every other social app. In Japan, for example, Zenly is usually in the top 5 or 10 apps, but it often rises to pole position ahead of Facebook, WhatsApp, Discord and the home-grown market leader line, as this iOS chart from August 19 shows.

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Zenly iPhone Downloads for Japan on August 19, 2022

Elsewhere, Zenly is a frequent top-5 social app in Russia and Belarus, a top-ten social app in France, Indonesia, and Thailand, and tops app charts in many other markets around the world.

Of course, other emerging social apps like TikTok and Berial are leading the charge in Snap’s core target markets, including the US, which may be why Snap is less enamored with Zenly’s enduring popularity elsewhere. However, a well-placed source told Technology Flow that Genly has steadily grown its user numbers on a quarter-by-quarter basis since the acquisition, and there’s little evidence that this trajectory will stop anytime soon — and that’s hard. Regardless.

Immediate decision

Why did Snap choose to pull the plug on Zenly instead of trying to build on its obvious popularity in its core markets of Europe and Asia? And why not sell the app to another company that can do something useful with it? There’s a clue in Snap’s own words from yesterday’s announcement. In an SEC filing, the company said it was shutting down Zenly to “focus on Snap Map,” the location-focused social product it launched back in 2017.

While Snap Map isn’t built directly on Zenly’s technology, it’s easy to see why having two location-based social products might feel redundant, especially if one of them needs to be financially supported as a standalone product outside of the main Snapchat client.

“Going forward, we will focus our mapping efforts on a single service, Snap Map on Snapchat,” a Snap spokesperson told Technology Flow. “We thank you [Zenly] team for their many contributions and the Genly community for their support.”

This shows that Snap isn’t abandoning social-mapping, which means selling Zenly to a third party isn’t prudent from a competitive standpoint. Snap confirmed this rationale to Technology Flow, explaining that it has made significant investments in Zenly since 2017, nearly doubling the size of the team in the process, and ultimately unable to find a path to meaningful revenue. Furthermore, given its continued focus on the Snap map, the company said it would not be in Snap’s strategic interests to let Zenly fall into the hands of another company.

It’s probably not too much of a stretch to say that Genly’s popularity may have actually worked against it here – any company did If Genly decides to buy, it will have a significant, oven-baked global community to build from the get-go. The stakes here are ultimately too high for Snap.

Internally, Snap says Snap Map has more than 300 million monthly active users, each of whom has the ability to connect with 30 million businesses listed on the app — many of which are paid to promote their listing. As an aside, it’s not clear how many of these active users are for the mapping and location features — many use Snap Map to see when their friends were last seen online.

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Snap Map Businesses

In essence, Snap feels that it already has all the maps/location stuff covered in Snapchat, that Zenly doesn’t have the cash flow to continue funding its growth, and that another company isn’t ready to take the reins to protect it. Business benefits.

Other cuts

The same happened to Voisey, which acquired UK startup Snap for an undisclosed amount in 2020 and is now shutting down on September 5. Voisey also revealed how Snap is pulling back from Zenly to focus on Snap Map. — which has been described as a “TikTok for music creation” — makes way for Snap to focus entirely on Sounds, the music feature it launched on Snapchat two years ago.

Elsewhere, Snap confirmed that it is discontinuing its investments in several features and services, including Snap Originals and Minis. And its small-drone project Pixy, which Snap only announced in April, is also going the way of the dodo, as reports suggested a few weeks ago.

It helps highlight how quickly the tide has turned for Snap. In the space of four months, Pixy was dead in the water from an exciting (if confusing) new hardware project, while Zenly went from the crest of a wave to the brink of extinction.

But we have seen some of this coming. Snap’s active users may continue to grow, but this is not reflected in its financial performance, which is largely due to the current economic climate. At its Q2 earnings in July, Snap wrote to its investors:

While the continued growth of our community increases the long-term opportunity for our business, our financial results for Q2 do not reflect our level of ambition. We are not satisfied with the results we are delivering regardless of the current headwinds.

Additionally, Snap said at the time that it would reduce its operating expenses and slow its hiring rate. The company also declined to give any guidance on its future financial performance due to “uncertainties related to the operating environment”.

So we expect some casualties to come out of all this. But it’s still a sad story in every way, not just for those directly affected by the layoffs.

While Genly may have slipped under many people’s radars – especially in the US, where it has very few users – it is undoubtedly a major European success story. Zenly inspired a new generation of European entrepreneurs, had a huge impact on the French tech ecosystem and solidified Snap’s reputation in France. Genly’s founders proved it was possible to build a European social app with tens of millions of users – and BeReal shows it’s still possible today.

In the right environment, Genli could have gone on to great things, so it was a great irony that it met such a sudden and untimely death.

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