Snap, the newly formed business that owns Snapchat and will shortly be listing publicly, has made an adjustment to its policy around employees retaining their shares.
The employee lockout period, formally 180 days has been reduced to 150 days, in line with that of founders and investors. This comes after news of the extended employee lockout period gained traction, both on social media and through some news outlets. While this wouldn’t be a significant issue for most companies, who commonly have extended employee restrictions around unloading shares, Snapchat has built its reputation on an inclusive environment, and flat management structure. For Snap to then stop employees unloading their shares, while founders get rich on the back of what will potentially be one of the most lucrative IPOs in Silicon Valley history, would be seen as a crime for the social network – being off brand, and out of touch with its core demographic.
This points out a glaring new challenge for Snap as they enter Wall Street. Snapchat is an irreverent, disruptive brand, which appeals greatly to both the disenfranchised younger generation, and the affluent older generation, seeking to forge a younger identity. This demographic is part of the reason that Snapchat has been incredibly powerful at consumer marketing, but business to business marketers, have had little to no success. The question is, how this type of Snapchat user will respond to the scrappy little underdog, transforming into a corporate monster.
Obviously, Snap and its senior executives are well aware of this problem, and the almost immediate response to adjusting the share policy is evidence of this. However, it also demonstrates that the user base is aware of this transitional period, and cares a great deal. Unlike many other social networks, users tend to be quite protective of Snapchat, as for some it forms part of their identity, not just a way to communicate with friends and family, as Facebook tends to be. Snapchat has been able to create a tremendous amount of loyalty, through minor changes to the platform, without major overhauls – even including users in upgrading filters.
While Snap is a separate business, it’s unlikely that users will see it that way, and any attempt to differentiate between the two entities could be seen as dishonest, or at least misleading. However, Snap management is famously aware of user sentiment and apparently pays close attention to any form of opinion online that gains traction. They also have no fear around making changes to keep their user base happy.
A cynic would say that attempting to elongate the transition period for employee shares, was something that Snap thought it could get away with, and got caught out. However, the likelihood is that it was a good example of management adhering to best practice over company identity and being forced to make changes to a policy they potentially weren’t even aware of. It’s highly likely that the IPO documentation is being looked over with a fine tooth comb, not only by the financial teams and experts hired by the business, but also by the guardians of the brand, and the senior marketing team.