How Snapchat Scaled From $58 Million to $404 Million in Just 1 Year

Follow these strategies to grow–fast–without the growing pains.

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BY Rahul Varshneya - 02 Mar 2018

How Snapchat Scaled From $58 Million to $404 Million in Just 1 Year

PHOTO CREDIT: Getty Images

Growing a business from the ground up takes patience, perseverance, and a little bit of luck. On the other hand, scaling a growing company from a successful startup into a business empire takes something more, as Snapchat discovered during its wild ride to the top.

Snapchat went public in March 2017. Since then, its stock has taken a serious fall, dropping from $27 the day after its debut to under $15 for much of the last few months.

The social media app has taken a beating in the harsh reality of tech competition, with Facebook, Instagram, and Twitter all copying many of the features that made the app unique. Coupled with slowing user growth and advertiser challenges, Snapchat's initiation into the upper echelon of tech hasn't been an easy one.

Before its problems began, however, Snapchat got almost everything right. What started as a small picture-sharing app rocketed in popularity from 2015 to 2016, acquiring new users at unbelievable speed and forcing players like Facebook to pay attention.

If Snapchat has problems today, it has the right kind of problems--the ones only major entrepreneurial success stories get to face.

In response to new issues, Snapchat is doing something different (again) by eschewing marketer attention in favor of stronger user connections. Whether this strategy translates to financial success remains to be seen, but one thing is certain: When it comes to scaling stories, Snapchat remains king.

Other companies can emulate the Snapchat scaling model by following these simple--but vital--strategies.

1. Smooth out the supply chain

Sellers can't afford to let logistical hiccups hinder progress. Learn the ins and outs of supply chain management to prevent these issues from taking over an otherwise successful company.

Not every startup can afford to master supply chain logistics without compromising time spent on core competencies. Factors such as product quality and customer service could suffer if company leaders attempt to navigate a supply chain environment they don't understand.

According to Nate Schwandt at Sheer Logistics, a leading third-party logistics provider, the complexity of most shipping processes leaves companies open to a wide range of opportunities for costly slip-ups. Clearing out these logistical snags through a top-down adjustment can both save money by avoiding expensive errors and improve the customer experience across the board.

2. Improve payment processing

Shopify lists uncertain security and complex checkout processes as two of the top four reasons online shoppers abandon their carts. Without good payment processing, customer interactions that would have been sales turn into negative experiences. This not only causes lost revenue, but also negative word of mouth that spreads among prospects, further hampering scalability.

Jeff Zimmerman, COO of the payment processing service Clearent, explains that transparency hasn't exactly been a top priority in the history of his industry. Pricing figures have been so confusing or inaccurate that they have damaged trust for both merchants and salespeople--and this needs to stop.

Before doubling down on a payment processor that frustrates customers and overcharges everyone involved, spend extra time vetting the available options for one that smoothly integrates with existing systems and doesn't waste funds.

3. Automate simple processes

Everything that can be automated should be. Use cloud storage and organization for internal files. Set up automatic bill-paying options for customers. Find a platform that automates payroll and centralizes other HR responsibilities.

The fewer operational issues that require human intervention, the better. Automate the distribution of marketing content, especially on social media. Chris Snook of Launch Haus says that recent cloud updates allow everything from CRMs to email to work together seamlessly, making business processes more unified than could have been imagined a decade ago.

Don't let social media grow stale, however. While you will want to automate marketing posts, keep humans on board to respond to people online. Not only will this grow a stronger following, but it will also help solve potential PR slip-ups before they become viral disasters.

4. Choose what to hire for and what to outsource

No company ever scaled with a group of people who punch a clock and don't deviate from their job descriptions. Startups looking to scale need agile people with multiple skill sets. Developers should be able to talk on the phone, sales people should know how to write a blog post, and designers should have a few ideas about marketing.

As the business begins to scale, opportunities will appear and disappear quickly. Only companies with multitalented teams can take advantage of those short windows.

This kind of talent gets expensive quickly, so don't try to get everyone on board at once. Pick the most essential, capable personnel, then outsource everything that doesn't require daily attention. The skills of lawyers, accountants, designers, programmers, writers, and other professionals can all be acquired on an outsourced basis, depending on the industry.

5. Start the marketing bonanza

When it's time to scale, hit the marketing hard and fast. Keep your blog updated with regular, fresh content. Run contests on social media and post content regularly, especially visual content. Reach out to a few niche influencers with small but loyal followings who would be interested in your company's product.

Video tutorials, whitepapers on industry trends, blog posts outlining step-by-step instructions for how to do something--all of these types of content can bring in more people than plain sales pitches. Even better, a web of content eventually establishes your company as an industry leader, which can tip the scales as customers decide between two comparable options.

Not many companies will scale to the level Snapchat did, but these strategies can turn small companies into big successes.