Snapchat closes the French Zenly after refusing to sell it, the 70 employees in shock

Le logo de Zenly, le réseau social français de la géolocalisation entre amis.

Tragic fate for Zenly. The French social network for geolocation with friendswhich has been a hit in recent months, is one of the collateral victims of the huge social plan undertaken by its parent company, Snap, publisher of the social networking giant Snapchat. Following poor quarterly results linked to the general reduction in advertising spending by advertisers, Snap lost nearly 40% of its stock market value in one month. In an attempt to bounce back, the American had warned that he would have to reduce his expenses, but no one expected such a purge: on Wednesday August 31, the company announced the elimination of 20% of its workforce, out of a total of 6,400 employees, i.e. the dismissal of approximately 1,300 people, mainly in the United States.

All activities that are not directly related to the Snapchat productits monetization or the development of augmented reality, are purely and simply suppressed or “ interrupted ». Zenly, French social network bought in 2017 at a gold price for 300 million dollars, but which remained independent in the Snap structure and was not monetized, bears the brunt of it, just like the music creation application Voisey. The Snap Originals (exclusive series), Minis (integration of third-party applications), Games (mobile games) and Pixy (miniature drone) activities are ” interrupted » until further notice.

Anger and disappointment: “we experienced an American-style dismissal”

According to our information, the management of Snap has acted internally the removal of Zenly for at least a week, when Snap announced to the French teams the visit to Paris, in the offices of the 11th arrondissement of Zenly, of Jeremy Voss. This last one is product manager at Snap and also in charge of the French startup since the departure, last March, of the last co-founder, Antoine Martin. ” We feared that Jeremy would come to give us some bad news, but we had no idea that Snap would throw the whole box in the trash. We thought they would freeze hiring and put an end to the trial periods for new employees, about fifteen positions, which already seemed important to us. “, confides an employee to La Tribune.

Accompanied by the European director of human resources, Caroline Sarles, and a “transition manager” – a manager responsible for supporting a period of change -, Jeremy Voos brought together the employees present in theopen space of the startup on Wednesday August 31 at 3:30 p.m. in a “ freezing atmosphere ». A few minutes before, Evan Spiegel, the founder and CEO of Snap, had sent an email to all Snap employees, in which he announced that Zenly was going to be “wind down”, which can be translated as ” gradually reduce”. An expression sufficiently explicit to worry the employees but not enough to deduce with certainty the deletion of the app.

Many employees therefore fell out of their chairs when they finally understood that Snap was removing Zenly, especially since the startup continued to recruit and was preparing to welcome three new people from Monday, September 5, according to an internal source. . ” It was violent. We experienced an American layoff: overnight we come to see you and we say to you “bravo for everything, we adore you but it’s over now” ”, says, bitter, another employee. The manner of announcing the news also displeased this employee who has been there for several years. ” They kept beating around the bush, it’s annoying because we had to wait for the question and answer session, which lasted an hour, to clearly understand that they are closing Zenly and that they are going to delete the app from application stores in a few weeks », he continues. La Tribune was able to confirm the information that Snap announced to employees the upcoming removal of the app, which will therefore become untraceable in a few weeks.

The meteoric rise of French Zenly, bought more than 250 million dollars by Snapchat

Snap refuses to sell Zenly for fear of competition

At Zenly, the shock gave way to anger, disappointment and incomprehension. ” This purely economic decision wastes more than 10 years of work when we have a great app that brings together a very committed community, a unique and patented technology, and we were growing.”regrets a disappointed employee.

Created in 2011, Zenly presents itself as the social network for geolocation between friends, or “social mapping”, which also includes internal messaging. Just shake your smartphone with your hand to send your contacts your exact location. Convenient for meeting in a large or crowded place such as high school, in a bar or an event such as a festival. The app also allows you to organize unexpected meetings according to the location of your loved ones, or quite simply to follow the activity of your friends in real time, which is very popular with the younger generation. The new version, successfully launched last spring, finally allows you to create your “fingerprint”, that is to say a digital identity card according to your favorite places, and to share it.

In the clogged world of social networks, the niche success of Zenly among young people since its launch at the end of 2015 is a rarity. The concept, which places location at the heart of social interaction, is then new and promising. This is why Evan Spiegel, the founder of Snap, quickly spotted the French startup and repurchases for about 300 million dollars in 2017a huge amount for a nugget certainly full of potential but then very little known.

Five years later, Zenly has gone from 4 million active users per month – the figures communicated at the time – to 40 million today, of which 15 million connect every day. Independent of Snapchat, which is very present in the United States and Europe, Zenly is a hit especially in Russia and Southeast Asia. Last March, the tricolor nugget was in the top 10 most downloaded social applications, ahead of Twitter or Discord.

Hence the employees’ sense of waste. According to our information, after the departure of the last co-founder, Antoine Martin, last March, Zenly asked its parent company to regain its independence. International investors have even been found and would have been ready to pay several hundred million dollars to get Zenly out of Snap’s fold and develop the application. But Snap refused, for fear of competition. Asked about this subject, the American company did not respond to our requests.

This Wednesday again, when an employee asked Jeremy Voos why Snap did not sell Zenly rather than closing the company, the latter replied, according to several employees present consulted by La Tribune, that Snap did not want Zenly, which is aimed at the same target as Snapchat – young people – overshadows it. Snap therefore prefers to sit on a jackpot of potentially several hundred million dollars, rather than leaving Zenly to continue on its own.

Lack of monetization, Zenly’s weakness at Snap

While the takeover by Snap seemed like a huge development opportunity for Zenly in 2017, being a satellite of a large group has become a trap for the French startup. ” This decision does not make sense strategically, it is purely financial. It’s just the financial director in his office who has to find budget cuts, look at the accounts and remove all the red lines “Laments an employee, who believes that Zenly was costing Snap” between 40 and 60 million euros per year “.

If it seems understandable to eliminate cost items not related to the main economic activity in times of crisis, Zenly believes that it could have been otherwise. ” Snap never wanted to monetize us. Zenly does not offer advertising, nor subscription, does not collect data. Nothing. Snap has been offered monetization strategies many times, but they never wanted to. They told us that we had to develop more before considering monetization, but paradoxically they weren’t investing enough for us to accelerate faster. “says a source. The independence of Zenly – which is not built on the same technical stack and therefore impossible to integrate into Snapchat without a major overhaul – has therefore proved to be a double-edged sword for the tricolor startup.

For its part, Snap believes that it has “ a lot invested in Zenly “. Indeed, after the departure of Antoine Martin in March, the group showed enthusiasm and interest in the development of Zenly, to the point of raising salaries, continuing to hire and setting up a five-year bonus plan based on sales. actions to encourage employees to stay with the company. But the struggling group now prefers to focus on growing Snapchat, including its Snap Map service, a feature that has similarities to Zenly, although less developed.

Create another Zenly from scratch, a possible but improbable hypothesis

What next? The dismissal of some 70 employees of Zenly will be spread over several months and will have to comply with the legislation in force in France, even if the startup belongs to an American company. In his letter to employees, Evan Spiegel assured that those affected by the cuts would leave under good conditions.

The hypothesis of a takeover being excluded, can employees recreate another Zenly from scratch? Yes in theory, because Snap has not activated, according to our information, the non-competition clause. But this is actually very unlikely. ” Recreating an app at the same level as Zenly would take too long, and in the meantime the market will have evolved “, sweeps one of our sources. The only consolation: the French tech ecosystem, and in the first place BeReal, the other tricolor social network which is a hit, will be able to recover talents with valuable experience.