# Snap is rebuilding ads around smaller performance-focused customers

Markdown copy of https://realalpha.app/s/snap-is-rebuilding-ads-around-smaller-performance-focused/ on Real Alpha, the best minutes from long interviews with the people building AI. Cite and link the page, not this copy.

- Speaker: [Evan Spiegel](https://realalpha.app/people/evan-spiegel/) · Evan Spiegel is cofounder and CEO of Snap Inc. · Co-founded Snapchat at Stanford and has led Snap as CEO since 2011, building Stories and the Specs AR glasses.
- Host: [David Senra](https://realalpha.app/people/david-senra/) · Host, Founders · Has read an entrepreneur's biography every week for Founders since 2016.
- Show: Founders
- Episode: [Evan Spiegel, Snapchat: Building a Multi-Billion Dollar Company](https://realalpha.app/v/Sr6n-9mzYnk/), Apr 12, 2026
- Moment: 1:13:00 to 1:19:06 of the episode (6 min), playing on https://realalpha.app/s/snap-is-rebuilding-ads-around-smaller-performance-focused/; the episode from there: https://realalpha.app/v/Sr6n-9mzYnk/?t=4380

## Quote

> “that we needed to have a lower funnel business with a diversified set of **small and medium customers**.”
> — [Evan Spiegel](https://realalpha.app/people/evan-spiegel/) at [1:17:48](https://realalpha.app/v/Sr6n-9mzYnk/?t=4668) · Founders

## Takeaways

1. Snap’s early ad business relied heavily on large U.S. brands.
2. Smaller advertisers need measurable lower-funnel returns.
3. The shift changes sales, product, and engineering work.

## About this segment

Snap is shifting from a few large brand advertisers toward small and medium customers seeking measurable results. That change requires new ad tools, sales practices, and engineering priorities.

From “Evan Spiegel, Snapchat: Building a Multi-Billion Dollar Company”, Apr 12, 2026. [Watch the full episode](https://realalpha.app/v/Sr6n-9mzYnk/)

## Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

[1:13:03](https://realalpha.app/v/Sr6n-9mzYnk/?t=4383) There's been a couple of huge shifts for us in the past couple of years. So, you know, the core of our advertising business from the early days really grew around, you know, a small number in the, you know, in the hundreds of large customers in the United States really built around a brand business. And it grew very, very quickly throughout the, you know, the history of the company. But our advertising mix almost looked like the inverse of like a Google or a Meta.

[1:13:29](https://realalpha.app/v/Sr6n-9mzYnk/?t=4409) So Google or Meta, the vast majority of their revenue comes from small and medium-sized customers. And a small amount of their revenue comes from large customers, especially here in the US. We had like the inverse. We had most of our revenue coming from this small group of large customers, and then a very small amount of money coming from small and medium customers. Part of that was because at the time, many years ago, we didn't have a really robust lower funnel advertising business, where people can optimize against events that happen in their app or people making purchases on their website. And we hadn't really built out a lot of those capabilities. And small and medium customers really care about that. They want to see their return on ad spend right away. So despite having this enormous scale and all this engagement,

[1:14:10](https://realalpha.app/v/Sr6n-9mzYnk/?t=4450) the ad offering, especially in the lower funnel, was immature. So over the past couple of years, we built out that entire lower funnel advertising offering so we can really drive performance for customers, for small and medium customers. And we've been really rapidly growing that small medium, that small medium customer segment. So we're doing like this really difficult transformation to make our sort of inverted, you know, mostly large US customers advertising around upper funnel and brand goals into like mostly small medium customers advertising against lower funnel goals. And that's just been a transformation of like every part of our advertising business, the way that we go to market on the sales side, the engineering and product work that's happening. Yeah, I'd be curious like what that looks like. Because if you're doing

[1:14:54](https://realalpha.app/v/Sr6n-9mzYnk/?t=4494) the inverse, you have these giant brand deals, I'd have to imagine giant brands spending a ton of money, right? I'd have to imagine that you have to employ a ton of salespeople, right, in a way that Google and Facebook do not. Yeah, that's certainly one part of it, for sure. So that'd be more profitable, too, because they kind of have like a self-service product. Yeah, and I think, you know large customers rightly want a lot of bespoke service as well so our engineering team was spending a huge amount of time building bespoke solutions for really large customers who want to measure things in a specific way or want a really unique integration or unique offering and you know now our engineering team is spending a huge amount of time serving lower funnel customers at scale right and so rather than doing building a product they need to adapt to

[1:15:35](https://realalpha.app/v/Sr6n-9mzYnk/?t=4535) that small yeah that small medium customers can really easily you know sign up for unused are you getting rid of the bespoke? Are you trying to like, we're doing a lot less bespoke, but we also find that these large customers, they want to drive lower, lower funnel outcomes too. So a lot of it is teaching our sales folks, you know, who we're used to living in this more brand upper funnel oriented world to sell into lower funnel objectives for large customers. It was actually a weird idea that just came to mind because I just did.

[1:16:00](https://realalpha.app/v/Sr6n-9mzYnk/?t=4560) this episode called How SpaceX Works. So there's this guy named Max Olson who he still needs permission to publish a book, but essentially he's like, hey, I want to tell this story of the history of SpaceX as it happened and I'm going to use their internal memos to do so. So he's got access to like the first 10 years. I hope SpaceX allows him. I've seen a copy of like the advanced copy that you can't sell yet.

[1:16:19](https://realalpha.app/v/Sr6n-9mzYnk/?t=4579) It's called SpaceX Foundation. So he's like, well, in the meantime, I'm going to write an essay that tells the story of why this is important. And so I read the essay like three times, like this is fucking crazy. So I just did an episode of Founders on it. And one of the most interesting things I never thought of is like, essentially, the aerospace industry, everything was bespoke. Everything was custom to the customer.

[1:16:40](https://realalpha.app/v/Sr6n-9mzYnk/?t=4600) And it's just like, well, if you do that, you can't scale. And Gwyn Strotwell was, you know, a huge driver behind this. It's like, we're going to, you know, build a basic, good enough launch system that you adapt to. And then it took a while to educate them to adapt to it. But once they're adapted, then they just I mean, now they're doing I think most launch providers would do two to four launches per year that they do one every like two days.

[1:17:04](https://realalpha.app/v/Sr6n-9mzYnk/?t=4624) They did more load last year than every single other launch provider in like China, Russia, America, everywhere else combined. And that one idea where it's like we can't do bespoke, we have to we have to get this uniform if we're going to scale this and we can't get to our goals if we don't scale it. And to take it a step further, they didn't have to deal with all the political pressure that NASA is under to put, you know, a certain factory here or plant in this state.

[1:17:30](https://realalpha.app/v/Sr6n-9mzYnk/?t=4650) And, you know what I mean? Like, I think, like, just out the gate, they were able to deliver rockets at a temp the cost, you know, of a NASA or something like that. Did you intentionally invert? Were you like, Google and Facebook are doing it this way, we're going to try a different way, and then realizing, oh, we need to change? Like, back then, did you make that decision consciously? We saw that, like, if we really wanted to grow the ads business to be, you know, double-digit billions over time, that we needed to have a lower funnel business with a diversified set of small and medium customers.

[1:17:57](https://realalpha.app/v/Sr6n-9mzYnk/?t=4677) But did you hope that wasn't true at the time, at the very beginning? No, I just think we grew really fast on, you know, large customer brand advertising. They can move dollars very, very rapidly, right? That's one of the benefits. You know, if you're working with a large customer, they can move, you know, millions of dollars very quickly. if you have a couple hundred of those customers, you can build a very large advertising business very quickly. The question is like, how do you build a diversified, very, very big one over time? Okay. So you can get big, but you can't get huge without it. Oh, okay. And you needed to get big. That was like almost like stage one. You had to do it that way. And I'd say almost all of these platforms, stage one looks like that. Okay. Right. I mean, even Facebook in the early

[1:18:35](https://realalpha.app/v/Sr6n-9mzYnk/?t=4715) days, it was display advertising, right? And then over time, they built out way more advanced systems, optimizing against lower funnel goals. I'd argue like a Reddit or a Pinterest today, I mean, you know, to some degree, Pinterest is building out lower funnel objectives and this kind of thing. But a lot of it is still, you know, large customer upper funnel dollars. So I'd say almost all ad platforms start with that because you can grow very quickly. And then you use that to invest in building out much more sophisticated systems. Yeah. And at the beginning, you said you