Software features are easy to copy, but ecosystems are harder

Transcript

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

1. 9:41

   Let me just ask you, like, as a human, how does it feel just to see this consistently happen to you? You guys come up with something awesome. Someone rips it off, benefits hugely from it. and you just have to keep doing that again and again? You know, it's certainly better than making stuff that people don't want to copy. So I think, you know, in many ways, it's a blessing that we've been able to continue to innovate, to make new things that really resonate with folks and that ultimately people want to end up, you know, copying from Snap.

2. 10:10

   So I think it certainly beats the alternative, but it does, you know, mean that we have to be really thoughtful about our strategy. And so I think, you know, one of the things, it's been an interesting time for me to reflect a lot on, you know, our strategy over the last 15 years, because, you know, 15 years ago, we essentially learned that software is not a moat, right, which is something that everyone is discovering today with AI, right? But 15 years ago, because all the software features that we could create were so easily cloned by our competitors, we started to think about how to build a more durable business, how to build a business, you know, that had bigger and more effective moats. One of the first things we did was focus a lot on building ecosystems, right, whether those are the relationships between creators and Snapchatters, whether that's the

3. 10:52

   platform we built around augmented reality where developers have built millions of these lenses. So it's very easy to copy software features. It's very hard to copy or to replicate a full ecosystem or a platform. And so we realized that the more that we could build a platform around our business, the more that we could build an ecosystem with creators and developers, the harder it would be for folks to just copy that.

4. 11:18

   And then it also informed a lot of our thinking about investing in other places that are really hard to copy, including hardware, where it's really, really challenging to copy our fully vertically integrated stack around augmented reality. So I'm certain there's a lot more to talk about there. But I think we learned early on that software is easy to copy. And so it's really important to build more durable nodes.

5. 11:39

   That's really interesting hearing this from you. And I was going to get to this later, but we can talk about this now. this big investment you've been putting into hardware, like you would think network effects would be the moat. That's what everybody's always trying to get to because that's classically a great moat. Are you saying that that's maybe not even as great a moat or that's just not enough?

6. 12:00

   And then you need something more like, say, hardware. I think network effects are certainly an important piece of the puzzle for sure. But I don't think they're enough when it comes to these sorts of software cloning. And so despite the fact that we've got a ton of patents and we've protected all these ideas, the way that it works in software is that it's quite easy for folks to copy or iterate on top of these ideas.

7. 12:22

   And so I think in addition to network effects, it's really important to try to build businesses that are more defensible by truly building out a platform that can support relationships between creators, developers, and the community