Snap is taking a page from early-stage playbooks, carving the company into small “startup squads” of 10 to 15 people in a bid to move faster as its core advertising business slows. In an annual letter to employees and investors, CEO Evan Spiegel framed the shift as a return to entrepreneurial fundamentals, designed to shorten decision cycles and put product owners closer to users and revenue.
The urgency is clear. Advertising growth in the second quarter rose just 4%, a far cry from the breakneck pace social platforms enjoyed earlier in the decade. North America daily active users slipped 2% to 98 million, a critical weakness in Snap’s most lucrative market, even as global engagement remains resilient. With roughly 5,000 employees and heavyweight rivals competing for ad dollars, Snap is betting that smaller, accountable teams will rebuild momentum.
Why break into squads now
Squads are Snap’s answer to bureaucracy: fewer handoffs, fewer committees, and tighter ownership of goals that map directly to revenue and retention. The model echoes Amazon’s “two-pizza teams” and Spotify’s squads, structures associated with quicker iteration and clearer accountability. For Snap, the prize is getting new features into the wild faster—then either doubling down or killing them before they soak up resources.
The advertising landscape has also shifted. Privacy changes upended targeting and measurement across mobile, performance budgets have migrated to platforms with stronger attribution, and short-form video competition has intensified. Research firms such as Insider Intelligence still project growth in social ad spending, but gains are increasingly concentrated where return on ad spend is easiest to prove. In that context, a smaller, metric-driven build culture is not just operational hygiene—it’s existential.
How squads could reshape the product roadmap
Expect squads to cluster around revenue-critical surfaces: Spotlight and Stories monetization, messaging integrity and growth, creator tools, and performance ad products. A squad responsible for ads relevance, for example, can be judged on conversion lift and cost per action; a creator monetization squad can be measured by retention of top publishers and share of time spent with premium content. The key is direct, observable impact rather than diffuse OKRs.
This structure also suits Snap’s culture of experimentation. Features like Lenses, Map layers, and My AI can be built and iterated with clear guardrails: ship, measure, prune. If Snap pairs squads with shared platforms—ads delivery, ranking systems, safety and trust—teams can compete for outcomes without reinventing the plumbing.
Leaning into direct revenue and AR bets
Amid the ad slowdown, one bright spot is direct revenue. Snapchat+ now tops 15 million paying subscribers and more than $700 million in annual recurring revenue, according to the company. That’s a meaningful, high-margin buffer that diversifies the top line and provides a clearer feedback loop: build features subscribers will pay for, and retention will validate the roadmap. At roughly $4 per month, the math suggests churn and lifetime value are already competitive for a consumer subscription at scale.
Hardware remains the longer-term swing. Snap is investing in next-generation Spectacles—lightweight augmented reality glasses that Spiegel has pitched as a step toward more natural, “human-centered” computing. It’s an audacious vision promoted by peers too: Meta’s camera-forward Ray-Ban line and Google’s renewed interest in eyewear signal a category forming. But wearables are unforgiving on battery, optics, and developer ecosystems. Squads could help here by isolating risks—one team for on-device vision, another for interaction models, a third for creator tools—so hard problems advance in parallel.
What it means for advertisers and creators
Advertisers should watch for faster cadence around performance features: improved postbacks and measurement, more durable targeting signals, and streamlined creative formats that travel across Stories, Spotlight, and camera entry points. If squads are truly empowered, expect more market-facing experiments—smaller betas, quicker iteration, and clearer documentation for buyers.
Creators could benefit from a tighter focus on revenue share and subscriber perks that link to Snapchat+. A squad tasked with premium content might, for instance, bundle early access or exclusive AR effects for paying fans, giving creators a second monetization lane beyond ads. The larger ambition is a flywheel: creators drive time spent, squads translate that attention into higher-yield formats, and measurable advertiser outcomes pull budgets back toward Snap.
Valuation, risks, and the execution bar
Spiegel has argued that today’s valuation—around $12 billion—bakes in skepticism yet leaves “startup-style” upside if the new model works. The market will want proof in three places: stabilization in North America engagement, a clear uptick in ad efficiency metrics, and durable subscription retention. Analysts have also flagged the risk of fragmentation; squads only outperform when shared infrastructure is strong and leadership enforces crisp prioritization.
Snap has reinvented itself before, pivoting from ephemerality to camera-first AR at scale. The squad approach is a bet that its next reinvention requires fewer layers, faster shipping, and sharper incentives. If it delivers, the company won’t just look more like a collection of startups—it may start to grow like one again.