In early April, Evan Spiegel, the CEO of Snap Inc., wrote an impassioned email to the staff of Zenly, the social mapping platform acquired by Snap in 2017. He praised the app’s extremely rare “product-market fit in consumer technology” and shared news that Zenly, which had been proudly independent since its acquisition, would have more oversight from company executives. “I believe that the scale of Zenly today demands more organizational support as we enter the next phase of Zenly’s growth around the world,” Spiegel wrote in his email. Around that same time, he began overseeing Zenly’s operations.
Just five months later, Snap announced that it would shut down Zenly entirely.
The sudden shutdown left Zenly workers, by and large, shocked. Yes, the company hadn’t yet monetized, but it had a global community of 40 million monthly active users, with hubs in Japan, Russia, Indonesia, Brazil, and Thailand. According to internal metrics reviewed by Rest of World, Zenly’s user base had grown from less than 150,000 daily active users (DAU) in 2017, when Snap acquired the app, to 15 million last month.
Rest of World spoke to five current and recently departed employees at Zenly, including senior managers, each of whom asked to speak on the condition of anonymity due to non-disclosure agreements or fear of professional retaliation.
According to these employees, what was even more upsetting was that Spiegel refused to sell Zenly and preferred to shut it down entirely, effectively abandoning millions of users and casting aside nearly a decade of product development. Employees say there was no shortage of suitors who expressed interest in buying Zenly off of Snap before the shutdown. High-level employees told Rest of World that several prospective buyers had approached the team in the weeks since.
The transition officer tasked with overseeing the shutdown of the app’s operations even acknowledged the situation in a lengthy Q&A with the Zenly staff, according to two employees in attendance. “He said, guys, if the seller doesn’t want to sell, he will not sell. Period,” one of the current employees recalled to Rest of World. “The message was very clear … he said Snap doesn’t want Zenly as a potential competitor in the future.”
Snap would not confirm to Rest of World whether there were — or are — any current offers for Zenly on the table, but Rest of World verified that there has been outreach to executives at the company from interested parties.
To many within Zenly, Snap’s resistance to considering a sale was just the latest slight from its Santa Monica, California-based parent company. These employees say that with Zenly’s growth came greater oversight from Snap executives, which led to a simmering corporate culture clash between the two teams. That tension was felt most acutely after Zenly’s co-founder, Antoine Martin, left in May.
Around the time of Martin’s departure, the company’s reporting structure was overhauled, which resulted in some Zenly team members in Paris reporting directly to managers in Santa Monica. Some of those employees told Rest of World that their Snap managers did not seem to have knowledge of Zenly’s business, product, or community. Two employees said that Zenly workers were asked to consult with at least one Snap manager who had not even downloaded the app, as well as other Snap colleagues who were not active on the app prior to working with Zenly.
One current employee attributed the shuttering of Zenly to Snap’s frustration with operating an app outside of its core business. They also noted that Zenly was not integrated into the rest of the company. “I really think it came down to culture as well — the history that our team has with their team. It hasn’t always been the most positive relationship,” they said.
Snap declined to comment directly on many of the claims made by sources at Zenly. In a statement to Rest of World, a Snap spokesperson said, “We are working hard to adapt to this very difficult economic environment, including laying off 20% of our team. This includes beginning the process to wind down Zenly. We are grateful for the Zenly team’s efforts and we share their disappointment that we are not able to continue our investment.”
Founded in 2011 by French entrepreneurs Antoine Martin and Alexis Bonillo, Zenly was acquired by Snap in 2017, in large part for its social mapping IP. That technology was quickly integrated into the company’s namesake product and its then-recently launched “Snap Map” feature. Following the acquisition, former employees said Zenly’s Paris office was largely siloed from the rest of the company, allowing its team to quietly grow the app’s user base. After finding its footing, mostly in Asian and Eastern European markets, in March of this year, Zenly was reported to be the tenth most downloaded social app globally, according to figures from Data.ai.
But, within a month, Martin, who had been acting CEO for a decade, chose to leave the company. Sources indicate that the decision was tied to encroaching oversight from Snap executives, particularly after Zenly’s growth exploded coming out of the early stages of the pandemic. Martin’s exit appeared to be the catalyst for major changes within the company.
According to five different employees, Zenly’s marketing head Michael Goldenstein, the executive hand-picked by Martin to be his successor, had his leadership power restricted. Meanwhile, Snap-appointed colleagues carved out increasing influence, and top-level decision-making shifted to the company’s headquarters.
Employees told Rest of World that Snap’s new corporate oversight caused tension, and complained that they felt some Snap managers had little familiarity with Zenly’s product or business.
Spiegel initially scheduled a dedicated 45-minute time slot every week to speak with at least one Zenly team following the leadership shake-up. But according to an employee who participated in the meetings, the sessions were often spent revisiting foundational product decisions that dated back to Zenly’s acquisition.
“Even though he’s this super strong charismatic CEO, or whatever, he just doesn’t know the product and doesn’t know about Zenly,” the employee told Rest of World, explaining that his deep familiarity with Snap Map did not translate easily to their product. “We would spend basically 45 minutes explaining to him choices we made five years ago.”
When Snap executives visited Zenly’s Paris offices this spring in an effort to foster camaraderie, some Zenly employees noted that their colleagues rarely used the app. One Snap manager downloaded the app two weeks prior to taking a leadership role at Zenly, while other team members barely interacted with the app.
Some former Zenly employees reported that Zenly’s nimble startup ethos butted heads with the bureaucracy of its big tech parent company. “[Zenly’s] working culture was one where, if you were moving fast enough, you’d be able to fix mistakes fast enough before they became big mistakes. But that just doesn’t work in a Snap world,” one employee told Rest of World. “We’re used to things happening within, you know, minutes, hours, days. Snap is more longer term — months, quarters, years.”
When asked if there were pains in the integration process, the employee responded: “There was no integration.”
Throughout a seemingly tense spring and summer, Snap offered incentives to Zenly employees. These included a new round of raises, along with new stock grants in July.
Despite Spiegel’s email and the new incentives, at some point over the course of the summer, Snap appeared to change its mind on Zenly. In both its public statements and official legal filing to the French government, Snap has outlined two of the main reasons for Zenly’s closure. First and foremost is the fact the app was not monetized. Employees say that, as recently as May, Spiegel made clear that he supported a strategy of investing in growth and product development for the foreseeable future. But, following a nearly 80% decline in Snap’s stock price this year, and underperformance on earning estimates during its most recent quarterly announcement, this investment in the future of Zenly may have become less tenable.
Snap has also cited Zenly’s sluggish growth — a point several employees said was more nuanced than statements had indicated. Prior to Martin’s departure, Zenly launched a full redesign of its app. Several employees told Rest of World that users had a negative reaction to the changes, which ended up temporarily slicing off a chunk of the app’s daily active user base. Internal metrics reviewed by Rest of World showed Zenly’s DAU growth rate had nearly returned to previous levels by August.
According to two senior employees who were familiar with the decision, Zenly’s paid user acquisition budget was cut by Snap after Martin’s departure — stifling influencer marketing, social ad placements on platforms like TikTok, and other marketing initiatives — which ultimately contributed to a period of slow growth. Zenly rehabilitated its growth rate organically, without a major marketing drive.
Multiple sources told Rest of World that when Spiegel was mulling his decision to close Zenly, he reviewed a projected Zenly budget that calculated its annual operating cost. These sources contest that the estimate was grossly exaggerated, and more than double the actual cost. They claim it was generated by inaccurately using freelance contracts for one-off, short-term projects earlier in the year to estimate longer-term operating costs.
“We shipped this new version of the app — from first mock-ups to shipping in four months. In order to do that, we hired a bunch of freelancers, an army of mercenary freelancers,” said one individual, familiar with the app redesign that launched in April, to Rest of World. “We ramped up costs quite a bit, and those projections were based off of those costs. They’re misleading for sure.”
By the end of the summer, despite brewing tensions with corporate, there were still few signs that a full closure was coming. “It really came as a shock,” one employee, present for the All Hands at which the shutdown was announced, told Rest of World. They said they had braced for layoffs, but not outright shuttering. “I don’t understand why they just turned it down because we would have been able to manage it even with a shorter amount of employees. This was a huge surprise to me.”
Former employees told Rest of World that the shutdown has not gone smoothly. During the team meeting in which Snap announced the Zenly shutdown, a Snap manager told the Zenly team that they would receive what was characterized as a generous severance package. But the severance, listed in a copy of a 60-page legal filing to the French government obtained by Rest of World, is only slightly above the minimum legally required severance in France, as previously reported by Sifted. “Especially from tech precedents in general in France it’s far, far, far from generous,” said one employee.
Furthermore, given that French regulations require a calendar year for employees to access stock, none of the laid off Zenly employees will receive stock for the grants they were offered in July. “Giving everyone a raise in [the spring] and then giving everyone an additional stock grant in July, when you’re essentially going to fire everyone a month later, is a pretty big fuckup,” said one current employee.
Snap has communicated internally that, if sold, Zenly could be a threat to Snapchat’s business, according to multiple employees. One high-ranking employee said that historically, Zenly was asked to intentionally spend its marketing budget in countries where Snapchat did not have a strong usership, contributing to its presence in mostly non-Western markets, and arguably, filling in Snap’s blind spots on the world map. That dynamic is most dramatic in Japan, where Snap has shown signs of interest in expanding. Earlier this year, the company launched a Tokyo office.
Snap chose not to comment directly on questions regarding potential offers to buy Zenly, but has previously stated to Business Insider that Zenly does not independently own its intellectual property, complicating a possible sale.
Still, former executives in the company told Rest of World there were offers to buy the app. One current employee described selling Zenly as a no-brainer — guaranteed “fresh money in the bank” for Snap and its investors during its current revenue crunch.
“There were numerous interested parties to take over,” another executive confirmed to Rest of World. “And for competitive reasons, they chose not to sell. They basically felt that the markets Zenly operates in are the markets they want to retain a monopoly on.”
In the meantime, Snap competitors have begun recruiting Zenly employees. “LinkedIn has been blinking nonstop for the last few weeks — some competitors, some other tech companies, and personally, a lot of messages from founders, from startups that are just beginning,” one current employee told Rest of World.
Given the team’s reputation for quality product and engineering, the phrase “Zenly Mafia” has gained traction on social media as part of speculation that a new crop of French startups may emerge from Zenly’s ashes. The Zenly shutdown comes just as another Paris-based startup, the photo-sharing app BeReal, is finding a global audience.
“BeReal is, if anything, even more of a direct competitor to Snap and is in Paris. In closing Zenly, I wouldn’t be surprised if a number of talented individuals go to BeReal,” said an employee, wondering aloud if the talent migration may end up being a bigger threat to Snapchat than a sale.
At least one employee confirmed recruitment outreach from BeReal: “I’m sure there will be another Zenly that pops up soon, either driven by Zenly’s current employees or by a group that is inspired by Zenly.”