Snap is breaking itself apart and rebuilding from within. CEO Evan Spiegel just announced the 5,000-person company is restructuring around small "startup squads" of 10 to 15 people to regain agility against larger competitors as advertising revenue growth flatlined at 4% and North American users declined 2%.
Snap is tearing down its corporate structure and starting over. In a dramatic restructuring announcement that reads like a startup manifesto, CEO Evan Spiegel revealed the company is breaking its 5,000-person workforce into nimble "startup squads" of 10 to 15 people each, designed to move faster against tech giants that have been eating its lunch.
The timing couldn't be more urgent. Snap's advertising revenue growth practically flatlined at just 4% in the second quarter, while North American daily active users—the company's most valuable audience—actually declined 2% to 98 million. That's not just a speed bump; it's a red flag in a market where Meta and Google continue to dominate digital advertising spend.
"We're breaking ourselves apart and rebuilding from within," Spiegel wrote in his annual company letter, acknowledging what industry observers have been saying for months: Snap has lost its startup agility as it scaled. The squad-based approach mirrors how successful startups operate, with small teams moving independently rather than getting bogged down in corporate bureaucracy.
The restructuring comes as Snap faces an existential question about its place in the social media hierarchy. While TikTok captures Gen Z's attention and Instagram Reels competes directly with Snapchat Stories, the company has struggled to maintain the innovation pace that once made it the darling of young users. The startup squad model represents Spiegel's bet that smaller, more autonomous teams can rediscover that creative spark.
But Snap isn't just restructuring—it's also pivoting its revenue strategy. Spiegel highlighted one genuine bright spot: Snapchat+ subscriptions now generate over $700 million in annual recurring revenue from more than 15 million paying subscribers. That direct-pay model reduces dependence on the fickle advertising market that's been hammering the company's growth.
"Direct revenue is one of Snap's fastest-growing opportunities," Spiegel noted, signaling a strategic shift away from the ad-dependent model that built the company but now constrains it. This mirrors evolution under different leadership, though is executing the transition while maintaining its core social features.
