On March 2nd, Snapchat, and their parent company Snap Inc. (established in September 2016), will undergo its Initial Public Offering (IPO). An initial public offering is when a company decides to change from a private company to a public one. This means that the owners put some of their shares up for sale, often to raise capital for a new venture or to capitalise on the money offered for personal gain.
Snapchat burst onto the scene in mid-2011 when founders Evan Spiegel, Bobby Murphy and Reggie Brown had the idea for their picture sharing service. Like many big unicorn start-ups, the idea was scoffed at, but now it is one of the biggest social media platforms in the world. The app now has over 150 million users, with some 10 billion daily video views. However, even with such mammoth numbers, Snapchat has struggled to monetise their platform.
Snapchat introduced the sponsored stories section to its user interface in a bid to allow companies to pay for their video adverts to be pushed, but that saw limited interaction and did not garner the response that Snap Inc. was looking for. They then introduced the “learn more” feature, which allows users to swipe up to learn more about what is happening in the Snapchat story – a story is a photo or video posted by a user that lasts 24 hours, not seconds – this allows users and businesses to link directly to their product page.
However, despite their lack of monetisation, an equity offering (where a private company puts a set percentage of shares up for public purchase) in late 2016 raised $1.86 billion which demonstrated a large corporate interest in the company. So, here we are at the IPO of Snapchat. Though the current figures vary somewhat, it seems as though the current valuation is around $20 billion.
Once the company has gone public, users can expect to see a change in their experience, as the direction of the company will be governed by a board of members that represent the shareholders rather than the original founders. This means that the user experience will be far more focused on advertising. So, expect to see more adverts interrupting snap stories, or more opportunities to follow links, as that is how Snapchat will aim to earn a return for their shareholders.
Other ventures that are aiming to earn money for Snap Inc. are the newly released Snapchat glasses (covered extensively on Geeknaut), which allow you to record snaps right from your glasses whilst avoiding the pitfalls of the now-discontinued Google Glass. A more recent progression, however, is the rumour of a new Snapchat drone. Although these are mere speculation at the moment, as it is not clear how Snap Inc. would be able to tailor a drone to their 10 second format, what is obvious is their intention to branch into the camera market. This was made clear in early 2017, when CEO and co-founder Evan Spiegel spoke of the power of camera technology in what is a fast developing market.
So, though there are worries about the ability to monetise the Snapchat platform, one thing is clear, and that is they are will to entertain new ideas. It is hard to know whether the initial valuation will be accurate or whether it will be at a price point that will actually allow for a return on investors purchases. However, it will certainly be interesting to see where the new focus of the business will take Snapchat and how that will ultimately affect the user’s experience.