Snap’s long awaited S-1 filing is now public. There’s a lot of media buzz about the nuances of the filing which is exactly what Snap wants. Looking at the major social media players, I think Snap will benefit the most from going public. This is because Snapchat’s user base is mainly 18-34 year old people. The goal over the next few years is to bring in older users. Going public will give it traditional media coverage and interest from potential investors which will get older adults to try the app that their kids love, for the first time.
The most obvious aspect of the S-1 form that jumps out at me is that it describes itself as a camera company. I get worried when a company tries to re-define itself to investors. Snap is clearly a social media company which has developed unique features that augment reality such as lenses. Instagram is a photo sharing app which has filters as a core function, yet it doesn’t call itself a camera company. Snap did release a glasses product with a camera on it, but that was a very small product launch compared to its 158 million daily active users.
Snap’s redefinition of what type of company it is reminds me of GoPro. GoPro ironically wanted to redefine itself away from being a camera company. It called its cameras capture devices and played up its content as a new revenue stream. GoPro didn’t want to be viewed as a camera company because hardware firms inevitably have low margins. Camera companies haven’t been successful in the past (think Kodak). Being a social media firm sounds like a better description considering Facebook’s success. Maybe Snapchat knows it won’t be able to reach the mass appeal Facebook has and wants to avoid comparisons with it. Comparisons to Facebook have certainly hurt Twitter, but I wouldn’t say that’s the principle cause of its demise. Even if Facebook didn’t exist, Twitter would still be a company which isn’t profitable and has slow user growth. That would never get investors excited in any circumstance.
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