Like many of our clients, Sentieo is gearing up to cover what is likely to be the biggest technology IPO of 2017. We will be doing a series of 5 minute reads, reintroducing potential investors to key parts of the investment story. If you would like to receive notification when these go out, you know what to do.
Evan explaining the Why of Snapchat with none of the high-production-fluff.
High Level Takeaways
- On average, Snap rolls out a major new product once every three months.
- In the past two years, this product strategy was significantly supported by rolling up adjacent products. This implies acquisitions likely to appear as products soon are Mobile Search and Augmented Reality.
- The last two years’ $350m acquisition bill is only 70% of its Series D, indicating the company likely had both tremendous ROI on its acquisitions as well as a sizable war chest for more rollups.
A Brief History of Snap: Product, M&A, and Funding
Snap today is a very different company from the Snapchat of 5 years ago, so the relevance of a deep history to the IPO investment case always deserves some reflection. However the culture and strategic direction of a company can be observed in its history, and this is what we focus on to understand the execution ability of the management team.
We are kicking off this series with the first product history on the company curated for IPO investors. As amateur Snap historians we have discovered that the M&A strategy is inextricably linked to the product, and indeed the turnaround times for M&A have been shockingly fast and prescient. And, of course, we then have to include the funding rounds that made the M&A possible. We find the following to be the Minimum Viable History of Snap all investors should know.
- Jul 2011: First incarnation of Snapchat released as Picaboo v1 and v2
- Sep 2011: Picaboo version 3.0 renamed as Snapchat
- May 2012: Lightspeed solo seed round for $485k
- Dec 2012: Snapchat 4.0: Video sharing (10 second video messaging) Product Video
- Feb 2013: Benchmark leads $12.5m Series A, Android app launch
- Jun 2013: IVP leads $80m Series B @ $800m, Snapchat 5.0: Swipe navigation
- Oct 2013: Snapchat 6.0 Stories (personal curation of media) Product Video. Snapchat later refers to this as its most fundamental change.
- Nov 2013: Declined Facebook offer for $3bn (Podcast discussion)
- Dec 2013: Coatue $50m solo Series C
- May 2014: Buys AddLive for $30m for video streaming (rereleased immediately as Video Chat)
- May 2014: Snapchat 7.0 Video chat and Here button. Product Video.
- Jun 2014: Our Story (multiple contributors contributing to the same event which becomes a stream people can view)
- Jul 2014: Geofilters (special graphical overlays to be available if the user is within a certain geographical location, such as a city, event, or destination) Product Video
- Aug 2014: Live section (location based events live submitted by users)
- Sep 2014: Buys Scan.me for 50m for QR codes (rereleased in Jan 2015 as Snapcodes)
- Nov 2014: Snapchat 8.0: Snapcash with Square (aka Venmo on Snapchat) Product Video
- Dec 2014: KPCB leads $485m Series D @ $10bn
- Dec 2014: Buys Vergence Labs for $15m for smart glasses (rereleased in Nov 2016 as Spectacles)
- Jan 2015: Snapcodes and Discover (Ad supported short form content). Product Video. The next evolution of Stories for publishers.
- Mar 2015: Alibaba leads $200m Series E @ $15bn later joined by Glade Brook and York
- Jun 2015: Snapchat 9.0, still the major version of Snapchat today. Live Stories (curated version of Our Stories), Camera switch, video zoom, 2FA.
- Jul 2015: Memories (a searchable, shareable archive of your snaps). Product Video
- Sep 2015: Buys Looksery for $150m to acquire lenses (rereleased immediately as Lens)
- Sep 2015: Lens (allows users to add real-time effects onto their faces by using face detection technology)
- Nov 2015: Official Stories (verified celebrities program) and Story Explorer (removed in Dec 2016). Product Video.
- Mar 2016: Buys Bitstrips for $100m for Bitmoji (rereleased in July 2016 as Bitmoji Snaps)
- Mar 2016: Chat 2.0 update bundle (includes Audio Call and auto advancing Stories)
- May 2016: Sequoia leads $1.8bn Series F @ $20bn
- Jun 2016: Buys Seene for 3D selfies (no integration yet)
- Jul 2016: Bitmoji sending as Snaps. Product Video
- Aug 2016: Buys Vurb for $110m to do mobile search (no integration yet but large acquihire component)
- Aug 2016: Geostickers (city-specific stickers in snaps)
- Sep 2016: Releases Spectacles (camera enabled sunglasses)
Of course, any history involves curation and omission of important factors, and we do aim to flesh out other dimensions of the company in our future pieces. Over the next few posts we will concisely summarize:
- Snap’s business model and monetization history,
- the stated goals and strategy of Snap’s management team,
- consolidated publicly announced numbers on Snapchat with pro forma model,
- and round it out with a comparison to Snap’s peers and potential future competition.
Stay tuned,
P.S.
Original Sources
- Snapchat Youtube Channel https://www.youtube.com/channel/UCFlFU7Px-ez8S69KvOwzUvg
- Snap Inc SEC Filings https://www.sec.gov/cgi-bin/browse-edgar?CIK=0001564408&action=getcompany
- Snap Company Blog https://www.snap.com/en-US/news/
Other histories on the interwebs:
- Crunchbase History https://www.crunchbase.com/organization/snapchat#/entity
- Wikipedia Main https://en.wikipedia.org/wiki/Snapchat#History
- Wikipedia Timeline https://en.wikipedia.org/wiki/Timeline_of_Snapchat
- TechCrunch https://techcrunch.com/gallery/a-brief-history-of-snapchat/
- GaryVee (infographic) https://www.garyvaynerchuk.com/the-snap-generation-a-guide-to-snapchats-history/
- Forbes http://www.forbes.com/sites/jjcolao/2014/01/06/the-inside-story-of-snapchat-the-worlds-hottest-app-or-a-3-billion-disappearing-act/#75c0657255ec
Article by Sentieo