One of the longstanding criticisms of Snapchat is that the app is confusing and not very intuitive to use.

Snapchat's parent company, Snap Inc., even went so far as to include a guide on how to use the app in its public offering paperwork with the SEC.

The reason Snapchat can feel hard to understand happens to be the same reason it's popular with younger people, according to Snapchat's first investor, Jeremy Liew of Lightspeed Ventures.

In a comment on a recent Medium post titled "Why Snapchat’s Design is Deliberately Confusing," Liew explained that Snapchat's design "is confusing to some because it breaks traditional metaphors and conventions for app design. Hence it is confusing to those who are expecting those conventions."

"But to those who do not come in with any expectations about 'how an app should work', it isn’t confusing at all," he continued. "In fact, it is MORE intuitive because it takes a fresh look at UI from first principles, rather than starting with established metaphor. And because it is more intuitive, it rewards those who use the app heavily."

Snapchat is touting its youthful appeal and high engagement metrics — like being opened 18 times per day on average — as it prepares for a blockbuster IPO. The app's design is a key Snapchat for to keep its young users addicted, according to Liew.

"This is why Snapchat found an initial user base with teens; those with the least expectation for what UI 'should' look like, and those who use it the most," he said.

Snapchat's "unfolded cube" design, as Liew put it, is a different take on how to navigate an app. Instead of using a menu button or drop-down, you simply swipe in any direction to move between different parts of the app.

If you're interested in Snapchat's design, Liew's full comment and the original "Why Snapchat’s Design is Deliberately Confusing" article he references are both worth a read.

SEE ALSO: How Snapchat's first investor found Snapchat when it had less than 100,000 users

DON'T MISS: Watch Snapchat's CEO explain what makes the app special

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NOW WATCH: Teens told us the brands they love and can't live without

All the big social media apps are going all-in on live video. Facebook, Instagram, YouTube, Snapchat, and Twitter have all spent more and more time and money encouraging both celebrities and regular people to broadcast in recent months. They’re especially eager to get brands to spend advertising dollars that they may normally reserve for TV on those streaming platforms.

But, as this chart from Statista shows, there’s no dominant leader just yet. According to a recent survey by UBS Evidence Lab, 17% of respondents said they watched live video on Facebook in the second half of 2016, just 1% above YouTube — which fell 5% from UBS’ study in the first half of the year — and 5% above Snapchat.

Perhaps the most notable stat here is that only 36% of respondents said they watched live video in the first place, a 2% decrease from the first half of the year — though 63% of millennials said they had tuned in. Facebook, Google, Snapchat and the rest may be smart to bet on live video, but the movement is still young.

SEE ALSO: Jeff Bezos says the Echo 'isn't about' getting people to shop on Amazon, and he may be right

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NOW WATCH: The one mistake everyone makes when trying to clear space on their iPhone

Apple CEO Tim Cook said last week that augmented reality can be as big as the iPhone. 

It's not the first time that Cook has talked up Apple's plans in AR, a technology that integrates computer graphics and internet information with the real world — think of a next-generation Google Glass or "Pokémon Go," or the fun face filters on Snapchat. 

Whatever Apple ends up doing in AR, it's likely to include Metaio technology. Apple bought the company in 2015, as one of the first AR companies it purchased in a mini-run of AR acquisitions. 

In fact, Apple may have gotten a deal on Metaio because of its vision for the technology, Bloomberg reports in a longer story about Apple's M&A strategy. 

From Bloomberg:

That was the case when Apple acquired Metaio in 2015. Bankers appointed by the augmented-reality firm to negotiate weren’t allowed in the room, and while Metaio executives felt the offer was low, Apple’s vision for the technology convinced them to sell, according to a person familiar with the discussions.

This raises the question: What's Apple's vision for the technology, and why did it allow them to get a good price for a company that had been around for over a decade and had active clients, including major companies?

A German document confirming Apple's purchase of the company suggests that Apple paid a euro per share, or roughly 30 million Euros for the company, although that may only have encompassed part of the price of the company.

There are other signs that Metaio could be critical to Apple's AR products or strategy. Metaio's former CEO, Thomas Alt, changed his job title last summer to "Director of Procurement, Strategic Deals Team" at Apple. 

Since the Metaio deal closed, Apple has bought other AR startups including Flyby Media and Indoor.io. Apple has also looked at other AR technologies, but no other deals have yet surfaced. 

Here's a video of what Metaio technology was capable of before it was purchased. What's Apple's vision for this technology?

Did you work for Metaio? Know anything about Apple and AR? Email the author at kleswing@businessinsider.com

SEE ALSO: 9 startups Apple bought in 2016, and what they do

AND: Tim Cook laid out the playbook for Apple's next big thing

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With its S-1 filing finally made public, Snap Inc. is close to selling shares to the public for the first time. The company, known for its wildly popular Snapchat app, is expected to raise around $3 billion and be valued in the ballpark of $25 billion. Snap only started running ads in late 2014, producing just $404 million of revenue last year. If a price-to-sales ratio above 60 doesn't scare you away, here are two more reasons to stay far away from this hyped-up IPO.

Revenue growth means nothing

Snap grew its revenue by nearly a factor of eight between 2015 and 2016. That growth is what has investors excited, but it's really not as impressive as it seems. User growth drove a portion of this increase, with daily active users jumping from 50 million in early 2014 to over 150 million today. But the ramping of ads, from none in late 2014, was the main driver.

If you take any ad-free platform with daily active users measured in the tens or hundreds of millions and start showing ads, revenue is going to explode no matter what. A monkey could be in charge of Snap's ad business at this point, and the company would still be posting incredible revenue growth.

The real challenge is to generate enough revenue to cover costs and turn a profit while not driving users away with excessive advertising. Facebook nailed it. Twitter, which was once putting up its own explosive growth numbers, has failed miserably. Twitter's annual revenue surged from just $28 million in 2010 to $2.53 billion in 2016. That's a 90-fold increase. But costs have exploded as well, leading to massive losses each year, along with a crumbling stock price.

Snap's revenue growth so far proves nothing. The company is losing even more money than Twitter was when it was generating a similar amount of revenue prior to its IPO. Twitter lost $79 million on $316 million of revenue in 2012. Snap lost a staggering $514 million on $404 million of revenue in 2016.

Snapchat's daily active user growth has already started to slow, with the company adding just 5 million new users globally during the fourth quarter, down from a gain of 10 million during the third quarter. Growth could certainly reaccelerate, but it's possible that the company is already approaching its ceiling, much like Twitter has done. There's plenty of room to grow revenue per user, but if that growth is accompanied by exploding costs, Snap will end up just like Twitter.

Public in name only

Snap will be the first U.S. IPO offering only shares with no voting power at all. Other tech companies like Facebook have share structures that leave the founders with an outsize percentage of voting power relative to their ownership stake. But Snap isn't even putting up a facade.

Those who buy into the Snap IPO likely won't care as long as the company and the stock perform well. You don't need voting rights when everything is going great. Problems only arise when the situation turns south. Snap warned potential investors in its S-1 filing about the risks associated with this structure:

This concentrated control could delay, defer, or prevent a change of control, merger, consolidation, or sale of all or substantially all of our assets that our other stockholders support. Conversely, this concentrated control could allow our co-founders to consummate a transaction that our other stockholders do not support. In addition, our co-founders may make long-term strategic investment decisions and take risks that may not be successful and may seriously harm our business.

Having a long-term focus is important for any company. But having no check whatsoever on the two co-founders, CEO Evan Spiegel and CTO Robert Murphy, is a disaster waiting to happen. Here's another line from the S-1 filing:

If Mr. Spiegel's or Mr. Murphy's employment with us is terminated, they will continue to have the ability to exercise the same significant voting power and potentially control the outcome of all matters submitted to our stockholders for approval.

In other words, both Spiegel and Murphy will enjoy a lot of job security, and management with no accountability doesn't seem like a good idea to me.

If there was ever an IPO to avoid, this one is it. A euphoric valuation, a completely unproven business model, and a structure that gives ordinary shareholders no voting rights at all... invest at your own peril.

SEE ALSO: Warren Buffett's 5 best-performing stocks so far in 2017

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When Chi-Hua Chien was a young associate for venture capital firm Accel Partners in 2005, he brought an exciting new company to his bosses.

Soon after that the VC firm invested in Facebook, and the rest is history. 

Now Chien has his own firm, Goodwater Capital, and he and co-founder Eric Kim, have set their sights on what many think could be the next hot internet IPO: Snapchat. 

The pair decided to write their own analysis of parent company Snap's IPO prospectus, doing a little bit of illustrative modeling to put Snap's future growth in perspective of other companies. 

To be clear, neither Kim or Chien are Wall Street analysts, and they're not issuing a "buy" or "sell" rating on Snap. But with investors and tech industry insiders just getting acquainted with Snapchat's business following the release of Snap's S-1 filing, Chien and Kim thought it would be good to simplify the filing's language into something startups and investors can understand — and to add some of their own analysis and insight based on their experiences as early investors in tech companies. 

"There's a pretty big gap between how Silicon Valley thinks and how Wall Street thinks," says Kim, who was an early investor in Twitter. 

Illustrating the future

Should Snapchat follow the growth rates of other consumer startups, Goodwater Capital projects that the company will grow its overall gross revenue from $404 million in 2016 to $14.8 billion by 2027. At that rate, it'll take until 2020 for Snap Inc. to reach profitability.

But none of this is guaranteed. 

"The crux of the issue here is how powerful is their ad unit," Kim told Business Insider.

For one, Snapchat needs to prove that its advertising unit can siphon away the advertising dollars from television as it believes it will. There's also the question of demographics. A survey of more than 2,000 people performed by the firm showed that Snap hasn't broken into the over 30 crowd — something Snap's S-1 confirms.

In Chien's view Snapchat will face two major questions:

• Can it break meaningfully out of the under 30 demographic?
• Can it break into Asia?

When Facebook went public at eight  years old, there were signs that it was breaking into both markets, Chien says. Snapchat is still missing both of those ingredients, but it's also only five years old and much earlier in the company's revenue and growth stages, which means there could be a lot of runway left for investors. 

The other big debate is whether Snap will be the next Facebook or the next Twitter. The former would make Snap another rocketship with an advertising-based money-printing machine, while the latter could bring challenges in monetization and in growing the size of its audience.

Snapchat's admittedly flat user growth doesn't help matters, though the healthy revenue growth Chien and Kim project is encouraging.

For now, neither Chien nor Kim will say whether they think Snap will go the way of Facebook or Twitter. Instead, they defer to laying out the facts and projecting where it might go from here. You can read Goodwater's full breakdown of the company here.

SEE ALSO: Meet the power players who help Evan Spiegel run $25 billion Snap Inc.

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NOW WATCH: WPP CEO Sir Martin Sorrell on Snapchat becoming the 'third force' to Google and Facebook

(Reuters) - Snap Inc, the owner of the popular messaging app Snapchat, has set a valuation range for itself of $19.5 billion to $22.2 billion in its initial public offering, the Wall Street Journal reported, citing sources.

The valuation range, which represents $14 to $16 per share, is close to the lower end of the expected range of $20 billion to $25 billion, the Journal reported. 

A Snap Inc spokesman declined to comment.

Snap Inc filed its IPO registration statement in early February and was expected to record the biggest valuation in a U.S. technology IPO since Facebook Inc.

The company had confidentially registered with the U.S. Securities and Exchange Commission late last year for an IPO.

Snap, which launched itself in 2012 with an app that sends disappearing messages, rebranded itself last year as a camera company and started selling $130 video camera glasses. It generates the majority of its revenue from advertising, seeking to challenge the dominance of existing internet giants.

(Reporting by Sangameswaran S in Bengaluru; Editing by Amrutha Gayathri)

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Snapchat is incredibly popular but many people struggle to figure out how to use many of its features.

Even regular users aren't aware of many of its constant changing features. 

We put together a guide that walks you through the basics of sending and viewing snaps, adding friends, and some less obvious features such as Snapchat's most recent update: the addition of the search bar. 

So whether you're entirely uninitiated, aren't sure if you've mastered all of Snapchat's features, or you just want to see what all the fuss is about — this is for you. 

When you open the app, it will default to the back-facing camera.

Tapping on the big circle will take a picture. Holding down on the circle records a video (of max length 10 seconds).

Once you've taken the picture (or recorded the video), swipe left or right to scroll through and add a geofilter.

Snapchat's parent company, Snap Inc., is seeking to price its initial public offering at $14 to $16 a share, setting its valuation below initial expectations, according to documents filed with the Securities and Exchange Committee on Thursday.

The updated filing confirms Snap is looking to sell 200 million class A shares. That would raise about $3.2 billion, and Snap estimates its proceeds from the deal will be between  $2.1 billion to $2.3 billion.

The filing confirms earlier reports from The Wall Street Journal and the Financial Times that the company has set itself a valuation of $19.5 billion to $22.2 billion.

It's still possible, however, that Snap could increase its valuation range if it sees strong demand for the stock as its IPO road show progresses.

The company will list on the New York Stock Exchange under the ticker symbol SNAP. According to a schedule obtained by Business Insider, the IPO is expected to price on March 1. 

The company's executives will embark on a global roadshow starting on Friday. The schedule shows that they will travel to London on February 20, followed by two days in New York. The roadshow then takes them to Boston, the midwest and West coast. 

Morgan Stanley is the lead bank working on the share sale. The other banks participating are Goldman Sachs, Barclays, Credit Suisse, JPMorgan, Allen & Company, and Deutsche Bank.

Snap, which made its fame with an app that sends ephemeral photo and video messages, describes itself as a "camera company."

The Snapchat app had 158 million average daily active users as of the fourth quarter of 2016. It makes the majority its money through advertising and booked revenue of $404.4 million last year, up from just $58.6 million in 2015. Last year the company introduced its first hardware product, camera glasses called Spectacles that retail at $130.

Snap says it plans to use the IPO funding for "general corporate purposes, including working capital, operating expenses, and capital expenditures."

The company adds that while it might purchase some "complementary businesses, products, services, or technologies," it is not anticipating any material acquisitions.

The class A stock being offered carries no voting rights. Holders of class B stock are entitled to one vote, and it is convertible into one share of class A stock. Holders of class C stock — restricted to the company's founders, CEO Evan Spiegel and chief technology officer Bobby Murphy — are entitled to 10 votes. The class C stock represents 88.5% of the voting power of the outstanding capital stock after the IPO.

"As a result, Mr. Spiegel and Mr. Murphy, and potentially either one of them alone, have the ability to control the outcome of all matters submitted to our stockholders for approval, including the election, removal, and replacement of directors and any merger, consolidation, or sale of all or substantially all of our assets," the regulatory filing reads. "If Mr. Spiegel's or Mr. Murphy's employment with us is terminated, they will continue to have the ability to exercise the same."

It marks the first US IPO to issue shares with no voting rights — something that prompted several of the largest US pension funds to send a letter of objection to Snap earlier this month, the Financial Times reported.

Snap's executives will now embark on the IPO road show, where they will pitch the stock to potential investors. The company is likely to be asked questions about how Snap plans to compete in a competitive market for users and advertising dollars.

The filing shows Snapchat's user growth slowed after the launch of Instagram Stories— a feature that mimics Snapchat's flagship feature, also called Stories, which allows users to send a string of videos and images to their friends that disappear after 24 hours.

Snap's executives are also likely to be quizzed on the company's path to profitability. The company posted an annual loss of $514 million in 2016.

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Tinder is making a push into video with the acquisition of Wheel, a collaborative video messaging app that functions similarly to Snapchat's "Live Stories" format.

A total of four Wheel employees, including cofounders Paul Boukadakis and Chris Shaheen, will join the Tinder team in West Hollywood. Terms of the deal were not disclosed, but Wheel has raised a total of $3.2 million in VC funding to date, according to Pitchbook.

In an interview with Business Insider, Boukadakis said that discussions with Tinder began a few months ago when he showed the Wheel app to Tinder chairman Sean Rad.

"What we were doing with content was all about connecting a young demographic around creating content together," he said. "There was a lot of synergy with what we were doing and what they were doing."

Boukadakis, who will be Tinder's VP of Special Initiatives, said that Wheel was designed to “lower the barrier for entry to content creation” and "make connecting more comfortable."

Rather than facilitating messages between two people, Wheel collects videos around specific themes, like holidays or school trips, that can be added to by others. When the app was in beta last summer, high schoolers created a themed video story for Arnold Schwarzenegger impersonations that eventually caught the attention of Schwarzenegger himself, who then posted to the story.

There are many possibilities for a product like Wheel in Tinder, like video messaging tied to Tinder's group matching feature, but Boukadakis wouldn't elaborate on what's coming next beyond "bringing people together to create."

SEE ALSO: Founder of $3 billion Tinder reveals the clever marketing tricks he used to make the app go viral

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NOW WATCH: TINDER COFOUNDER: Why the people you see on Tinder aren't random

Snap cofounders Evan Spiegel and Bobby Murphy plan to each sell up to $256 million in stock when their company goes public in March, according to documents filed with the Securities and Exchange Committee on Thursday.

The Snapchat maker is seeking to price its initial public offering at $14 to $16 per share and will float a total of 200 million Class A shares. The offering could value Snap at as much as $22 billion.

Spiegel and Murphy are Snap's largest shareholders — combined, they will control 89% of voting rights after the company goes public. They each plan to initially sell 16 million Class A shares on the public market, which come without voting rights.

When Snap goes public, Spiegel will also receive a CEO award of 3% of the company's stock, which is valued at up to $588 million. Spiegel's base salary will be reduced to $1 when Snap's IPO is registered, and his yearly bonus will be based on the company achieving the performance criteria agreed upon by the board.

Aside from Spiegel and Murphy, here are the other biggest Snap stakeholders who plan to sell shares when the company goes public:

• Benchmark partner and Snap board member Mitch Lasky stands to make up to $171 million by selling 10.7 million of his Class A shares.
• Lightspeed Partners, Snap's earliest investor, stands to make up to $74 million by selling 4.6 million of its Class A shares.
• General Catalyst stands to make up to $9 million by selling 572,904 Class A shares.
• Snap board Chairman Michael Lynton stands to make up to $878,512 by selling 54,907 Class A shares.

Additional reporting by Portia Crowe.

SEE ALSO: Snapchat plans to start trading March 2 — here's the full roadshow schedule

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NOW WATCH: The fabulous and charmed life of 26-year-old self-made billionaire, Snap CEO Evan Spiegel

Snapchat's parent company, Snap Inc., said in a filing Thursday that it was seeking an initial public offering valuation off up to $22 billion.

It is looking to price its IPO on Wednesday, March 1, Business Insider has learned.

The company said it was seeking to price shares at $14 to $16.

Snap is looking to list 200 million shares on the New York Stock Exchange under the ticker SNAP.

The active bookrunners are Morgan Stanley, Goldman Sachs, JPMorgan, and Deutsche Bank. Barclays, Credit Suisse, and Allen & Co. are also involved.

Here is the schedule for investors who plan to meet with the tech company:

• Friday, February 17: Mid-Atlantic
• Monday, February 20: London
• Tuesday, February 21: New York
• Wednesday, February 22: New York
• Thursday, February 23: Boston
• Friday, February 24: Midwest
• Monday, February 27: Los Angeles/San Francisco
• Tuesday, February 28: San Francisco
• Wednesday, March 1: New York pricing

Quality of engagement vs. quantity of users

The management team that will pitch the company to investors at its road show will include CEO Evan Spiegel, chief strategy officer Imran Khan, and CFO Andrew Vollero. Vollero will play a backseat role, according to one person familiar with the matter. Khan will present mainly on the company's business model, while Spiegel will talk about the product itself.

In a management meeting with sales people on Thursday morning, Spiegel said he spends 50% of his time focused on the product, 40% of his time recruiting, and 10% on things he doesn't want to do but gets paid to do (that is, running the rest of the business). 

On the roadshow, Spiegel and his team are expected to emphasize quality of engagement over quantity of users, according to the person familiar with the matter. Rather than focusing exclusively on growing the number of users, Snap would rather users really enjoy the product. Spiegel is focused on innovating the product to make it more usable, and continues to believe that in order to do so, users must have higher-end phones.

Snapchat works best on iPhones, and while some problems persist on Android and other phones, Spiegel says he will not dilute the product to make it work on every phone, this person said. So unlike Facebook, which has nearly 2 billion users around the world, Snap will not focus on non-iPhone-using customers in places like the developing world, because those markets are not easily monetized. The logic is that advertisers want to reach North America and develop Europe rather than rest of world. 

Similar to Facebook's roadshow, Snap is expected to simply show a video and then take questions in its meetings with larger groups.

Slowing user growth

Snap, which made its fame with an app that sends ephemeral photo and video messages, describes itself as a "camera company."

The Snapchat app had 158 million average daily active users as of the fourth quarter of 2016. The company makes the majority its money through advertising, and it booked revenue of $404.4 million last year, up from just $58.6 million in 2015. Last year the company introduced its first hardware product, camera glasses called Spectacles that retail at $130.

Snap says it plans to use the IPO funding for "general corporate purposes, including working capital, operating expenses, and capital expenditures."

The company adds that while it might purchase some "complementary businesses, products, services, or technologies," it is not anticipating any material acquisitions.

The class A stock being offered carries no voting rights. Holders of class B stock are entitled to one vote, and it is convertible into one share of class A stock. Holders of class C stock — restricted to the company's founders, CEO Evan Spiegel and chief technology officer Bobby Murphy — are entitled to 10 votes. The class C stock represents 88.5% of the voting power of the outstanding capital stock after the IPO.

"As a result, Mr. Spiegel and Mr. Murphy, and potentially either one of them alone, have the ability to control the outcome of all matters submitted to our stockholders for approval, including the election, removal, and replacement of directors and any merger, consolidation, or sale of all or substantially all of our assets," the regulatory filing reads. "If Mr. Spiegel's or Mr. Murphy's employment with us is terminated, they will continue to have the ability to exercise the same."

Snap is likely to be asked questions about how the company plans to compete in a competitive market for users and advertising dollars.

The filing shows Snapchat's user growth slowed after the launch of Instagram Stories— a feature that mimics Snapchat's flagship feature, also called Stories, which allows users to send a string of videos and images to their friends that disappear after 24 hours.

Snap's executives are also likely to be quizzed on the company's path to profitability. The company posted an annual loss of $514 million in 2016.

SEE ALSO: Snap is seeking an IPO valuation of up to $22 billion

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Snap Inc. has released its full IPO roadshow.

In a 35-minute video, Snap executives break down their company philosophy, how the Snapchat app works, and their ad products. The video is narrated by Snap CEO Evan Spiegel, CTO Bobby Murphy, CSO Imran Khan, and CFO Drew Vollero.

Snap is the most highly-anticipated tech IPO in years, and it's planning to go public on March 1 at a valuation of $22 billion.

We watched Snap's full roadshow video and have collected all the highlights for you. Here's the abridged version:

SEE ALSO: Snap is seeking a valuation of $22 billion — here's how it plans to pitch investors

"Snap is a camera company," begins Spiegel. "We feel like we're really at the beginning of what cameras can do."

"Before, cameras were the perfect way to save or record something you saw. And they sort of helped augment memory. But now cameras augment the way that we talk."

Spiegel compares Snapchat's camera to a mouse cursor on a desktop computer. "With Snapchat, the camera has become the primary input for the phone."

When my gadget-loving boyfriend wore Google Glass in public for the first time, the thing I remember most is the stares. People squinted across trains and sidewalks at the utterly uncool head-mounted display built in the shape of eyeglasses.

So when Snap, the startup behind the disappearing messages app, unveiled Spectacles that can record what you see, we were both thrilled. Spectacles look cool compared to Google Glass — we aren't embarrassed to wear them on weekend adventures and future vacations.

We recently took Spectacles out for a test run in San Francisco. Here's what I thought.

SEE ALSO: REVIEW: Snapchat's Spectacles live up to the hype, but have a ways to go

We set out for Lands End in San Francisco, a rocky, windswept walking path opposite the Golden Gate Bridge. It was sunny, and I wondered if people would notice my sunglasses.

At first glance, Spectacles look like normal sunglasses. But the yellow circles near the lens are a giveaway. They light up when you hit the record button on top of the frames.

With one tap, Spectacles will record what you see for 10 seconds.

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Snapchat executives hit the road on Friday to lure investors into what could be the biggest tech-sector stock offering in years. 

The schedule of meetings will take them to London on Monday, and New York on Tuesday, and eventually across the US. And if it's like other high-profile tech deals of recent years, they'll draw a standing room only crowd of analysts and fund managers looking to get a feel of what the buzz is about.

Already, though, Snap Inc. has raised some eyebrows on Wall Street. After people close to the company floated the idea that it would be valued at up to $25 billion — for months — it hits the road with a price range that puts its maximum value at closer to $22 billion.

It's not a massive difference, but it was enough to raise the question of what happened. There are plenty of reasons for investors to be skeptical of the company's disappearing message app. One is simply that its user base is young, and that means plenty of decision makers on Wall Street won't even understand what it is. 

Snap knows this and one video posted on its website for investors Friday is simply a lesson on how the app works. People close to the company said that preliminary meetings with investors and analysts, late last year, included this lesson. 

Then there's the question of its valuation. Even if $22 billion is lower than it might have sought, the company only reported $400 million of revenue in 2016 and no profits. Also, it has a share structure that means investors paying that will get no say in how it is run. 

So is that all getting baked into the price already? Maybe. Reuters reported that one reason for the slightly lower valuation reflected feedback from those preliminary meetings. 

Playing it safe 

One person close to the situation told Business Insider that Snap is playing it safe with the intention of going higher as soon as demand merits. Conversely, asking for the full $25 billion and being forced to roll it back if investor demand isn't high enough would be a worse outcome that taints the company's trading debut. 

The company said Thursday it was seeking to price shares at $14 to $16, but this person — who asked not to be identified discussing the situation — said the only acceptable price, in reality, will be $16 per share or more. 

This person expects Snap's order book to be oversubscribed, meaning there will be demand for more shares than it is selling.

"If you look at Twitter, Facebook, or Alibaba, there's a pretty consistent playbook that many companies run," a pre-IPO investor in Snap, who also asked not to be identified, told Business Insider. "They come up with range that's very attractive and then they walk it up."

A spokesperson for Snap declined to comment.

So is it worth it?

Among the risks investors are likely to focus on is a slowdown in user growth. In the fourth quarter, for example, Snap says it had 48% more users than a year earlier. That's the slowest growth rate for any of the 12 quarters for which it reported numbers. 

"The deceleration in user growth is a clear indicator that Snap is losing its snap," said Lee Bressler, portfolio manager at Carbon Investment Partners, a small hedge fund. "Instagram's stories feature is a direct competitor and will continue to take market share. This could be the next Twitter, or worse, Myspace."

Twitter, which went public in 2013, is struggling to grow its user base and investors who held the stock for the last three years have been punished for it: at about $16 a share currently, the stock is well below its IPO price of $26. 

Spiegel is set to respond to concerns around its slowing user growth in investor meetings. As Business Insider previously reported, he plans to emphasize quality of engagement over quantity of users. He wants his existing users to really enjoy the product and is focused on innovating to make it more usable. 

Part of that means users must have higher-end smart phones. Snapchat works best on iPhones, and while some problems persist on Android and other phones, Spiegel says he will not dilute the product to make it work on every phone.

So unlike Facebook, which has nearly 2 billion users around the world, Snap will not focus on non-iPhone-using customers in places like the developing world because those markets are not easily monetized. The logic is that advertisers want to reach North America and develop Europe rather than the rest of world. 

In the company's roadshow materials, it said its biggest revenue opportunity is the growing budget for worldwide mobile advertising, which could reach $196 billion by 2020 from $66 billion currently.

Snap's business is to "create the best camera platform so we can drive engagement and monetize that engagement through advertising," Chief Strategy Officer Imran Khan said in the video.

Growing revenue

Focusing on revenue growth makes sense for Snap's executives because of the blistering pace at which sales are increasing. The company sold its first ad at the end of 2014, but really started to monetize the business with the hire of Khan in 2015. His team grew revenues from $58.7 million in 2015 to $404.5 million in 2016. Last summer, the company launched Snapchat Partners, an advertising API, to expand the advertising business.

Consumer tech investors Goodwater Capital estimate Snap will grow revenue to $1.10 billion in 2017, $1.94 billion in 2018, and $2.75 billion in 2019. They estimate the company will turn its first profit in 2020.

Certainly, the company's existing backers are betting that the stock will be more like Facebook — which is up 250% since its 2012 debut — and less like Twitter. 

Of course, Facebook's stock famously tanked in the months after its debut, losing about half of its value and raising questions about its pricing, though the company has now far surpassed that initial valuation. 

"While on an absolute basis, the valuation appears high from an investor's risk/reward perspective, I think Snap becomes very much the next Instagram, or possibly bigger," the existing Snap investor, whose fund has a $150 million stake in the company, told Business Insider.

Instagram, a photo-based social media network, is owned by Facebook. 

Facebook has "consistently tried to kill Snapchat off," the investor added. "It's a risk, but what helps me sleep well at night is that Snap has consistently out-innovated Facebook for five years and I think that is likely to continue."

SEE ALSO: SNAP'S ROADSHOW: Snapchat executives explain why investors should buy into their $22 billion IPO

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A key ad exec is leaving Snap less than a year after joining the company — and only a few weeks before the company's hotly anticipated IPO. 

Sriram Krishnan, who left Facebook in February 2016 to help lead advertising efforts at Snapchat's parent company, is stepping down from his role at Snap. The news was first reported by Recode's Kurt Wagner, but Krishnan later announced it via Twitter on Sunday. 

"After a great year at Snap, I've decided to leave and move back to SF to be closer to @aarthir, family and friends," Krishnan Tweeted, adding in another tweet that he's excited to be doing something "new and different" but will be taking time off for now. 

At Facebook, Krishnan led one of the upcoming threats to Google's ad dominance: Facebook Audience Network. He was hired by Snap to help boost the company's monetization efforts. 

It's unclear why Krishnan is leaving Snap, but the travel between his home in San Francisco and Snap's headquarters in Venice Beach may have been taking a toll, Recode reports. 

His departure isn't ideal for Snap, which is less than a month away from its initial public offering on March 2. Snap is seeking an IPO valuation of up to $22 billion. 

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SAN FRANCISCO (Reuters) - Snap Inc takes to the road in London on Monday to promote its initial public offering with a daring proposition: that it can build hot-selling hardware gadgets and ad-friendly software features fast enough to stay one step ahead of Facebook.

No longer just a purveyor of a smartphone app for disappearing messages, Snap has hired hundreds of hardware engineers, built a secretive product development lab and scoured the landscape for acquisitions as it pursues its newly stated ambition to be "a camera company."

These efforts, which are aimed at developing hardware and so-called augmented reality technologies, are central to the strategy of a company that is seeking a valuation of up to $22 billion in its early March IPO despite heavy losses and the spectre of stiff competition for advertising dollars with a far-larger Facebook.

It is a big gamble and the odds against Snap are long

There is little precedent for a company with its roots in software and social networking succeeding in the notoriously difficult consumer hardware business. Few U.S. firms aside from Apple have made big profits on hardware, and camera and wearable gadget makers have much lower valuations than Snap is seeking. Once-hot camera start-up GoPro is a cautionary tale: its stock sits 61 percent below its 2014 IPO price.

More broadly, creating new products and features that have mass-market appeal and cannot be readily mimicked is a huge challenge, analysts say.

"It’s worrisome,” said Paul Me eks, chief investment officer at Sloy, Dahl & Holst, which manages more than $1 billion in assets. “Snapchat is going to have to continue to be really innovative and distinctive. It’s going to be very tough to trump Facebook.”

Snap declined to comment for this story.

Snap first signalled its new focus with the September reveal of Spectacles, funky sunglasses with an embedded video camera for posting to the Snapchat app. The company spent $184 million on research and development last year, nearly half its revenue.

Augmented reality, which refers to computer-generated images overlaid on real surroundings and viewed through a smartphone or special glasses, is a big part of the plan. Snap's "lenses" image-overlay feature has been a hit, and gives Snap an advertising format that's unique, at least for now.

"If you're going to make the bet longer-term on Snap, you are betting they are going to come up with innovative products that Facebook can't copy," said Nabil Elsheshai, senior equity analyst at Thrivent Financial, who is considering whether to recommend that his firm buy Snap's IPO.

Facebook-owned Instagram last year rolled out a feature called Stories, modeled after Snapchat's feature by the same name. Snapchat had about 100 million fewer downloads than Instagram in 2016, according to market research firm App Annie.

New gadgets offer more ways to interact with Snapc

Snap had 158 million daily active users in the fourth quarter, up just 3 percent from the previous quarter, compared to 14 percent growth during the same period in 2015, according to Snap's IPO filing. New gadgets that offer more ways to interact with Snapchat could help attract new users and get existing users to spend more time on the app.

"Ultimately, that's what advertisers are going to be looking at," said Douglas Melsheimer, managing director at investment bank and consulting firm Bulger Partners. Snap, along with Facebook and host of online rivals ranging from Google to BuzzFeed, is capitalizing on the shift of video advertising dollars from traditional television to the internet.

Snap's IPO filing reads "as if all the hard things in front of them that they have to do are already done," said Rett Wallace, cofounder and chief executive at Triton Research. But, he said, that's not the case. "How will they hold up against all the guys you don't want to be fighting against in the world - Facebook, Google and Apple?"

Hardware is part of the answer. Snap has recruited hardware experts from Apple, Alphabet Inc's Google, Nest and Motorola, according to an analysis of LinkedIn profiles. One former employee described ample resources and support from management for the hand-picked hardware teams.

Last spring, Snap set out to hire up to 300 hardware, augmented reality and virtual reality specialists in a single month, according to another former employee. It also set up Snap Labs, a group dedicated to working on secretive projects. Its members have reviewed acquisition targets in areas including wearable cameras, facial recognition and 3D scanning technology, according to people close to the discussions.

Spectacles itself came from Snap's acquisition of startup Vergence Labs in 2014. The sunglasses surprised even Snap's earliest investors, who say hardware was not in Snap's initial pitch to them.

"It was a disappearing messaging product, and that's it," said Jeremy Liew, a partner with Lightspeed Venture Partners, who made the initial venture investment into Snap. Like most Snap backers he lauded the Spectacles rollout.

Snap has acquired at least 10 startups since 2014 according to firms tracking such deals, and M&A deal makers say Snap is one of the most active shoppers they have heard from.

Snap needs the "Amazon pass": Investors who are willing to allow the company to lose money for the first few years

Snap's R&D investment as a percentage of revenue is far higher than what Facebook or Twitter were spending before they went public. One result of that investment has been a wave of patent filings - about 46 total, according to research firm CB Insights.

They include eye-wear patents for Spectacles, as well as patents for photo and video-capture devices, and object and facial recognition, which is key to developing augmented reality technology.

One former employee said Snap is working to figure out ways to turn the warehouse of data it collects from Memories, a feature for users to save photos on Snap's server, into augmented reality or facial recognition applications.

Spectacles "opens the doors for augmented reality," Elsheshai said. "That's a different direction for the company than just adding more social media capabilities."

The quirky popularity of Spectacles further endears users to Snapchat, he said, but doubted that such niche products can propel the user growth Snap needs in the long term.

The greatest impediment to Snap's innovation efforts, however, may be its hefty losses: the company lost $515 million last year on $404 million in sales. Revenue from Spectacles. was "not material," according to Snap's IPO filing.

Snap, like Amazon.com, is expecting public investors to allow the company to lose money for years on the promise that more investment in innovation will pay off later.

"They are going to have to get the Amazon pass - investors that don't care in the short run," Elsheshai said.

(Reporting by Heather Somerville; Additional reporting by Julia Love; Editing by Jonathan Weber and Tomasz Janowski)

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Until now, the only way to buy Snapchat's Spectacles has been through yellow vending machines that appear unannounced in random cities for 24 hours.

Starting Monday, Snapchat will also sell its camera-equipped sunglasses on its website. Anyone in the US can order a pair of the $130 glasses, which record 10-second video clips and connect to the Snapchat app.

Snapchat maker Snap Inc. is also shutting down its Spectacles pop-up store in New York City that's been open since late November. A spokesperson confirmed that the company's "Snapbot" vending machines will continue to appear throughout the US after going on a "brief" hiatus.

Snap made a big splash with the unexpected debut of Spectacles last fall. The product garnered long lines during the weeks leading up to the holidays, and pairs were quickly resold online for thousands of dollars. Demand has since slowed, and Snap likely feels confident that it can finally fulfill online orders.

Spectacles represent Snap's first hardware effort to rebrand itself as a "camera company" ahead of its $22 billion public offering in March. Snap said it had planned to "significantly broaden the distribution of Spectacles" in its IPO paperwork earlier this month, although the product "has not generated significant revenue" yet.

SEE ALSO: Everything you need to know about Snapchat's Spectacles glasses

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• Snap began its IPO roadshow in London on Monday.
• Some investors have expressed concerns over the unusual share structure that will not give IPO investors any voting rights.
• The Snapchat parent company is also not providing future revenue projections.

LONDON (Reuters) - Snap Inc, owner of popular messaging app Snapchat, kicked off its first investor roadshow on Monday, looking to persuade London money managers to back its initial public offering in the face of concerns about its growth prospects, valuation and corporate governance.

The U.S. company, which has yet to make a profit, aims to raise between $19.5 billion and $22.3 billion from listing on the New York Stock Exchange, after cutting its initial target of $20-$25 billion last week following investor feedback.

Investors attending Monday's event said Snap's 26-year-old Chief Executive Evan Spiegel gave a sleek presentation. However, they were disappointed there were no projections on the company's future revenues or advertising share - an indication of how quickly Snap thinks it can make money from its huge user base.

"That's the million dollar question and we won't find out for some time," said one potential backer on his way out from the hour-long event where Spiegel ditched his usual casual wear and wore a suit with no tie.

Some were disappointed that it was just a question-and-answer session with no demonstration of Snapchat's spectacles, launched in the United States late last year, which come with a built-in camera.

One attendee, however, said it made sense not to push the hardware angle too much at this stage.

Few U.S. firms aside from Apple have made big profits on hardware, and camera and wearable gadget makers have much lower valuations than Snap is seeking.

Most of the questions related to how the company plans to manage its engagement with advertisers and users, and monetize that better, according to people who were in the room.

Its responses won over some potential investors.

"Management did a good show, they were very convincing," said one attendee.

Los Angeles-based Snap also plans roadshows in New York, Boston and San Francisco. It expects to price its IPO after the U.S. market closes on March 1, according to a confidential document seen by Reuters.

Governance concerns: A 'major red flag'

Some fund managers have said they will stay away from Snap given its decision to adopt a three class share structure - the first of its kind - that will mean shareholders who buy in through the IPO will not have any voting rights.

Instead Spiegel and his co-founder Bobby Murphy will have the right to 10 votes for every share, and existing investors one vote for each of their shares.

"My view would be investors should tread with caution here, the fact the shares will carry no voting rights would be a major concern for me from a governance perspective," Richard Saldanha, global equities fund manager at Aviva Investors, said ahead of the roadshow. Aviva manages 318 billion pounds across a range of asset classes.

Mike Fox, head of sustainable investments at Royal London Asset Management, said the inability to vote against a company at its annual general meeting was a "major red flag" and he would not be taking part in the IPO.

"It is worth noting that while many U.S. tech firms have delivered tremendous returns for investors following their listing, performance of firms in this sector has not always matched investor expectations following an IPO," he said, also before the meeting.

Others were less worried, though.

"Snapchat offers a cocktail of hype, insane valuations, dubious fundamentals and weak governance. However, the same was said about companies like Google and Facebook when they listed," said Geir Lode, head of global equities at Hermes Investment Management.

"For tech companies early in their lifecycle the weak governance structure is fairly typical, and even with those concerns subsequent shareholder returns have often been stellar."

With tech-savvy millennial users of Snap's products able and willing to quickly jump ship to the next Big Thing, there were also concerns about its competitive position versus industry rivals such as Facebook.

"Barriers for entry would appear low here as well, and you could see their demographic - 18-34 year olds - easily shift to another service," Aviva Investors' Saldanha said. 

(Reporting by Simon Jessop; Editing by Susan Fenton)

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Snap Inc. took its initial-public-offering road show to London on Monday, looking to persuade potential UK investors to buy up the company's stock, but one London-based analyst remains "neutral" about the company's ability to drive upside beyond its initial price range of $14 to $16 a share.

Atlantic Equities research analyst James Cordwell did not attend the presentation on Monday but spoke with clients who did. (Atlantic Equities is also not one of the banks underwriting Snap's IPO.)

In a detailed research note, Cordwell set a $14 price target for Snap's stock for the end of this financial year. That would imply a market cap of $19.5 billion.

He said while the Snapchat app was an "impressive 'made for mobile' service" that was popular among young users, it would be difficult to expand its audience base beyond this demographic. And, all the while, competition is intensifying from Facebook, which is adding Snapchat-like features to many of its major properties, including Instagram, Messenger, and, most recently, WhatsApp.

Cordwell wrote: "With expansion beyond the core audience likely challenging, sustainability of engagement concerns to persist, and margins structurally lower than peers, we do not see upside to the $14-$16 IPO valuation range."

Revenue projections

Snap generated $404.5 million in revenue in 2016, according to its S-1 filing with the Securities and Exchange Commission. Cordwell thinks that may rise to $1.13 billion this year. Cordwell projects revenue will increase to $2.16 billion in 2018, rising to $3.03 billion in 2019.

Snapchat's average revenue per user is less than 15% that of Facebook, a fact Cordwell said demonstrated a "clear opportunity for significant near-term revenue growth."

But Cordwell assumes Snap will reach only 55% of Facebook's current monetization level by 2020, given Snapchat's heavy skew toward developed markets, its demographic skew toward younger users who are less likely to spend on advertisers' products, and the smaller amount of user data Snapchat has compared with Facebook, which could limit its potential among direct-response advertisers.

Snapchat will need to match Facebook's monetization levels on a per-hour basis if it is to ramp ad spending beyond the $2 billion a year at which Twitter began to run into revenue growth issues, Cordwell predicted.

Smaller margins compared with its peers

Snap's margins are lower than its peers', a reality Cordwell says is owing to the infrastructure costs required to deliver messaging centered on videos and photos, the revenue it shares with publishers in exchange for their content, a focus on direct sales versus self-serve, and its research-and-development costs.

Cordwell predicted Snap wouldn't reach non-GAAP (generally accepted accounting principles) profitability until at least the end of 2019 — with its GAAP operating margin in the long term unlikely to be higher than 15%. By comparison, Facebook is at about 45%.

Snap posted adjusted EBITDA (earnings before interest, tax, deprecation, and amortization) loss of $459.4 million in 2016. Cordwell predicted that loss would widen slightly to $482 million in 2017 before coming down to $184 million in 2018 and then turning to profitability of $44 million in 2019.

"Our price target effectively assumes Snap trades at over 50x FY20 EBIT (earnings before interest and tax) multiple at YE19, well in excess of the historical range of this metric for Facebook, though Snap’s margins still likely to be below structural potential at this point."

Cordwell says Snap will need to gain better leverage on its tech spending and improve its sales efficiency to become profitable.

Snap has been pitching itself to investors as a "camera company," which would imply that it does not want to become wholly reliant on ad sales in the future. So far, Snap's only hardware product is Spectacles, the camera glasses it launched last year that are available only in the US.

Cordwell doesn't think Snap's hardware products will be a near-term profit driver, but he notes that new products focused on "mixed reality" could help drive the company's stock multiple.

He writes: "To drive upside to the IPO range it seems necessary to believe Snap can leverage its AR (augmented reality)-style features and hardware efforts into a strong position in 'mixed reality', but it seems too early to attach value to this opportunity."

Earlier on Tuesday, Reuters reported that while investors attending the London leg of the Snap IPO road show were impressed with "sleek" presentation, some were disappointed the company did not provide projections on future revenue and advertising share.

SEE ALSO: Some investors who attended Snap's London roadshow voiced big concerns

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This post originally appeared on Medium. Read the original post here.

Snapchat is the darling of technology: for years, we’ve fawned over the company for being innovative, using daring interfaces and out of the ordinary tactics to get people to pay it.

Despite the fact that the app was always what some would consider “hostile” to new users, full of design anti-patterns, it managed to gain a fledgling user base of 180 million monthly active users. It’s an impressive feat, and one that the company is about to IPO for $20 billion over, but I think the company’s reign is coming to an end.

Snapchat started as something completely foreign to us all: it was a camera that didn’t save anything — if you took a photo, and it was opened by someone else, it was gone forever. At the time, that was alien, but eventually, as we all grew weary of social media and burnt out on over-sharing, it caught on.

Ephemeral messaging, the kind of disappearing messages invented by Snapchat, were a new world: you could share anything — a dumb thought, a nude photo, or a photo of a sunset — all in the same place with little fear that it’d escape once your recipient saw it.

Stories, however, were Snapchat’s genius moment. Being able to drop a continuous stream of interesting, or banal, photos into one continuous loop was fascinating at the time that the company released it.

The addictiveness and popularity of Snapchat’s Stories feature continue to this day, but the company finds itself at something of a crossroads: Facebook’s cloned the entire thing, and it’s doing it better than Snapchat ever could, and innovating at a faster clip.

When Instagram Stories launched well over a year ago, I thought it was cute, but couldn’t understand why I’d ever jump from Snapchat. Simply put, like you, I was hooked on snapping everything as it was. I loved sharing photos into my story, and rarely send pictures directly to others, because it’s a fun way to passively share what I’ve been up to over the course of the day.

Throughout each day, friends browse my story and fire back a chat message if they like it, and I do the same. Before I switched, I was probably checking Snapchat once an hour to see if anything new had happened. Like you, I was addicted to the service — more than a disturbing amount.

But I’ve noticed over recent months a shift: less people are using Snapchat around me, and I’ve stopped entirely. Photos in my stories that regularly got over 5,000 views a day, now get less than half of that — and only a handful of the people I actively followed along with are even sharing anymore.

We’ve all moved to Instagram Stories. I never thought I’d do it, but eventually, as I used it more, I found Instagram’s rip-off of Snapchat to be more authentic. Suddenly, instead of checking one app for beautifully manicured photos, and the other for raw feeds, I could get everything in one place… and it actually worked better.

Snapchat’s story feed was fun at first, but the company has tweaked it to the point that it’s not as good anymore.

Now you’re forced to pick which stories to watch end-to-end before even starting, and it’s filled with either advertisements between each one, or shitty clickbait from the likes of the Daily Mail trying to get you to click on Kim Kardashian’s boobs again.

Instagram, somehow, has innovated on Snapchat’s core ideas at an incredible clip: instead of making you see a story sequentially, you can tap either side of the screen to skip forward or back. You can swipe to get between stories, creating what amounts to an endless loop of content, or you can tap and hold to freeze-frame it on what you’re seeing.

Not only that, but Instagram’s added other content types already: live streaming, boomerang, hands-free and a bunch more. It cloned stickers, added filters and assumably, will soon launch face masks with that handy acquisition it made a few years ago. You can tag your friends directly in a picture, and even link out to external websites. Frankly, Instagram has made Snapchat better faster than Snapchat could make Snapchat better.

These thoughtful user-experience innovations probably come right from the core of Facebook: the company’s been thinking about this for years. Meanwhile, Snapchat’s experience is an exercise in a maze that looks something like this:

 

What really takes the cake, however, isn’t thanks to Snapchat’s terrible execution, but Instagram’s biggest strength: it’s already got a strong network underneath, full of people that I’m extremely interested in following.

If it’s not a friend’s stream I’m browsing through, it’s an incredible photographer’s, or a film maker in North Korea showing what life is like there.

Snapchat might have some of these users, but Instagram has the sheer majority because they’re just sharing there anyway — and what’s surprising to me, is these influencers seem to be shifting at a high click.

Half of the stories I drop into on Snapchat these days are these people asking me to follow on Instagram too, and if they’re not shifted entirely already, they’re definitely loading the same pictures into both platforms already.

I think this, at its core, has always been Snapchat’s problem. When you added a friend on Snap, it felt like you were performing an intimate ritual — it’s almost like letting someone into your underwear drawer — and feels like a big deal.

Be it scanning each other’s codes, typing out your username, or using the ‘nearby’ feature, adding someone on Snapchat is a big deal, and feels akin to a huge step in your friendship (it can also easily be misinterpreted as an attempt to flirt).

Instagram on the other hand feels just as free as following someone on Twitter, or adding a friend on Facebook: it’s non-committal, and isn’t a big deal. You don’t mind doing it with strangers, and it doesn’t feel strange. The service’s ease of discovery is miles ahead too, and encourages you to follow interesting stories from people every day, tucked away in the explore tab.

Snapchat’s discoverability looks more like this:

 

I think, after years of being an active Snapchat user and fan, I’ve decided to move on. The service was fun, but I’ve realized recently that it doesn’t offer anything unique, and even if Facebook was copying the company in the first place, it’s done a better job than Snapchat ever could.

The majority of my friends have moved across, and those who initially relented seem to have started getting their feet wet with Instagram too. Facebook, be it accidentally or on purpose, has created an Instagram renaissance that has us more addicted than ever before because we get to see beautiful photos in the feed, then the raw, real life stuff in stories.

Yes, that’s anecdotal at best, but I believe that’s what’s happening on a larger scale too: how else did Facebook get 150 million daily active users so quickly?

 


Snapchat’s S1 filing, which it’ll use to go public in the next few weeks, painted an interesting picture of the company: it’s either at the crux of something big, or a massive decline in users.

And I don’t think that scales to a billion people — or even that many more than the service might already have. Snapchat’s end game, of course, could be entirely different. It’s said repeatedly that it’s a camera company, not an app, and perhaps that’s true: maybe Spectacles are really the big thing™ and everything else is merely a distraction.

But my biggest question is, with thousands of employees and a years-long lead over everyone else, why has Snapchat floundered when its first real competitor has emerged? Facebook is pouring resources into what’s become an all-out war, and it could escalate even further if the 1.83 billion users of the core app are given a way to sync stories across Facebook, Messenger and Instagram in one tap.

I don’t think that it’ll ever go away, but I do think we’re watching another Twitter being hatched: it simply has limited appeal after a while, and eventually comes to feel like yet another service you need to keep topped up.

Snapchat, as it stands, isn’t going to survive. Maybe it evolves into a media platform instead, or something bigger, but in its current I don’t think it’ll be able to hold out.

P.S — As I was finishing writing this, Facebook added Stories to WhatsApp too!

This post originally appeared on Medium. You can follow Owen on Instagram Stories here, and find his weekly technology podcast here.

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