Who Owns Snapchat?

Evan Spiegel and Robert Cornelius Murphy are the co-founders and, respectively, CEO and CTO of Snapchat. Evan Spiegel owns 3% of Class A stocks, 25.7% of Class B stocks, and 53.4% of Class C stocks for a 53.2% voting power, whereas Robert Murphy owns 6% of Class A stocks, 25.7% of Class B stocks, and 46.6% of Class C stocks for a 46.6% voting power. Snapchat runs an advertising-based business model.

Snapchat has beneficial ownership as of 2022; Snapchat has three types of stocks, Class A, B, and C.

Origin story

Snapchat was initially conceived by former Stanford University students Bobby Murphy, Reggie Brown, and Evan Spiegel.

The characteristic feature of Snapchat where pictures and messages are only available for a short time was the brainchild of Brown, who approached Spiegel with his idea because he had more business experience.

Today, the Snapchat app has more of a focus on chronological user stories and short-form content where businesses can promote their brands.

The app’s mostly younger audience of 332 million users sends around 4 billion so-called “snaps” every day with 101 different product features so far developed.

To see how Snapchat arrived at this point and managed to carve out a niche in the crowded social media space, let’s take a general look at the early days of the company.

Development at Stanford University 

As we touched on above, Snapchat was developed while Murphy, Brown, and Spiegel were students at Stanford University.

The story goes that Brown came up with the idea for a social media platform where users could post videos and photos that were erased a few moments after they were viewed.

Brown then got Spiegel involved and also Murphy who was tasked with writing the code for the app.

After working for a few months, an app known as Picaboo was launched in the App Store on July 8, 2011.

During this time, Brown created the company mascot known as “Ghostface Chillah” which still serves as Snapchat’s logo today.

Departure of Brown

Soon after Snapchat was launched, Brown was ousted from the company for reasons which remain a mystery.

However, court documents reveal the three co-founders had a “contentious phone conversation” which resulted in Spiegel and Murphy changing the passwords for Snapchat’s accounts and servers.

Brown later sued the pair for breach of contract and settled for a total of $157.5 million split over two payments in 2014 and 2016. As part of the settlement, Snapchat released a statement attributing the idea for the company to Brown.

Introductory blog post

Spiegel then made an introductory blog post on the Snapchat website espousing a new way of sharing information that one wanted to see disappear. 

While the post is somewhat ironically no longer available, Spiegel described the app in terms of moments we can all relate to:

Snapchat isn’t about capturing the traditional Kodak moment. It’s about communicating with the full range of human emotion – not just what appears to be pretty or perfect. Like when I think I’m good at imitating the face of a star-nosed mole, or if I want to show my friend the girl I have a crush on (it would be awkward if that got around), and when I’m away at college and miss my Mom…er…my friends.

The idea of social media activity that would not come back to haunt users appealed to the younger generation in particular.

Video is added

Video was added to Snapchat around a year after it was launched which coincided with the app’s release in the Google Play store.

While only ten seconds in length, videos helped propel the platform to around 50 million daily snaps. 

The following year, developers added the “Stories” and “Chat” features with the former enabling users to post a sequence of snaps available for a maximum of 24 hours.

By 2015, there were 75 million active monthly users and advertising became an increasingly lucrative source of income.

In early 2017, Snapchat held an IPO on the New York Stock Exchange and achieved a valuation of $33 billion.

Snapchat business model today

Nowadays, the Snapchat Business Model moves around AR experiences through its app and spectacles.

Snapchat is a camera company which business model moves across three industries: social media, content marketing, and AR. Snapchat generates most of its revenue from several ad formats (AR Ads, Snap Ads, Sponsored Geolifters, and Sponsored Lenses). The company also produces Spectacles, a set of AR glasses enabling content creators to produce interactive experiences through Snapchat. 

Indeed, by 2022, Snapchat’s Revenue was $4.6 billion.

99% of Snapchat’s revenue comes from advertising. In 2022, Snapchat grew to over $4.6 billion in revenues, compared to $4.12 billion in 2021 and $2.5 billion in 2020. By 2022, Snapchat recorded a net loss of over $1.4 billion.

And Snapchat was still not Profitable.

In 2022, Snapchat recorded over $1.4 billion in net losses, with $4.6 billion in revenues, primarily from advertising. Snapchat has not yet found its way to profitability.

Snapchat Users grew to 375 million by 2022.

Snapchat measures its growth through a metric called Daily Active Users (DAUs), as a user on Snapchat usually interacts with it multiple times a day. Over the years, Snapchat DAUs grew from 229 million in early 2020 to 375 million by the end of 2022.

With Snapchat ARPU at $3.47 per user.

Snapchat global ARPU was $3.47 in Q4 of 2022, compared to $4.06 in Q4 of 2021.

For some context, in the same period, Facebook’s worldwide ARPU was over $10.

The ARPU, or average revenue per user, is a key metric to track the success of Facebook – now Meta – family of products. For instance, by the end of 2022, Meta’s ARPU worldwide was $10.86. While in US & Canada, it was $58.77; in Europe, it was $17.29; in Asia, $4.61 and in the rest of the world, it was $3.52.

Key takeaways:

  • Snapchat was initially conceived by former Stanford University students Bobby Murphy, Reggie Brown, and Evan Spiegel. Brown departed the company soon after the app was launched in 2011 for reasons that remain unclear.
  • In an introductory blog post, Spiegel described the app in terms of moments that occur online that we’d rather not have preserved for posterity. This premise proved to be a hit with younger social media users.
  • When video functionality was added at around the same time as the app became available for Android, Snapchat quickly reached 50 million daily snaps. Additional features and a 2017 IPO followed.

Key Highlights

  • Co-Founders and Ownership:
    • Evan Spiegel is the CEO and Robert Murphy is the CTO of Snapchat.
    • Evan Spiegel owns 3% of Class A stocks, 25.7% of Class B stocks, and 53.4% of Class C stocks, giving him a 53.2% voting power.
    • Robert Murphy owns 6% of Class A stocks, 25.7% of Class B stocks, and 46.6% of Class C stocks, giving him a 46.6% voting power.
  • Snapchat’s Stock Structure: Snapchat has three types of stocks: Class A, Class B, and Class C.
  • Origin Story: Snapchat was initially conceived by Stanford University students Bobby Murphy, Reggie Brown, and Evan Spiegel. The unique feature of disappearing pictures and messages was Reggie Brown’s idea, and it was pitched to Evan Spiegel, who had more business experience.
  • Snapchat’s Evolution: Snapchat has evolved from its early days of disappearing messages to focus on chronological user stories and short-form content. It has amassed a user base of 332 million, with users sending around 4 billion “snaps” every day.
  • Development at Stanford: The app, originally called Picaboo, was developed by Brown, Spiegel, and Murphy while they were students at Stanford. Bobby Murphy was responsible for writing the app’s code.
  • Departure of Reggie Brown: Reggie Brown was ousted from Snapchat for unknown reasons. Legal proceedings followed, resulting in a settlement where Snapchat acknowledged Brown’s contribution to the company.
  • Introductory Blog Post: Evan Spiegel introduced Snapchat as a platform for sharing moments that users wanted to disappear. The concept of ephemeral social media content appealed to younger users.
  • Addition of Video: Snapchat introduced video functionality about a year after its launch, which contributed to its rapid growth, with around 50 million daily snaps.
  • Growth and Advertising: Snapchat continued to grow, introducing features like “Stories” and “Chat.” Advertising became a significant source of revenue, leading to an IPO in early 2017, valuing the company at $33 billion.
  • Snapchat’s Business Model Today:
    • Snapchat is a camera company operating in social media, content marketing, and augmented reality (AR).
    • The majority of revenue (99%) comes from advertising, with various ad formats.
    • Snapchat also produces Spectacles, AR glasses for content creators.
    • As of 2022, Snapchat’s revenue was $4.6 billion, with a net loss of over $1.4 billion.
    • Snapchat had 375 million Daily Active Users (DAUs) in 2022, with an ARPU of $3.47 per user.
  • Comparison with Facebook (Meta):
    • Snapchat’s ARPU ($3.47) is significantly lower than Facebook’s (Meta) worldwide ARPU ($10.86).

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Read Also: Snapchat Business Model, Facebook Business Model, Instagram Business Model, YouTube Business Model, Twitter Business ModelDigital Business ModelsPlatform Business ModelsAttention-Based Business Models.

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