Evan Spiegel and Robert Cornelius Murphy are the co-founders and, respectively, CEO and CTO of Snapchat. Evan Spiegel owns nearly 3% of Class A stocks, 26% of Class B stocks, and 53.4% of Class C stocks for a 53.2% voting power, whereas Robert Murphy owns 5.2% of Class A stocks, 26% of Class B stocks, and 46.6% of Class C stocks for a 46.4% voting power. Institutional investors comprise FMR (10.65% ownership), Tencent Holdings (16.7% ownership), and The Vanguard Group (6.4% ownership).
Snapchat has beneficial ownership as of 2023; Snapchat has three types of stocks, Class A, B, and C.
| Aspect | Description | Analysis | Examples |
|---|---|---|---|
| Products and Services | Snapchat is a multimedia messaging app that allows users to send photos, videos, and messages that disappear after being viewed. It offers various features, including Stories, Discover, Snap Map, and augmented reality (AR) lenses. | Snapchat focuses on providing a unique and engaging communication platform, emphasizing ephemerality and interactive features. | Snapchat Stories, Discover content, Snap Map location sharing, AR face filters and lenses. |
| Revenue Streams | Snapchat generates revenue primarily through advertising. This includes sponsored content, sponsored AR lenses, and advertising within Stories and Discover. Additional revenue comes from premium features like Snap Originals and Snap Premium. | Advertising is the core revenue source, leveraging the app’s large user base. Premium features and partnerships contribute to diversified revenue. | Sponsored ads in Stories, branded AR lenses, partnerships with content creators for Snap Originals. |
| Customer Segments | Snapchat targets a primarily young and tech-savvy audience, including Generation Z and Millennials. It appeals to users seeking ephemeral and creative communication, as well as engaging multimedia content. | Focusing on younger demographics allows Snapchat to tailor its features and content to their preferences. It’s popular among those seeking innovative ways to connect and express themselves. | Generation Z users, Millennials, users looking for creative messaging. |
| Distribution Channels | Snapchat primarily distributes its app through app stores (Apple App Store and Google Play Store). It also leverages social media, influencer marketing, and partnerships for user acquisition and retention. | App store distribution is the main channel for user acquisition. Social media and influencers help maintain user engagement and growth. | Apple App Store, Google Play Store, Snapchat’s official social media accounts. |
| Key Partnerships | Snapchat collaborates with advertisers, media companies, and content creators for sponsored content and AR lenses. It also partners with smartphone manufacturers to integrate Snapchat’s AR features into their devices. | Advertising partnerships drive revenue, while content partnerships enhance user engagement. Integrating AR into smartphones expands Snapchat’s reach. | Partnerships with major brands for sponsored AR experiences, collaborations with media companies for Discover content. |
| Key Resources | Snapchat’s key resources include its app development teams, AR technology, user base, brand recognition, and a growing ecosystem of content creators and advertisers. | Skilled development teams are essential for app updates and innovation. A strong user community contributes to brand loyalty and content creation. | In-house app development teams, AR technology stack, user-generated content. |
| Cost Structure | Snapchat incurs costs in app development, server maintenance, marketing and advertising, user acquisition, employee salaries, and content creation for Snap Originals. | Investment in app development and marketing is essential for user retention and growth. Employee salaries are a significant cost due to tech talent. | Developing new app features, marketing campaigns, content creation for Snap Originals. |
| Competitive Advantage | Snapchat’s competitive advantage lies in its unique approach to ephemeral messaging, engaging multimedia content, augmented reality features, and its appeal to younger demographics. It offers a creative and interactive platform for communication and entertainment. | Snapchat’s focus on ephemerality and creativity sets it apart in the messaging app market. AR features and engaging content contribute to user retention. | Disappearing messages and Stories, innovative AR face filters, exclusive Snap Originals content. |
| Value Proposition | Snapchat offers users a platform for creative and interactive communication, where they can connect with friends and explore engaging multimedia content. It provides a unique way to express themselves and stay connected. | Snapchat’s value proposition centers on providing a fun and expressive messaging platform, offering users a unique way to communicate and share moments, stories, and creative content with friends and followers. | Sending disappearing Snaps to friends, watching exclusive Snap Originals content. |
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.
Indeed, by 2023, Snapchat’s Revenue was $4.6 billion.
And Snapchat was still not Profitable.
Snapchat Users grew to 414 million by 2023.
With Snapchat global ARPU at $3.29.
For some context, in the same period, Facebook’s worldwide ARPU was over $10.
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 Model, Digital Business Models, Platform Business Models, Attention-Based Business Models.
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