Actionable Insights

• Disrupting E-commerce. Snapchat's Augmented Reality ambitions give them a massive chance to reshape how e-commerce works.

• Snap's hardware is extremely advanced. Investments and acquisitions in hardware are on par with Meta.

• Pioneering technology. Snap has turned Augmented Reality from an obscure technology to the mainstream in Gen Z.

• Gen Z. Snap is one of the best brands for Gen Z and teens. This puts them in a very valuable position demographically compared to other social media platforms.

• A soon to be member of Big Tech. Snap's growing revenue, long term emphasis on innovation, strong leadership, and sticky product puts Snap in a strong position to become a member of FAANG or FAANGS after Snap's inclusion.

Hey all Robin here. Today's going to be my first post on BeeHiiv and the very first post that I've done in a long time.I have taken some time off to better refine my writing to better serve you, my readers. 

Today's newsletter will focus on Snap, their augmented reality ambitions and how they intend to disrupt the internet. Let's get right into the thick of it. p.s. before I begin, Snap and Snapchat mean the exact same thing. Snapchat is a product of Snap, but the terms are interchangeable.

The Silly Tech Company 

Funny dog filters, dancing hotdogs, really bad explore videos, and zoomers...

Are those some of the words that pop up in your head when you think of Snap and Snapchat?Well, you aren't exactly wrong. Most of it isn't sophisticated, it's kind of a joke. But there's a lot more than what meets the eye for this tech company.Snapchat’s current users range from 90% of people who are aged 13-24 in most western democracies, and 75% of people who are 13-34 years old. Their users are 3X more likely than non-Snapchatters to say they are using AR more than they did last year to try on products. This has huge implications for the future of e-commerce as users want to see how items look before they buy them.

However, Snapchat—despite all of these incredible numbers—is still one of the more ignored companies in Silicon Valley due to the fact that they had an extremely rocky IPO, difficulty monetizing, and the existential threat of the titan that is Meta constantly looking to squash them. For most of Snapchat's existence they have been in a long war against Mark Zuckerberg and Facebook fighting for their very existence.

Snapchat was founded by Evan Spiegel (current CEO) & Bobby Murphy (current CTO) at Stanford for some pretty interesting purposes (very nsfw pics) that a lot of college students would find interesting and was called Picaboo at the time.Evan Spiegel had a textbook “frat boy image” for most of his life, and it negatively impacted Snapchat's public image when his old college texts leaked and the company experienced one of the worst hacks in social media history. 

However, Snapchat persevered! The company encountered new challenges with a newly minted King Zuckerberg who was desperate to preserve his role as the King of Social Media. Snapchat was faced with multiple acquisition offers and tough choices to make, yet they chose to remain independent instead of joining forces with Facebook. It would prove to be one of the smartest choices Snapchat would ever make, in the grand scheme of things. The app exploded with younger users in middle schools, high schools, and colleges. Before TikTok, you could call it the heart of Gen Z and Millennials. But there was a big problem. Snapchat had absolutely no idea how to monetize, so they began releasing features like stories, the explore section, ads, and the most coveted feature in American social media—filters. Filters are the heart of Snapchat and a key reason why Augmented Reality is where it is today.While they mostly seem silly to the majority of people, these filters are remarkable in building brand loyalty and keeping users engaged. With the addition of filters, Snapchat went from the chat app for NSFW pictures to the Social Media giant it is today. 

ECom + Augmented Reality

Snapchat is by far the most important big tech company (aside from Amazon) that is actively trying to change e-commerce. Snapchat is doing this via augmented reality by building out partnerships. These partnerships provide the companies that they work with "a measurable and repeatable return on investment for advertisers". They also provide users with a chance to try on items before they actually buy them. *This is an existential problem for e-commerce companies since when you buy something online you really have 0 chance to try it on.* Augmented Reality changes this and according to Snapchat has resulted in a 25% decrease in returns.This ability to try things on can possibly allow Snapchat to carve up a sizable share of the fashion space and according to recent partnerships they are planning to just that. In Q4 2021, Snapchat partnered with indian e-commerce company Flipkart to create AR filters to try on clothing. 

Augmented Reality changes this, and according to Snapchat, has resulted in a 25% decrease in returns.

This ability to try things on can possibly allow Snapchat to carve up a sizable share of the fashion space, and according to recent partnerships they are planning to do just that.

In Q4 2021, Snapchat partnered with indian e-commerce company Flipkart to create AR filters to try on clothing.

Unparalleled expertise in Metaverse Hardware

Aside from expertise in Augmented Reality, Snap also has expertise in Metaverse hardware via Spectacles. I've already covered spectacles pretty extensively right here. 

Tl;dr Snapchat's spectacles are smart glasses that create a layer of augmented reality filters and games over the physical world. Snap believes that their role in the world is to be a camera company that can bring wonder via funky filters and augmented reality games. However, a recent Snapchat acquisition of a non-invasive BCI company has elevated them on my list of companies to pay close attention to. 

On March 23, 2022, Snapchat acquired French startup NextMind and they have deep expertise in creating devices that allow you to use just your mind to interact with augmented reality.  

You wear a headband and it uses your neural activity to understand your intent and has the computer react accordingly. Generally when Snapchat makes an acquisition like this, the technology is incorporated into Spectacles. Ex: Snap acquired WaveOptics for $500 million and now uses their display technology for Spectacles.  However, Snapchat differs drastically from the vision that Mark Zuckerberg proposes of the Metaverse. Snapchat wants to augment reality. You don't need to wear a clunky large headset. On the other hand, Meta wants you to be indoors and a "Metaverse Hermit". 

The Snapchat and TikTok Generation

Gen Z is now being called the Snapchat and TikTok generation for good reasons.They have the attention span of a gold fish—enjoy silly filters and short videos—and have a lot of consumer purchasing power. In a Piper Sandler survey, teens ranked TikTok and Snapchat as two of their top social media apps with the two nearly being neck and neck. 

The Snapchat generation is key for advertising. Users between 13-34 years old is the most malleable age group in terms of consumer preferences and ideology. . It's the age range where people do most of their self-discovery, purchasing, and develop loyalty with brands. 

However, Snapchat is facing increasing competition from TikTok and their possible desires to explore augmented reality for advertising as well. 

And let me tell you this…Ads for Gen Z are insanely lucrative with Snapchat finally becoming profitable and growing revenue 42% last quarter. Snapchat has not been affected by Apple's push for privacy as they have the decency to not be total creeps.  

Don't fade the zoomers, especially zoomers with money. 

Looking towards the future

Looking towards the future, it's clear that Snapchat has a very unique long term future when compared to most tech companies.They're the heart of a generation being the go-to communication app for zoomers and augmented reality experiences.They’re also a key company in the race to develop augmented reality that everybody can use.  It's likely that Snapchat will hold onto their position as being one of the most important apps for zoomers and increase revenue going forward. Their wide Gen Z audience and normalization of Augmented Reality puts them in an extremely advantageous position to beat Meta in the race for consumer augmented reality.