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The strangest part of Snapchat's IPO filing

Daniel Roberts
Senior Writer

The parent company of Snapchat filed with the SEC on Thursday to go public. The six-year-old tech company, based in Venice, Calif., will list on the New York Stock Exchange, with SNAP as its ticker symbol.

The S1 filing provided a treasure trove of new numbers and nuggets: Snapchat has 158 million daily active users; users send 2.5 billion “snaps” per day; Snapchat’s ad revenue jumped from $59 million to $405 million last year; and the company is heavily reliant on Google Cloud for its storage, which it discloses as a potential risk.

But the most eye-opening part of the S-1 filing (well, other than the line “we eat, sleep, and poop with our smartphones”) was a surprising declaration: “Snap Inc. is a camera company.”

A slide from Snap’s S-1 filing, annotated.

Huh? A camera company? That’s almost certainly not how most users think of the app, which relies on your smartphone’s camera, but is not, technically speaking, a camera of its own. Snapchat does make Spectacles, which are sunglasses that can snap photo and video, but they are not yet widely available and in a list of “our products,” Snap lists them last. (Interestingly, because Spectacles are an eyewear product, they are regulated by the Food and Drug Administration, Snap discloses.)

It’s the Snapchat app that Snap calls its “flagship” product, and it’s the app that currently drives the company’s advertising revenue.

The Snapchat app, by Snap’s own description, “opens directly into the Camera, making it easy to create a Snap.” Snap Inc. calling itself a camera company because its app utilizes your phone’s built-in camera is strange. It would be like Netflix calling itself a television company, or even GoPro calling itself an “adventure company.”

More accurately, Snapchat is a media company. Its platform now packages and summarizes news, presents original videos, and allows people to chronicle their day in a series of photos and videos. But it wouldn’t want to call itself that, just like Facebook avoids the label. No hot, social tech company wants to be associated with “media,” an unpalatable business these days.

This is not the first time Snapchat has called itself a camera company. Last April, at a Columbia University event, CEO Evan Spiegel used the term based on the reasoning that the app “opens to the camera.” In September, chief strategy officer Imran Khan explained further: “The biggest misconception that I hear about Snapchat is that Snapchat is just another social media company. In fact, Snap Inc. is a camera company.”

Clearly, this is an effort by Snap to distance itself from other social media networks—especially since the very term “social media” has morphed and, in many ways, lost its original meaning. Companies like Facebook and Twitter are almost never called “social media networks” anymore.

How Facebook and Twitter label themselves

The choice to formally label itself in its S-1 is more surprising, but not unheard of. Compare Snap’s S-1 to the filings of Facebook (in 2012) and Twitter (2013).

A slide from Facebook’s S-1 filing

Facebook did not have any similar “this is what Facebook is” line in its document. Instead, it shared its mission: “Our mission is to make the world more open and connected. People use Facebook to stay connected with their friends and family, to discover what is going on in the world around them, and to share and express what matters to them to the people they care about.” It’s still using that description today: “Facebook’s a platform for all ideas,” COO Sheryl Sandberg said in October.

Twitter did identify itself, but far more broadly than Snap: “Twitter is a global platform for public self-expression and conversation in real time.”

A slide from Twitter’s S-1 filing

In other words, both Facebook and Twitter stayed broad: they are “platforms.”

You’d expect Snap to do the same; “platform” has become the useful catch-all by which all tech companies can avoid restricting what they are and what they want to become. By calling itself a “camera company,” Snap boxes itself in from the outset. (Instagram, arguably more of a camera company since its app is strictly for photo and video and does not have news elements, does not call itself a camera company.) It also puts it in potential direct competition with Google, which has its own hardware camera aspirations (remember Google Glass?) and is thus both a friend and foe to Snap.

The ‘camera company’ label also associates Snap directly with GoPro, an actual camera company that has not at all fared well since going public in 2014. It’s not the wisest industry to put yourself in if you’re trying to court shareholders.

Betting big on the ‘camera screen’

So, why do it?

There’s a hint at an answer in Snap’s product list: “We believe that the camera screen will be the starting point for most products on smartphones,” Snap says. “This is because images created by smartphone cameras contain more context and richer information than other forms of input like text entered on a keyboard. This means that we are willing to take risks in an attempt to create innovative and different camera products that are better able to reflect and improve our life experiences.”

That’s arguably puzzling (even intentionally so), but in the very simplest sense, you could see it as an effort to distinguish the company as something new and different. In its filing, Snap says, “When we were just getting started, many people didn’t understand what Snapchat was and said it was just for sexting, even when we knew it was being used for so much more.” Snap’s grandiose claims about cameras are a complicated way of saying that Snapchat isn’t (just) for sexting.

Snap is doubling down on all things camera-related. The self-label of “camera company” suggests it is Spectacles, and other future potential products, that Snap sees as its future, and perhaps not its popular mobile app.

Daniel Roberts is a writer at Yahoo Finance, covering sports business and technology. Follow him on Twitter at @readDanwrite.

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