So Snap Inc. finally dropped its S-1 this week (Thursday, if you're keeping track) and I spent my lunch break scrolling through it instead of eating an actual lunch, which, fine, that's a me problem. Everybody's writing about the loss number, and it is a lot: 514.6 million dollars lost in 2016 on 404.5 million in revenue. Up from 58.7 million in revenue in 2015, so growth is real, the money-losing part is also real. Both true at once, welcome to Snapchat.
But the thing that actually stopped me scrolling wasnt the loss. Its buried a bit further in, in the part about share classes. Snap is planning to sell Class A shares to the public that come with zero votes. Not one vote. Zero. Evan Spiegel and Bobby Murphy keep their supervoting shares and the company stays theirs to run forever basically, no matter how much of it regular investors end up owning.
I get why theyre doing it. Founders watch what happened at other companies after the IPO and they dont want some activist fund showing up in year three demanding a board seat. Mark Zuckerberg has been doing something similar at Facebook for years with dual class stock, and Google did it too back in 2004. But this is a step further than either of those, this isnt "your vote counts less," its "you dont get one." As far as I know nobody's tried floating literally non-voting shares on a US exchange at this size before. If it works, and I suspect it will because people are going to want in on this regardless, every founder doing an IPO after this is going to ask their lawyers "can we do the Snap thing."
I dont think thats a great precedent honestly. I own a tiny bit of stock through an index fund like everyone else and Ive never once voted on anything meaningful with it, so maybe Im being precious about a right I dont personally exercise. But theres a difference between a right you dont use and a right that doesnt exist. One of those you can decide to care about later if a company does something you hate. The other one, you just cant.
The user numbers in the filing are interesting too, separate from all that. 158 million daily active users as of the end of 2016. Thats smaller than I expected honestly, given how much Snapchat gets talked about, but the engagement stats (they said users open the app over 18 times a day on average) explain why advertisers care regardless of the raw count. I use it maybe four times a week, mostly to send my sister photos of my dog looking stupid, so Im clearly not the demographic driving that 18 times number and thats fine, Im 31, I wasnt supposed to be.
Also worth saying, theyre listing on the NYSE under the ticker SNAP, and theyre reportedly aiming for something like a 20-something billion dollar valuation for a company that was basically worth nothing to the public five years ago. Whatever you think of the product (and I like Stories more than I expected to, credit where due, even though Instagram cloned the feature last summer and most people I know use it there instead now) thats an enormous number for a company still bleeding money at that rate.
Kind of a wild week for tech-and-money news generally too. Uber's Travis Kalanick stepped off Trump's business advisory council on Thursday as well, after weeks of #DeleteUber pressure over the airport pickup situation during the taxi strike. Different story, wont get into all of it here, but its funny that both of those things landed the same week. Silicon Valley companies quietly discovering that the choices they make have a public attached to them now, not just users.
Anyway. Ill probably write more about the Snap filing once the roadshow stuff starts and we get an actual IPO date, but the no-vote-shares thing is the detail I keep coming back to. Feels like the kind of decision that looks clever right up until it doesnt.