Six Fascinating Things From Snapchat’s IPO Filing

Snapchat’s long-awaited initial public offering is finally (almost) here. The company, now known as Snap Inc., publicly filed its prospectus with the Securities and Exchange Commission on Thursday afternoon, laying bare for the first time many details about its user base, profitability, and internal technical schematics for dog filters. We scoured the document for details so you don’t have to; here are six things that stood out among the corporate jargon.

“Snap Inc. Is a Camera Company”

That sentence is the most important one in Snap’s 178-page prospectus. The startup has always been tricky to define, evolving from a private photo-messaging service to a social network to something resembling a broadcast platform for brands, celebrities, and crowdsourced events coverage. It’s the camera that unites these disparate elements, Snap argues. “In the way that the flashing cursor became the starting point for most products on desktop computers, we believe that the camera screen will be the starting point for most products on smartphones,” the company wrote in its filing.

While we were all fascinated by Snapchat’s disappearing photos over the past several years, the decision to have the app open with the camera interface is radical as well. Snapchat encourages you to create rather than consume, which is the opposite of how social networks like Facebook and Twitter are designed. That presents opportunities to chart new and innovative waters but also presents challenges in monetizing the same way that traditional social media companies have.

Daily Active Users Are the New Monthly Active Users

There’s one key social media metric you won’t find anywhere in Snap’s 178-page prospectus: monthly active users. Instead, the company focuses on daily active users, of which it has an average of 158 million globally. (I called it.) There has been a steady shift among internet companies to emphasize daily engagement as online media has become more ubiquitous. Snap is essentially codifying a transition that’s already happened (and also conveniently avoiding comparisons to rival Twitter, which has struggled as a public company and uses monthly active users as a primary metric).

Snapchat’s user growth appears to be slowing, with it adding only 5 million new users in the most recent quarter after gaining 10 million in the one before that. Proving that it still has lots of runway to grow will be an early challenge for the public company.

Snap Has Lost More Than a Billion Dollars

Apple was profitable when it went public in 1980. So was Google in 2004. But today, very few startups make money before their IPO, and Snapchat is no exception. The company has lost $1.2 billion since launching in 2011, with its 2016 losses exceeding $514 million. Trying to get users to pay for features such as filters was a flop, so the company has doubled down on advertising as its path to profitability. Video ads stitched between user-created snaps, sponsored geofilters, and sponsored lenses are the main ways the company hopes to make money. It has a highly engaged user base — a typical user spends 25 to 30 minutes per day within the app — but it’s vying for dollars in a ferociously competitive space. Profits won’t come easy.

New Shareholders Won’t Have a Vote

In a highly unusual move, Snap is not awarding voting rights for the shares issued in its IPO. The structure ensures that founders Evan Spiegel and Bobby Murphy will be able to retain significant control over the company even as its financial ownership is extended to more shareholders. Google and Facebook have restructured their businesses in recent years to similarly protect the controlling interest of their founders.

Everything Is Funnier When You Replace “Snaps” With “Dick Pics”

I am deeply, desperately nostalgic for the days when nudes sent on Snapchat felt like a pressing national concern. The company spends multiple pages of its prospectus outlining its mission and its growth story (including comparing the power of Snapchat to the telephone and the telegraph), but there is surprisingly little ink spilled about dick pics. This is the closest we get: “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.”

I have taken it upon myself to rewrite some elements of Snapchat’s company narrative by replacing the words “Snaps,” “photos,” “selfies,” and “creativity” with “dick pics.” They are as follows:

“When we launched Snapchat in September 2011, it was one of the fastest ways to send a [dick pic] on a smartphone. Every [dick pic] was deleted from our servers by default after it was viewed, and a copy was saved only if the sender or recipient took a screenshot or otherwise saved it.”

“Since the beginning, many people have used Snapchat primarily to send ‘[dick pics],’ digital self-portraits captured and shared using our Camera. We think this is because deletion by default makes our users feel comfortable sending [dick pics] of themselves even when they don’t look pretty or perfect.”

“The first version of Snapchat unlocked an explosion of [dick pics] because deletion by default, our internet-connected smartphone Camera, and new Creative Tools gave our community a visual voice to express themselves in the moment. We learned that [dick pics] can be suppressed by the fear of permanence, but also empowered through ephemerality.”

“As Snapchat’s popularity grew, people began to make more friends on the service. Our community started asking for an easier way to send a [dick pic] to all of their friends, not just one or two at a time. … Some people in our community asked for a ‘Send to All’ button, but we thought this might encourage users to spam each other by making it too easy to send a [dick pic] to everyone very quickly, ruining what made Snapchat personal and fun.”

Dog Filter Schematics

Many internet users over the age of 25 have at some point had this terrifying thought: “Maybe Snapchat isn’t a cumbersome, stupidly designed app … maybe I’m just old.” To save bankers from this dark confrontation with their own mortality, Snap included a surprising number of detailed schematics that label every function of each of the app’s screens, including the dog filter (technically it’s called a “Lens,” but we all know it as the dog filter). It’s like if A Beautiful Mind’s John Nash were tasked with decoding the flower crown, and it is by far the best part of this long, jargon-filled document.