Snap Inc, the red-hot messaging company, is seen by many tech investors as the next Facebook Inc or Google, but its youthful founders are pushing far more aggressively than its predecessors in moving from scrappy start-up to public company.
At a time when it is fashionable in Silicon Valley to stay private as long as possible, Snap is planning an initial public offering (IPO) valuing it at more than US$20 billion just two years after it first began to generate revenue, even though it has plenty of cash and ample opportunity to raise more on the private markets.
It is expected to be the biggest US tech IPO since Facebook’s 2012 debut.
It is also defying convention by declining to bring in “adult supervision” to help 26-year-old cofounder and chief executive officer Evan Spiegel and 28-year-old cofounder and chief technology officer Bobby Murphy manage the company.
Imran Khan, a former Credit Suisse banker who played a big role in the Alibaba Group Holdings Ltd’s (阿里巴巴) IPO in 2014, is emerging as a key figure in his role as chief strategy officer.
However, some investors remain concerned that the combination of an inexperienced management team and a sky-high valuation could be problematic.
“It is a very clearly inexperienced team leading a company that’s asking for two things: a huge valuation and a very aggressive multiple,” 55 Capital market strategist Max Wolff said. “Once you start asking public investors for 30x earnings, the tolerance for mistake, misadventure and learning on the job goes down.”
Questions about the management team have lingered after a string of senior executives left following short stints with the company.
High-profile departures include Emily White, who joined as chief operating officer from Instagram at the start of 2014 and quit after just more than a year, according to her LinkedIn profile.
Mike Randall, who joined Snap from Facebook, left last year after less than a year as head of business and marketing.
The departure of Jia Li (李佳), one of the highest-ranking women at the firm and its head of research, to join Alphabet Inc’s Google this month left another high-level opening.
“I think Snapchat struggles with leadership,” said Dave Carvajal, an executive recruiter for tech companies. “Just because something is a great idea, it still has the very real challenge of bringing in the right people.”
Spiegel, an enigmatic figure who choose to locate the company in the Southern California beach town of Venice rather than Silicon Valley, has not followed the example of Facebook founder Mark Zuckerberg, who partnered early on with Sheryl Sandberg, a former US Department of Treasury official and Google executive.
Google cofounders Larry Page and Sergey Brin initially ceded the chief executive officer role to veteran technology executive Eric Schmidt.
“I think [Spiegel] is a sole dictator type,” said Lyon Wong, cofounder and partner at venture firm Spectrum 28, and former partner at Lightspeed Venture Partners, a firm that made multiple early investments into Snap.
Hemant Taneja, a managing director at the venture capital firm and Snap investor General Catalyst, pointed to Khan as a key figure in the run-up to the IPO.
“I think that hire was critical and they work very well together,” Taneja said. “He has taken a lot of things off of Evan’s plate so he can focus on what he does best.”
Taneja said the turnover might be more indicative of Spiegel constantly upgrading the talent in his ranks.
“I think that Snapchat does everything in an unconventional way,” Taneja said. “Comparing it to Facebook or another company is an incorrect way to think about it.”
Wolff also said that the company might yet bring in more experienced managers and board members ahead of the IPO.
Snap, valued at about US$18 billion, has raised about US$2.5 billion from investors, including mutual fund Fidelity Investments, Sequoia Capital, T. Rowe Price and Alibaba.
It raised US$1.81 billion as recently as May, according to regulatory filings.
An IPO early next year might help Snap capture pent-up investor demand after a prolonged IPO drought, while also getting out in front of other hotly anticipated debuts from Uber Technologies Inc and Airbnb Inc.
Some investors said the marketing boost and visibility that comes with an IPO is crucial to help Snapchat get more users outside the US — and outside its dominant user base of millennials, while other said an IPO will also give the company a more mature image that will appeal to advertisers.
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