Roger McNamee - Spectacles Are A Genius Marketing Gimmick

Image: Snap Inc.

New York is the newest location for one of Snap Inc.'s vending machines. Located inside a pop-up shop at 5 East 59th Street, near Central Park in Manhattan, and right across from the Apple Store.

Vending machines are the only way you can officially buy the sunglass-mounted cameras. The location is scheduled to remain open until New Year's Eve but will be closed on Thanksgiving, Christmas Eve, and Christmas Day.

Spectacles are sunglasses with an integrated video camera that captures 10-second scenes, said to be capable of recording a day’s worth of “Memories" in a circular video format and on a single charge. Spectacles connect directly to Snapchat via Bluetooth or Wi-Fi.

With its trio of three bold, bright colors (teal, orange, or black) and blinking lights to indicate recording, the edgy device looks more fashion toy than tech, which is said to only add to the appeal for its user base. According to Mashable the Snapchat app reaches 41 percent of all 18- to 34-year-olds in the United States and is reported to be growing daily active users at 50% annually (based on leaked numbers), and to have had 150M daily active users in June 2016. Now those users can pop on a pair of Spectacles and capture everything that they can see. Since the glasses capture circular videos, they are a de facto GoPro for the face.

Image: CNBC Squawk Alley

Speaking on CNBC’s Squawk Alley, Roger McNamee of Elevation Partners weighed in on Snap's Spectacles vending machine arriving in NYC, describing it as a “Genius marketing gimmick," also saying, "No matter what else it is, it is an extraordinary marketing gimmick. I look at Snap and I have nothing but admiration for them."

Roger continued, "When they turned down the offer from Facebook a number of years ago, like many people, I thought that that was ill-advised and was going to result in a lot of tears. It turns out not only did they have the last laugh, but at the moment they really, they have captured something in the zeitgeist out there that is different from other technology companies. I don't know where it's going to lead, but I will say that they have the magic right now."

Commenting on Snap being Los Angeles as opposed to Silicon Valley based, Roger said, " If we think about Amazon and Amazon Web Services located in Seattle, there was a long period of time when Silicon Valley was wildly better as a producer of great tech companies than the rest of the country, maybe two standard deviations better in terms of the percentage of successful tech startups coming out of the valley. The reality is, the rest of the country now can do it. Silicon Valley, there's still way more money there, still way more people, a lot of energy here. But the hit rate has come down so much that it no longer stands out as the place you have to be if you want to create a technology company. That if you work hard enough and you have a great idea, you can do it pretty much anywhere now. Snapchat, I think, really does confirm, yet again, that observation."

Reflecting on a possible IPO, Roger said, "What the stock is worth is anybody's guess. But it is really clear to me that they're going to get everybody's attention. When they do the IPO, I suspect it will be well subscribed."

A recent article on Recode has described the rollout of Spectacles as a "spectacle," commenting, "Everywhere Snap drops a Snapbot, the big yellow vending machines that serve as temporary storefronts for the glasses, crowds line up, dozens of people deep, and spend their hours waiting in line posting and tweeting about how excited they are to get their hands on some Spectacles." 

The author concurs with the assessment of "genius" when it comes to marketing, adding, "Snap isn’t going to make much money selling smart glasses one vending machine-full at a time. But that’s not the point. Instead, what the company has done is create the kind of buzz and excitement around a product - and thus the Snap brand, which is prepping for an IPO - that we haven’t seen in a long, long time."

The momentum before the IPO?

Snap Inc., the parent company of Snapchat, describes itself as a camera company, saying, “We believe that reinventing the camera represents our greatest opportunity to improve the way people live and communicate. Our products empower people to express themselves, live in the moment, learn about the world, and have fun together.” 

Image: CNBC Squawk Alley

The company is using the "bot" vending machines to sell Spectacles - keeping them exclusive and generating hype - and most importantly, generating perceived demand. Spectacles are a pricey $130 a pop and you can only buy a maximum of two pairs at a time - but people are reported to be reselling them online for far more - up to $2,500!

Snap Inc. is reported to have filed confidentially for an IPO that could value the company north of $22B. For context, the company was last valued at $18B in the private markets, which put it just behind three other US-based unicorns: Uber ($68B), Airbnb ($29B), and Palantir Technologies ($20B), and just ahead of WeWork ($16.9B). Snap’s public debut would be the first unicorn IPO since the September 2016 IPO of Nutanix, which went public at a valuation of $2.2B.

Snap’s move into wearables could be a signal of possible future growth in new areas. Its initial Spectacles product sold out quickly, and Snap has itself acquired three companies this year alone, including a company specializing in 3D imaging (Seene). Snap also bought Looksery, a facial recognition company in 2015. In January 2015 it acquired Epiphany Eyewear. Patent data also reveals it has filed over 30 patents, with more recent patents related to object recognition and image augmentation.