Snap spins off AI video team into new company Dotmo
What's the story
Snap has announced the spin-off of its internal generative AI video team into a new company called Dotmo. The move comes as part of Snap's strategy to cut costs associated with developing these technologies in-house. Dotmo will focus on building AI models for interactive gaming experiences, according to TechCrunch.
Company dynamics
Dotmo will be staffed by current employees
Despite being an independent entity, Dotmo will retain its close ties to Snap. The latter will license its technology for gaming and interactive entertainment platforms to Dotmo. The initial team at Dotmo will be made up of current Snap employees who are leaving the company to start this new venture.
Investment details
Snap will get a large equity stake in Dotmo
While Snap won't directly fund Dotmo, its Chief Technology Officer (CTO) Bobby Murphy will be the lead investor with a major personal stake in the new company. Even as a financial backer, Murphy will continue his full-time role at Snap as its CTO and head of GenAI research and development projects. In return for talent and a tech license, Snap will get a large equity stake in Dotmo.
Past actions
2nd spin-off this year
The Dotmo spin-off is Snap's second major move this year, after the earlier spin-off of Specs into a new company dedicated to smart glasses development. However, the launch of Specs wasn't well-received by investors due to its high price tag of $2,200 per unit. Earlier this year, Snap also laid off around 1,000 employees from its workforce.
Future prospects
Potential for future partnership remains in spin-off strategy
Dotmo's team will work on developing digital experiences outside of Snap's core business priorities. However, a representative from Snap said that the company could still be a partner in the future if it deems fit. The spin-off strategy could help Snap save costs on its AI efforts, while still keeping an equity stake in Dotmo for potential future returns.