Apple should buy Snap
Most of the possibilities floated by analysts and the press don't make a lot of sense: Time Warner, Disney, Tesla Motors.
Some are saying Apple needs to think differently, and make one big, crazy acquisition, before it's too late. An acquisition that would change the company forever.
I think Apple should buy Snap, Snapchat's parent company.
The timing is now
Snap filed for a confidential IPO earlier this week, Business Insider learned, that could value the company between $20 billion and $25 billion. The actual paperwork, including Snap's revenue, profit (or lack thereof), and assets has yet to surface.
But the fact that Snap filed confidentially reveals one fact: Snap's revenue is less than $1 billion. Even assuming big league revenue growth for the disappearing photo messenger, that's a surprisingly large valuation.
That doesn't matter to Apple, and the company could afford a nice premium over the $25 billion the public market could value Snap at. Apple could afford Snap even if it were valued at $50 billion.
Spiegel has expressed doubt that advertising is the growth engine that will propel Snap to become a massive technology company. "Feed based advertising units will plummet in value ... similar to earlier devaluing of Internet display advertising," he wrote in an email stolen during the Sony hack.
If Snapchat's advertising strategy doesn't work out, it could destroy much of the worth currently locked into Snap shares held by Spiegel and other founders.
That's why Spiegel seems to be pivoting his company towards becoming a hardware provider, even going so far as to call Snap a "camera company" on its own website. It's also why Snap has started to sell Spectacles, a surprising new product that combines stylish sunglasses with a camera.
There's no company that understands making and selling premium hardware better than Apple.
First glass
Every time Snap's custom-built, Minion-looking vending machine touches down somewhere - three times in California so far, and once in Oklahoma - a line immediately forms, full of people waiting to buy the $129 glasses.
Apple used to have a following like that, and to some extent still does, but there is an excitement to the Spectacles launch that Apple has not had in a long time.
That's because Spiegel carefully planned this launch. He understands the importance of marketing, and limited rollouts, and how important it is to make something cool that people want.
And that's the key - Spectacles are the first piece of tech worn on the face that is actually cool.
"From the first moment of opening the lid to pairing the Spectacles with my phone, they were everything I hoped they'd be: well-designed, stylish, fun, and easy to use. Walking around New York City with them, I felt like part of an exclusive club," my colleague Avery Hartmans wrote earlier this week.
"Regardless of how you feel about Snapchat's new camera-equipped glasses, one thing is certain: Snapchat's marketing team is genius," she wrote.
News broke this week that Apple is working on a pair of stylish smart glasses that could launch as soon as 2018. It's still early, but it seems like Snap has already solved the biggest problem with wearable computers on the face: getting people to want to wear them.
Snapchat's glasses are only a camera for now, but it's not hard to see where the company is going with them - a fully functional AR device that could be competing with Apple Glasses in a few years.
Apple could eliminate a major competitor and gain a great head start to its glasses project at the same time.
Why Apple would want Snap
Cook says all the time that Apple doesn't buy companies for their cash flow - Apple has plenty of that itself.
Instead, Cook says, Apple is looking for "great talent and great intellectual property." Snap has both.
Snap is growing quickly and now has a varied and eclectic pool of talented engineers, especially in the fields of computer vision and AI, two fields which Apple is investing heavily in.
Some of Snap's top employees even used to work at Apple.
Snap also has some great intellectual property. People in the augmented reality industry say its in-house developed emoji tracking feature is genuinely impressive, and could be a building block for future applications. Snap's face-transforming Snapchat "Lens" filters are probably the most widely used example of computer vision-powered augmented reality at the moment.
That's pretty attractive intellectual property for a company that is is getting into augmented reality in a big way. Plus, it's undeniable that Snap is tapped into young people in a way that Apple, led by its team of mostly older men, is not.
Plus, Apple is reportedly developing a Snapchat-like video app. Why clone, when you can have the original?
Spiegel might not sell - but he does emulate Apple founder Steve Jobs
But the bigger problem is that Spiegel probably doesn't want to sell.
He famously turned down an offer from Facebook CEO Mark Zuckerberg to buy his company for billions of dollars in 2013. (He also previously blew off Zuck with a surprisingly cold email.)
If Speigel, who is 26, sold Snap to Apple, Apple should make him the CEO. After all, Apple has had a 26-year old CEO before: Steve Jobs.
The key to Spiegel is that he is a product "Picasso," as people who know him have said. He studied product design at Stanford, and Business Insider has been told that Snap's office vibe is like "a movie director starting a company, with artists flowing in and out" - similar to how Apple's famously secretive industrial design studio operates.
Apple would do well with a product-focused guru at its helm. Cook is fantastic at running the company, but Apple was built around the whims and taste of one man - Jobs - who was intensely focused on building products.
Speigel - who resembles Steve Jobs in his showmanship, his obsession with secrecy, and his focus on products and experience - would be able to give Apple some clarity when it comes to its AR and glasses strategy, and probably has an idea or two about how to make the next iPhone better beyond giving it faster chips and taking away the headphone jack.
But Apple should hurry. Snap could list as soon as March - and in a few years, it could be one of Apple's fiercest competitors.