Snap, the parent company of Snapchat, hired a team of people who worked at a Swiss startup developing software tools to make code more difficult for competitors to copy, Bloomberg News reported. Laurent Balmelli, an engineer who co-founded the company Strong.Codes, and three others joined Snap earlier this year and will remain working in Switzerland. Strong.Codes is now closed down.
Snap also placed help wanted ads for information security experts and cryptographers in Switzerland and has been building up its European operations. It hired Facebook’s Marianne Bullwinkel in May as country manager for Germany, Austria and Switzerland.
Snap’s expansion into Europe includes the opening of a pop-up in London department store Harrods to sell camera-equipped Snapchat Spectacles, according to TechCrunch. The hands-on display lets people try on the sunglasses before buying them, unlike Snapchat’s other direct sales channels such as its website, Snapbot vending machines and Amazon.com.
Snap is coming to terms with the competitive threat from Facebook’s Instagram, which has 700 million users compared with Snapchat’s 166 million, and the negative effects on advertising growth as the former continues to copy the latter's features. By hiring a team of encryption and security experts from Strong.Codes, which specialized in protection against taking apart software to learn how to copy it, Snap has taken another step in facing the Instagram onslaught, a strategy that has also included beefing up self-serve options for advertisers on Snapchat. Facebook Messenger and Instagram have copied several features of Snapchat, such as its Stories tool to collect multiple images and videos to form a daily narrative.
Snap’s foray into hardware with the development of Spectacles may be seen as a missed opportunity to generate stronger retail sales, even as electronics products have their own lifecycle and greater risks than the software business (as GoPro, FitBit, Garmin, Blackberry and Nokia can attest). While Snap is focused on software development, it describes itself as a camera company that is wholly dependent on other companies for hardware. The pop-up shop in Harrods will be an interesting test to see if consumers are more likely to buy the gadget if they’re given a chance to touch, test and try it on. A fashion item like sunglasses is also subject to a wide variety of personal tastes.
Snap’s next earnings report is scheduled for Aug. 10 after the market closes for the day. Investors again will want to see some sign that the company is growing its user base and drawing greater commitments from advertisers. Snap’s shares fell to an all-time low on Tuesday of $14.65 after a series of negative forecasts from analysts.