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Why it totally makes sense for Snapchat to invest in shopping startup Spring

snapchat evan spiegel shane smith
snapchat evan spiegel shane smith

(Michael Kovac/Getty Images) George Lucas, Vice CEO Shane Smith and Snapchat CEO Evan Spiegel

Snapchat is investing in shopping app Spring, according to Re/code.

Spring is a mobile app like a virtual mall, where items from hundreds of brands can be purchased with a pre-uploaded credit card and a single button swipe.

Neither Spring nor Snapchat would confirm the investment to me. (A Snapchat spokesperson rushed me off the phone, saying they needed to eat. A Spring spokesperson would only comment about the upcoming Rangers game.)

But I don't think either company would let a rumor like that fly around if it wasn't true.

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So, operating under the assumption that Snapchat is investing in Spring, why might it do that?

I have a working theory. It's not proven, but I've run it by a few industry insiders who think it's credible.

The easy answer: Snapchat wants to dabble in social commerce, and it's cheaper to invest than to buy

Snapchat has purchased a few smaller startups, but this is the first we've heard about it making an investment in one.

Scan.me is Snapchat's largest-known acquisition to date; the transaction was about $50 million in cash and stock.

Even though Spring is less than a year old, Spring would cost significantly more than that to buy. It has raised more than $30 million to date and even though Snapchat has raised nearly $1 billion, it might not want to drop $100 million+ to buy a company it just wants to test out.

An investment is a good way to experiment with ecommerce without diving all in. Some ecommerce initiatives from Snapchat are already known, like Snapcash, which lets friends exchange money via debit cards with each other in chats. Following and aiding Spring's progress could be another.

The social e-commerce space is heating up: Facebook, Twitter and Google are all messing around with buy buttons, and Facebook hired David Marcus away from PayPal, which signals that payments could be in the company's future.

Another idea: Snapchat wants to launch Discover, but for e-commerce brands and shopping

More strategically, Snapchat could be gearing up for another big launch.

Specifically, Snapchat could launch another channel like Discover, but for shopping. The channel could partner with a few select brands, like Discover does with Vice and ESPN, but instead of browsing top news stories you'd browse top products, like a mini virtual and social mall.

And guess what Spring is?

A mini virtual mall.

Snapchat has been pretty pleased by its four-month-old Discover channel, which has been yielding millions of daily views for its 11 partnering media companies. It's not hard to imagine Snapchat launching other channels, like for shopping and maybe music, down the line.

E-commerce may not be Snapchat's next big monetization push, but the company is in experimental mode, trying to figure out how to become a big revenue-generating business. And that means trying a bunch of things, maybe even something like Spring.

I ran my new-shopping/Discover theory by Snapchat.

I was told (jokingly), "If you want a job as a product manager we’d probably totally hire you." Then more seriously, "We’re not going to comment on Spring but what you said is not rooted in reality."

"What do you mean by 'reality' specifically?" I asked. "All reality?"

Then, I got a laugh.

NOW WATCH: It's dangerously easy to record Snapchats without the other person knowing



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