Snap spins off AI video unit into cost-cutting venture Dotmo
▼ Summary
– Snap is spinning off its generative AI video team into a new company called Dotmo, which will focus on AI models for interactive gaming experiences.
– The spinoff is partly due to the high costs of conducting the AI work internally.
– Dotmo will remain closely tied to Snap, which will license its technology for gaming and provide initial staff from current Snap employees.
– Snap’s CTO, Bobby Murphy, will act as lead investor in Dotmo with a significant personal stake, while continuing his full-time role at Snap.
– In exchange for talent and technology, Snap will receive a large equity stake in Dotmo, which may seek outside funding in the future.
Snap is spinning off one of its internal generative AI video teams into a standalone entity named Dotmo. The newly formed company will concentrate on building AI models designed to power interactive gaming experiences, Snap confirmed to TechCrunch.
The decision to separate the unit stems largely from the high operational costs associated with running such advanced AI research internally. While Dotmo will function as an independent business, it will maintain close ties with Snap. Specifically, Snap will grant Dotmo a license to adapt its proprietary technology for use in gaming and interactive entertainment platforms. The initial team will be composed of current Snap employees who are leaving the parent company to launch the new venture.
Snap will not directly fund Dotmo. However, Bobby Murphy, Snap’s chief technology officer, will serve as the lead investor, holding a significant personal stake in the new firm. Despite this financial involvement, Murphy will remain at Snap full-time, continuing his role as CTO and overseeing the company’s broader GenAI research and development efforts.
In exchange for the technology license and the transfer of talent, Snap will receive a large equity stake in Dotmo. This position could prove lucrative if the startup succeeds. Snap also noted that Dotmo may eventually seek outside funding from external investors.
This spinoff marks Snap’s second major restructuring move in 2026. Earlier this year, the company spun off Specs into a separate entity dedicated to developing its smart glasses line. That launch was not a smooth one. Snap’s stock dropped sharply after investors raised concerns over the $2,200 price tag attached to the new smart glasses. Snap also conducted a round of layoffs earlier this year, cutting approximately 1,000 jobs.
A Snap representative explained that Dotmo represents a different kind of spinoff compared to Specs. While the Specs team focused on hardware that aligns with Snap’s core business, Dotmo’s team will explore digital experiences that fall outside Snap’s current strategic priorities. However, the representative added that Dotmo could still become a partner in the future if the opportunity fits.
Spinoffs can serve as a cost-saving strategy for companies, but they can also generate investor attention, showcase a particular asset, or provide operational flexibility to the team involved. By spinning out Dotmo, Snap may be reducing the financial burden of its AI initiatives while retaining exposure to any potential upside through its equity stake.
(Source: TechCrunch)
