Snap's Strategic Spin-off of Dotmo
Snap is spinning off its internal generative AI video team into a new, independent company named Dotmo. This strategic move is largely driven by the high costs associated with developing such advanced artificial intelligence technology within the company. Dotmo will concentrate on building AI models specifically designed for interactive gaming experiences.
The newly formed company will be comprised of current Snap employees who are departing the social media giant to spearhead this new venture. While Dotmo will operate independently, it will maintain close ties with Snap. Snap will provide Dotmo with a license to adapt its technology for gaming and interactive entertainment platforms. In exchange for this talent and technology license, Snap will receive a substantial equity stake in Dotmo.
Bobby Murphy's Personal Investment and Continued Role
Significantly, Bobby Murphy, Snap's Chief Technology Officer and co-founder, will serve as the lead investor in Dotmo, taking a considerable personal stake in the new firm. Despite this personal investment, Murphy will continue in his full-time role as Snap's CTO, overseeing its generative AI research and development initiatives. This arrangement allows Snap to potentially benefit from Dotmo's future success without directly funding its operations.
This structure is not a clean break from Snap, nor is it a standard corporate venture round. It represents a founder-led carve-out designed to allow Snap to retain upside potential in AI while shifting expensive, non-core research and development off its balance sheet. Dotmo may also seek outside funding in the future.
A Pattern of Spin-offs and Cost Optimization
The creation of Dotmo marks Snap's second major spin-off effort this year. Earlier in 2026, Snap spun off its Specs smart glasses division into a separate company to focus exclusively on their development. This previous spin-off occurred after concerns were raised about the high price tag of the new smart glasses, which cost around $2,200, leading to a drop in Snap's stock.
These spin-offs align with Snap's broader strategy to optimize costs and achieve profitability. In April 2026, Snap announced a plan to reduce its global headcount by approximately 16%, impacting around 1,000 full-time employees, with an aim to cut annualized costs by over $500 million in the second half of 2026. CEO Evan Spiegel stated that rapid advancements in AI enable teams to reduce repetitive work and increase velocity. As of April 2026, 65% of Snap's new code was reportedly being generated by AI.