Snap spins off AI video team into new company, Dotmo, due to costs
The Snapchat maker is spinning off yet another internal unit. Dotmo will be composed of current Snap staff who are leaving the social media company to focus on AI video development.
Snap will be spinning off an internal generative AI video team into a separate company. The new company — dubbed Dotmo — will focus on developing AI models that can create interactive gaming experiences, Snap told TechCrunch.
Snap cited the high costs of conducting such work internally as one of the reasons for the spinoff.
While technically a separate company, Dotmo will retain its close ties to the Snapchat creator. For one thing, Snap will provide Dotmo with a license to adapt its technology for gaming and interactive entertainment platforms. At the same time, the initial Dotmo team will consist of a group of current Snap staff who are leaving Snap to launch the new venture.
Additionally, while Dotmo won’t be funded by Snap directly, the company says that Bobby Murphy, its chief technology officer, will act as lead investor and will have a significant personal stake in the new firm. Though a financial backer, Murphy will continue to work for Snap full-time as its CTO and continue to lead its GenAI research and development initiatives.
In exchange for the talent and the technology license, Snap will get a large equity stake in Dotmo, the company said — a position that could prove rewarding if the company prospers in the future. Dotmo may also eventually seek outside funding, Snap said.
The move marks Snap’s second major spinoff effort this year. Earlier in 2026, Snap spun off Specs into a new company to focus exclusively on the development of its smart glasses line. (Snap’s recent unveiling of Specs wasn’t exactly a home run for the company. Snap’s stock tanked after concerns were raised about the hefty price tag attached to the new smart glasses, which is around $2,200.) Snap also underwent a round of layoffs earlier this year, during which some 1,000 jobs were cut .
Dotmo represents a different kind of spinoff than the Specs operation, in that its team will be focused on developing digital experiences that aren’t currently a part of Snap’s core business priorities, a Snap representative said. However, it could still be considered a partner in the future if the fit seems right, they added.
Spin-offs can be a cost-savings strategy for companies, although they can serve a variety of other purposes — like showing off a particular asset, generating investor attention, or providing operational flexibility to the team involved. In spinning out Dotmo, Snap may be reducing the financial burden associated with its AI efforts, while still maintaining exposure to any potential upside through its equity stake.
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Key takeaways
- Snap is adopting a spin-off strategy to optimize costs and focus on its core competencies.
- The ongoing collaboration between Snap and Dotmo may inspire similar partnerships in Brazil, fostering innovation.
- The financial sustainability of AI initiatives is a growing concern, and the spin-off model may be a viable solution.
Editorial analysis
Snap's decision to spin off its generative AI video team into a new company, Dotmo, reflects a growing trend in the tech sector where companies seek to optimize costs and focus on their core competencies. For Brazil, where the startup and innovation ecosystem is expanding, this move could serve as a case study on how companies can restructure to remain competitive in a rapidly evolving market. The creation of Dotmo may inspire Brazilian startups to consider spin-offs as a viable strategy to explore market niches without the financial burdens of larger operations.
Moreover, the ongoing connection between Snap and Dotmo, through the licensing of technology, suggests that collaboration between companies can be an effective model for developing new solutions. This could encourage similar partnerships in Brazil, where collaboration between startups and large companies is vital for innovation. Bobby Murphy's role as both an investor and Snap's CTO also highlights the importance of technical leaders who not only fund but also continue to contribute to the development of new technologies.
The move also raises questions about the financial sustainability of AI initiatives, especially in an environment where development costs can be high. By opting for a spin-off, Snap may be signaling to the market that operational efficiency is a priority, something that may resonate with other Brazilian companies exploring the potential of AI. What to watch next is how Dotmo positions itself in the market and whether it can attract external funding, which could influence the investment landscape in technology in Brazil.
Finally, Snap's experience with its smart glasses line, which did not perform as expected, serves as a reminder for companies seeking to innovate. The need for a clear strategy and a deep understanding of the market is crucial for the success of new products and services. This lesson may be particularly relevant for Brazilian startups trying to navigate a competitive and ever-changing environment.
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