Snap Disbanded Its Web3 Unit Following Massive Layoffs

 

The company's growth rates fell to their lowest point in the last five years in the second quarter, prompting the company to lay off one-fifth of its workforce.

Snap (SNAP) has decided to terminate its Web3 team in order to reduce expenses in light of the company's significantly slowed growth.

Jake Sheinman, co-founder of Snap's Web3 team, announced his retirement from the company in a tweet on Thursday. In the tweet, he also revealed the social media behemoth's future plans.

"As a result of the company restructure, decisions were made to sunset our [W]eb3 team," according to the tweet.

CoinDesk's request for comment to Sheinman was not met with an immediate response.

Snap CEO Evan Spiegel revealed that the company's executives were concerned about the company's underperformance after the company reported its earnings for the second quarter in July.

"Our financial results for the second quarter do not reflect the scale of our ambition," the company admitted in an investor note. "We are not happy with the results we are producing."

Snap's second-quarter revenue of $1.11 billion, while up 13% from the same quarter last year, was significantly lower than the company's previous guidance of 20% to 25% and fell short of analyst expectations.

Despite this, Snap's revenue increased by 13% year on year.

Spiegel revealed on Wednesday, several weeks after first disclosing the data, that Snap will lay off 20% of its workforce.

"The extent of this reduction should significantly reduce the risk of ever having to do this again," Spiegel wrote, "while balancing our desire to invest in our long-term future and reaccelerate our revenue growth."

The layoffs are expected to have a particularly negative impact on Snap's augmented reality (AR) Spectacles team, bringing the company's honeymoon period with AR to an end.

Snapchat began selling augmented reality (AR) eyewear called Spectacles in 2016, three years after the company first introduced Lenses, its own augmented reality (AR) filters.

In 2021, Snap made its largest acquisition, paying more than $500 million for WaveOptics, the company that supplies the augmented reality displays used in Snap's Spectacles. This transaction occurred the previous year.

Even as recently as July, the company planned to conduct research on a feature that would allow users to import NFTs into Snapchat and use them as augmented reality filters; however, given the impending layoffs, it is currently unknown whether or not this initiative will proceed.