Snapchat secretly acquired a company working on a Google Glass type of product in March, according to documents that leaked as a part of the Sony hacking.
Sony Entertainment CEO Michael Lynton is also a Snapchat board member, and his inbox has been exposed by hackers. In it, we see deal terms that suggest Snapchat paid $15 million for Vergence Labs, which makes frames for glasses. The terms say Snapchat paid $11 million in cash and $4 million in stock.
Vergence Labs' website makes no mention of being owned by Snapchat. However, a source tells us that Snapchat has in fact bought Vergence. We've reached out to a Vergence employee for comment.
This is a strange acquisition because Snapchat makes an app for sharing photos and messaging. Its photos quickly disappear. Perhaps it has good technology for converting video files. Perhaps it has talented engineers.
Snapchat's investors have spoken briefly about wearable potential for the company though. In an interview with J.J. Colao in Forbes last year, Coatue Management's Thomas Laffont stated, "People haven’t thought about use cases on new computing platforms. In one tap you take a photo, one more and you can share it. Imagine [the difficulty] trying to post on Instagram from a Google Glass device." Coatue invested $50 million in Snapchat.
Vergence Labs' main product is Epiphany Eyewear, a product that subtly records video with the press of a button on the side of the frame. The glasses come with 8GB, 16GB or 32GB of storage. Depending on which pair you get, you'll spend $300 to $500. The glasses hook into a computer, and you upload the video to an online account. You can't take photos with the device, but Epiphany has software that you can use to capture stills from the videos you upload.
Erick Miller and John Rodriguez cofounded the company in 2011, before Google Glass was announced. Miller worked on the idea as a graduate student at UCLA and poured his life savings into building the product. You can find a review of Epiphany Eyewear here.
Vergence may have been low on money, because in another email just days before the deal was sent around, another email showed Snapchat loaning it $2 million.
> Approval of Stock Purchase Agreement
> Whereas, the Board has reviewed the proposed Stock Purchase Agreement (the “Stock Purchase Agreement”), among the Company, Vergence Labs, Inc. (the “Target”), the stockholders of Target and Erick Miller as the stockholders’ agent, in substantially the form of Exhibit A hereto, pursuant to which the Company would acquire all the shares of Target and Target will become a wholly-owned subsidiary of the Company (the “Transaction”);
> Whereas, the Board has discussed a proposal to acquire Target through the Transaction in exchange for an aggregate purchase price of up to $15,000,000 in cash that will be paid to Buyer in two separate payments, where the first of such payments will be paid to Buyer at the closing (the “Closing”) in an amount equal to $11,000,000 in cash, less (i) the Company’s transaction expenses and (ii) the amount required to repay that certain loan paid prior to the signing of the Transaction (the “Buyer Loan”) and the second of such payments in an amount equal to $4,000,000 in cash that will be held back at the Closing (the “Holdback Amount”) and be subject to monthly vesting over 24 months based on the continued employment of the stockholders with the Buyer pursuant to the terms set forth in the Stock Purchase Agreement (the “Purchase Price”);
NOW WATCH: Why Bethany Mota Has A Legion Of 10 Million Fans Waiting For Her Next YouTube Video
