Snap is spinning off its internal generative AI video team into a new company called Dotmo, with CTO Bobby Murphy stepping in as lead investor and Snap taking a large equity stake in exchange for talent and a technology license. The Snapchat parent told reporters the move was driven in part by the high cost of running frontier generative video research inside the company. Dotmo will focus on AI models that produce interactive gaming experiences, a category Snap has not pursued as a core product line.
The spinoff is Snap's second of 2026. Earlier in the year it carved out Specs, the standalone unit for its smart glasses, which launched at roughly $2,200 and pushed Snap's stock down on pricing concerns. Snap also cut around 1,000 jobs earlier in 2026, a backdrop that helps explain why the company is pushing speculative AI research off its own balance sheet.
Dotmo's initial staff will be current Snap employees who are leaving to launch the new venture. Murphy will not draw funding from Snap itself; instead, he personally backs Dotmo as lead investor while continuing full-time as Snap's CTO and head of its generative AI research and development. The structure keeps Murphy on both sides of the line — Snap's senior technologist and the new company's anchor financial backer.
Key facts
- 01Snap is spinning off its internal generative AI video team into a separate company called Dotmo, focused on AI models for interactive gaming.
- 02CTO Bobby Murphy will be Dotmo's lead investor with a significant personal stake while continuing full-time as Snap's CTO.
- 03Snap will take a large equity stake in Dotmo in exchange for talent and a technology license; Dotmo may pursue outside funding later.
- 04This is Snap's second 2026 spinoff after Specs, the $2,200 smart glasses line whose pricing knocked Snap's stock.
- 05Snap cut roughly 1,000 jobs earlier in 2026.
In return for the team and a license to its underlying technology, Snap receives a large equity position in Dotmo. The company said Dotmo may eventually raise outside capital, which would dilute Snap's stake but bring in dedicated venture funding for the gaming and interactive entertainment build-out. Snap framed the license as adaptable for those use cases specifically, leaving Snap's core ad and Snapchat product technology unaffected.
The strategic logic mirrors what other large tech companies have done with capital-intensive AI bets: offload the operating cost, keep optionality through equity. Generative video models are among the most compute-hungry workloads in the field, and the talent needed to train them commands frontier-lab salaries. For a company that just trimmed about 1,000 roles, sustaining an internal team building interactive video models on Snap's own books was hard to justify against ad-revenue priorities.
Snap drew a distinction between the Dotmo spinoff and the Specs one. Specs remains directly tied to a product Snap sells. Dotmo, by contrast, is being pushed out because its work targets digital experiences that are not part of Snap's current business priorities — gaming and interactive entertainment platforms that Snap does not operate. A Snap representative said Dotmo could still be considered a partner in the future if the fit makes sense.
The Specs comparison is unflattering on the financial side. Snap's stock fell after the $2,200 price tag on its new smart glasses drew skepticism, and the company has been under pressure to show discipline on speculative hardware and AI spending. Spinning Dotmo out without Snap writing the funding check — and with the CTO covering the lead-investor role personally — addresses that pressure while preserving upside if interactive AI video becomes a real market.
The arrangement does raise governance questions. Murphy's dual role as Snap's CTO and Dotmo's lead investor puts him on both sides of any future licensing renegotiation, partnership deal, or acquisition discussion between the two companies. Snap did not publicly detail what guardrails govern that overlap. Whether Dotmo can recruit outside investors at attractive terms — given Snap's large equity stake and the licensed-rather-than-owned core technology — is the other open question.
For Snap, the math is straightforward: convert a cost center into an equity position, keep the strategic optionality, and let someone else's capital fund the next round of model training. For Dotmo, the test is whether a Snap-licensed video model stack can produce something differentiated in interactive gaming, a market where the major AI labs and the major game engines are already moving. The spinoff structure is increasingly common when frontier AI work outruns a parent company's appetite to fund it, and Snap has now used it twice in a single year.
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