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The Real Deal Los Angeles

Lack of corporate headquarters could hurt Snap Inc.

Tech company filings suggest diffuse office structure could hamper business
February 27, 2017 02:30PM

Snap Inc.’s Market Street office, Evan Spiegel (Google Maps/Getty Images)

The disappearing act might work for its users. But a lack of visibility could hurt Snap Inc., as the parent company of Snapchat gets ready for its highly anticipated $3.2 billion initial public offering next week.

The company has no corporate headquarters, which could negatively impact its business, the Los Angeles Times reported.

None of the other 10 California-based tech companies with the biggest IPOs in the last 15 years went public without a centralized headquarters, according to the L.A. Times.

Snap makes a mention of its untraditional offices in its IPO filings. It has a principal office in Venice but its other buildings are spread out through the city, Santa Monica and abroad. The firm said lacking a corporate headquarters has the potential to negatively impact business and employee culture.

“This diffuse structure may prevent us from fostering positive employee morale and encouraging social interaction among our employees and different business units…[and] because our office buildings are dispersed throughout the area, we may be unable to adequately oversee employees and business functions,” the filings state.

Sigal Barsade, professor of management at Wharton School of the University of Pennsylvania, told the Times consolidating offices helps bring people together. A company’s culture is often set from the top down and employees can become better acclimated when working near leadership.

It also helps cut costs, said Robert Mankin, partner at architecture firm NBBJ, to the Times. He said amenities such as yoga classes and even food services are better placed in one location.

“If you’re providing a food service, you don’t want to have to do that 15 times in 15 different locations,” said Mankin.

But investors are not too worried about the company’s diffuse office structure, according to the Times. Snap’s founder Evan Spiegel is seen as a game changer for the tech industry and the bottom line is investors have their eyes on two things – new users and increased revenue.

The Real Deal broke the news in November that Snap is looking to take up to 400,000 square feet in Santa Monica Business Park. Sources familiar with the talks, however, said that it would be an expansion, rather than a consolidation. [LAT]Subrina Hudson