FOLLOW US

Facebook-owned Instagram last year rolled out a feature called Stories, modeled after Snapchat's feature by the same name. Snapchat had about 100 million fewer downloads than Instagram in 2016, according to market research firm App Annie.

NEW GADGETS

Snap had 158 million daily active users in the fourth quarter, up just 3 percent from the previous quarter, compared to 14 percent growth during the same period in 2015, according to Snap's IPO filing. New gadgets that offer more ways to interact with Snapchat could help attract new users and get existing users to spend more time on the app.

"Ultimately, that's what advertisers are going to be looking at," said Douglas Melsheimer, managing director at investment bank and consulting firm Bulger Partners. Snap, along with Facebook and host of online rivals ranging from Google to BuzzFeed, is capitalizing on the shift of video advertising dollars from traditional television to the internet.

Snap's IPO filing reads "as if all the hard things in front of them that they have to do are already done," said Rett Wallace, cofounder and chief executive at Triton Research. But, he said, that's not the case. "How will they hold up against all the guys you don't want to be fighting against in the world - Facebook, Google and Apple?"

Hardware is part of the answer. Snap has recruited hardware experts from Apple, Alphabet Inc's Google, Nest and Motorola, according to an analysis of LinkedIn profiles. One former employee described ample resources and support from management for the hand-picked hardware teams.

Last spring, Snap set out to hire up to 300 hardware, augmented reality and virtual reality specialists in a single month, according to another former employee. It also set up Snap Labs, a group dedicated to working on secretive projects. Its members have reviewed acquisition targets in areas including wearable cameras, facial recognition and 3D scanning technology, according to people close to the discussions.

Spectacles itself came from Snap's acquisition of startup Vergence Labs in 2014. The sunglasses surprised even Snap's earliest investors, who say hardware was not in Snap's initial pitch to them.

"It was a disappearing messaging product, and that's it," said Jeremy Liew, a partner with Lightspeed Venture Partners, who made the initial venture investment into Snap. Like most Snap backers he lauded the Spectacles rollout.

Snap has acquired at least 10 startups since 2014 according to firms tracking such deals, and M&A deal makers say Snap is one of the most active shoppers they have heard from.