Mark Zuckerberg may be Evan Spiegel's rival, but that hasn't stopped the Snap CEO from pulling a page out of his adversary's playbook and adding his own ambitious twist to it.

Spiegel, whose company could go public as early as March, is reportedly setting up Snap's stock structure in a manner reminiscent of Facebook's so that he and his co-founder can maintain decisive control of the company while owning less than half of the shares.

To do this, the company behind Snapchat has been selling investors shares of stock with no voting power in the most recent rounds of private funding. That is a tactic the company plans to continue when it sells shares of Snap in its initial public offering, according to The Wall Street Journal. By going this route, Spiegel and co-founder Bobby Murphy could have more than 70 percent of the voting power while owning only about 45 percent of Snap's stock.

If this sounds familiar, that's because this is an increasingly popular strategy for tech companies. Most notably, this tactic was put into an extreme form last year by Facebook. The social media giant created a new class of stock with no voting power in a maneuver that would allow founder and CEO Mark Zuckerberg to continue his goal of keeping near-total control of his company while giving away his fortune in the name of philanthropy.

For Snap, creating this kind of setup is not too difficult for a variety of reasons. Perhaps most important is the fact that Wall Street has been starved for a big tech IPO.

The last time the public market salivated over a tech company's going public was when Chinese shopping giant Alibaba held its IPO back in late 2014. Since then, there have not been many tech companies that have gone public and even fewer that have gotten anyone excited. Snap is different. This is a company led by a 26-year-old that has one of the most popular apps among Millennials, and that recently launched a hardware product shaping up to be a hit as well. In an IPO market short on supply of exciting tech companies, Snap holds all the leverage.

While advocates for shareholders lament the trend toward consolidation of voting rights by founders, an argument for this structure is that tech companies need to retain control for the sake of continuing innovation. The idea is that you can't build and create when there are too many cooks in the kitchen.

That defense has mostly proved itself out. Both Google and Facebook have continued to perform well years since they went public, and that's in part because they haven't had to deal much with the meddling hands of Wall Street investors. In preparing to sell shares of Snap, the argument for this structure is easy: If it ain't broke, don't fix it.

Published on: Jan 17, 2017