#22 How To Turn Down A Billion Dollars The Snapchat Story

In the podcast discussing Billy Gallagher's book "How to Turn Down a Billion Dollars: The Snapchat Story," the host explores Snapchat founder Evan Spiegel's journey and philosophies. Evan, mentored by David Kelly at Stanford, shunned traditional career paths, valuing originality and learning from failures like his startup Future Freshman. The host emphasizes Evan's strategic battles with Mark Zuckerberg and his rejection of Facebook's buyout offer, highlighting Snapchat's focus on ephemerality and real communication over maintaining a social media presence. Evan's insights on privacy, the impermanence of digital content, and the app's design choices, such as the yellow logo and unique features like Stories, are discussed. The narrative also touches on Snapchat's monetization strategies and Evan's vision of the app as a personal, not brand-driven, communication tool, contrasting with Facebook's approach and underlining the importance of authenticity and change in human nature.

• Evan chose to study product design to improve everyday items.
• He was mentored by David Kelley at Stanford's design school.
• Evan was determined to work for himself, not for others.
• He prioritized learning over grades, taking classes for knowledge rather than resume building.
• Evan's first startup, Future Freshman, was a platform for college applicants.
• The startup failed, teaching Evan the importance of originality to compete with established companies.

"One thing was clear, as he frequently put it, I'm not going to work for someone else. And this gave him freedom from the heavy grind of Stanford. Nobody would ever see his resume or grades, so he took classes for what he actually wanted to learn."

The quote emphasizes Evan's commitment to autonomy and personal growth over traditional academic success.

• Evan learned from Future Freshman's failure that original ideas face less competition.
• This concept aligns with the Blue Ocean Strategy, which suggests success comes from creating new markets.
• The idea for Snapchat emerged from the need for privacy in photo sharing among college students.
• Evan and his co-founders recognized the potential for a disappearing photo app, which later became Snapchat.

"In order to avoid getting destroyed by better funded competition, his next idea had to be more original."

This quote explains Evan's realization that originality was key to avoiding competition and achieving success.

• Evan's initial pitch for Snapchat at Stanford faced skepticism.
• Critics doubted the app's value, suggesting it was a sexting tool.
• The story parallels Phil Knight's experience presenting his idea for Nike, which also received a lukewarm response.
• Both Evan and Phil Knight faced initial criticism but ultimately found success with their original ideas.

"The vcs sitting in Evans'classroom that day likely passed up at least a billion dollar investment return."

This quote highlights the missed opportunity by venture capitalists who failed to see Snapchat's potential.

• Snapchat's design focused on immediacy and privacy.
• The app opened directly to the camera, and screenshots were discouraged.
• Evan chose a yellow logo for Snapchat to stand out in the App Store.
• The app's initial name was Peekaboo, which was later changed to Snapchat.

"Evan studied the hundred most popular apps in the App Store and noticed that none had yellow logos. To make Peekaboo stand out, he put the Ghostface killer logo on a bright yellow background."

This quote shows Evan's strategic approach to making Snapchat visually distinctive and memorable.

• Evan admired Edwin Land and Steve Jobs for their ability to 'discover' rather than invent products.
• Both Land and Jobs had a vision for their products before they were created.
• Evan followed a similar philosophy with Snapchat, believing in the product's existence before it was widely recognized.

"Both of them had this ability to not invent products, but discover products."

This quote captures the shared philosophy between Land, Jobs, and Evan on product creation and innovation.

• Evan and his team used personal interactions to promote Snapchat.
• They gave one-on-one tutorials and even distributed the app at malls.
• Snapchat's growth was initially forced but later became organic.
• A significant growth spurt occurred when high school students in Orange County started using Snapchat on school iPads.
• The app's popularity surged during the holidays, aided by the distribution of iPhones with front-facing cameras.

"Evan and Bobby knew Snapchat had value because everyone who used the app used it all the time. They just needed to get it into more people's hands and make it grow, even if they had to force this growth at first."

The quote illustrates the founders' belief in Snapchat's value and their dedication to increasing its user base through direct engagement.

• Facebook became less appealing to teens due to less personal and engaging content.
• Parents joining Facebook deterred teens from posting, leading to stale profiles.
• The permanence of content on Facebook created social anxiety among younger users.

"Facebook had become boring for teens as they and their friends posted less content, less personal content, and often no content once their parents joined the social network."

This quote highlights the shift in Facebook's user engagement, particularly among teens, who found the platform less appealing as it became more family-oriented and less private.

• Evan designed Snapchat to be the antithesis of like-driven social media.
• Snapchat's focus was on private sharing with close friends, not public social networking.
• The app's design discouraged permanence and social anxiety, promoting more genuine interactions.

"Evan designed Snapchat as an antidote to this obsession with likes and retweets."

The quote explains the foundational design intent behind Snapchat, which was to create a social platform that moved away from public validation and towards more personal, ephemeral sharing.

• Snapchat allowed adding friends only through phone numbers or usernames, fostering closer connections.
• The app did not initially allow uploading from the camera roll, emphasizing real-time sharing.
• Early versions of Snapchat included personal engagement from the founders, enhancing user loyalty.

"Snapchat had no likes, no permanence, no social anxiety. You could just send whatever you thought was funny or cool or interesting, even if that was an otherwise unflattering image of yourself."

This quote encapsulates the core user experience Snapchat aimed to provide, one that was free from the pressures of traditional social media metrics and permanence.

• Evan regretted accepting a term sheet with standard terms without fully understanding it.
• He later advised other entrepreneurs to be wary of "standard" terms and to understand the implications.

"One of my biggest mistakes as an entrepreneur involved a term sheet."

Evan reflects on his inexperience with venture capital terms and how it led to a disadvantageous position for Snapchat, serving as a cautionary tale for other entrepreneurs.

• Evan chose to participate in graduation ceremonies despite not completing his degree, reflecting on conformity.
• He later regretted conforming to societal expectations, emphasizing the importance of following one's own path.

"It reminded me that oftentimes we do all sorts of silly things to avoid appearing different."

Evan's quote reflects his realization that conforming to societal norms can be counterproductive to personal and entrepreneurial growth.

• The app's growth was accelerated by smartphone adoption and address book integration.
• Snapchat's user base had high expectations for message delivery speed, challenging its infrastructure.

"Snapchat's existing users were also sharing more and more photos."

This quote indicates the increasing user engagement on Snapchat and the subsequent demands it placed on the app's technical infrastructure.

• Evan was committed to being the founder and CEO, not selling the company.
• Snapchat faced skepticism about its longevity and data collection strategy compared to other companies.

"There's no way I'm going to work for anybody else."

Evan's determination to maintain independence and control over Snapchat is clear from this quote, illustrating his commitment to his vision for the company.

• Zuckerberg expressed interest in Snapchat but was met with cool responses from Evan.
• Facebook's Poke app was a direct competitor to Snapchat, signaling a threat rather than an opportunity.

"I hope you enjoy Poke."

Zuckerberg's one-sentence email to Evan after the launch of Poke underscores the competitive tension between Facebook and Snapchat, with Facebook signaling its readiness to compete directly.

• Poke failed to gain traction against Snapchat, which continued to rise in popularity.
• Critics questioned Facebook's inability to innovate independently, often imitating features from other platforms.

"How is it that Facebook, which has some of the smartest folks in the room, can't really invent any new single online behavior that would keep people addicted to Facebook?"

This quote from a tech blogger and venture capitalist criticizes Facebook's strategy of copying features from other platforms, like Snapchat, rather than innovating on its own, which ultimately led to Poke's failure.

• Facebook launched Poke to compete with Snapchat, aiming to create a family of successful apps.
• Poke was designed for impermanent content sharing, similar to Snapchat.
• Teens preferred Snapchat over Poke because it was not associated with Facebook, which was seen as a platform for older users and parents.
• Facebook's attempt with Poke inadvertently validated the ephemeral messaging space and shifted the narrative around Snapchat from being a sexting app to a serious social media contender.
• Evan Spiegel referred to Poke as "the greatest Christmas present we ever had," acknowledging its unintended positive impact on Snapchat.

"Facebook's strategy with Poke was to have a family of separate, highly successful apps filling different user needs."

This quote explains Facebook's strategic approach to create a suite of apps with Poke being one of them, each designed to meet various user requirements.

"Evan would later call Poke the greatest Christmas present we ever had."

Evan Spiegel's comment highlights the irony of how Facebook's competitive move ultimately benefited Snapchat by increasing its legitimacy and user interest.

• Evan Spiegel's personality is described as a mix of being inclusive and private.
• Despite creating a platform for sharing, Evan preferred privacy at his own events, as evidenced by the "no photos please" policy at Snapchat's New Year's Eve party.
• This contradiction reflects Evan's complex character as both a social figure and a private individual.

"Evan had put no photos please on the party invites, hoping the lack of documentation would let everyone loosen up and have more fun."

The quote illustrates Evan's desire for privacy and his belief that the absence of documentation can lead to a more enjoyable and authentic social experience.

• Jeff Bezos' quote emphasizes the importance of being bold in business due to the asymmetric payoff, where successes can vastly outweigh failures.
• Bezos' perspective is used to draw a parallel to Evan's approach with Snapchat, suggesting that taking risks can lead to significant rewards.

"The difference between baseball and business, however, is that baseball has a truncated outcome distribution... In business every once in a while, when you step up to the plate, you can score a thousand runs."

This quote from Jeff Bezos is used to underscore the potential for outsized success in business compared to the limited outcomes in a game like baseball, reinforcing the value of ambitious endeavors.

• Evan Spiegel's view is that the use of camera-enabled communication, like taking numerous photos, is a form of conversation rather than image preservation.
• He sees internet-connected photography as a reinvention of the camera, allowing for real-time sharing and experiencing of the world.

"People wonder why their daughter is taking 10,000 photos a day... She's talking."

Evan's quote conveys his understanding of modern communication, where image sharing is a primary mode of conversation, especially among younger users.

• Digital dualism refers to the false distinction between online and offline worlds.
• Nathan Jurgensen's concept resonated with Evan, influencing Snapchat's strategy and reflecting its core ethos of living in the moment.
• Jurgensen joined Snapchat as a researcher, shaping the company's understanding of social media and the internet.

"The tension between experience for its own sake and experience we've pursued just to put on Facebook is reaching its breaking point. That breaking point is called Snapchat."

Jurgensen's quote captures the essence of Snapchat as a reaction to traditional social media, where experiences are shared for authenticity rather than for crafting an online identity.

• Snapchat Stories was a response to user demand for group messaging but designed to maintain Snapchat's unique value proposition.
• The feature was created without permanence, likes, or comments to encourage spontaneous sharing.
• Stories allowed users to see who watched their content, providing a "psychological candy" and driving user engagement.

"Was there a better way to create a one to many sharing tool than group messaging?"

This rhetorical question reflects the Snapchat team's desire to innovate beyond the expected group messaging feature, leading to the creation of Stories.

"The brilliance of stories was everything that wasn't in it."

The absence of certain features in Stories is highlighted as its key strength, enabling users to share freely without the pressures of traditional social media metrics.

• Evan's preference for privacy increased with Snapchat's popularity, as seen in the stricter no-photo policy at the subsequent New Year's Eve party.
• Unlike other tech CEOs, Evan maintains a low-profile on social media, aligning with his personal values and the privacy-centric nature of Snapchat.

"Unlike the previous year's bash, where they simply asked that you not take photos this year, security confiscated everyone's phones."

This quote indicates a shift towards greater privacy measures at Snapchat events, mirroring the app's emphasis on ephemeral content and user privacy.

• Evan Spiegel presented a vision of the "more personal computer era," where the internet is ubiquitous, and identity is defined by the present moment rather than a cumulative online profile.
• He emphasized live communication over the recreation of experiences online, challenging traditional social media paradigms.

"Snapchat says that we are not the sum of everything we have said or have done or experienced or published. We are the result. We are who we are today, right now."

Evan's quote outlines the philosophy behind Snapchat, focusing on the immediacy of self-expression and identity rather than a permanent, curated online presence.

• The selfie is immediate and represents our current state of being.
• It transitions digital media from self-expression to communication.
• Snapchat leverages this by using selfies as the fundamental unit of communication.

The selfie makes sense as the fundamental unit of communication on Snapchat because it marks the transition between digital media as self expression and digital media as communication.

The quote highlights the shift in how media is used on Snapchat, emphasizing the role of selfies in real-time communication rather than just sharing for self-expression.

• Snapchat focuses on the feeling content brings, not its appearance.
• Content is discarded to maintain the integrity and context of conversations.
• This approach mirrors in-person interactions and emphasizes communication through content with friends.

Snapchat sets expectation around conversation that mirror the expectations we have when we're talking in person.

This quote explains Snapchat's philosophy of creating a user experience that resembles face-to-face conversations, where the emphasis is on the interaction rather than the permanence of the content.

• Evan and Bobby initially focused on user growth over monetization.
• Snapchat's product development took precedence, leading to features like Stories, Live, and Geofilters.
• The company studied Asian messaging apps for monetization strategies without compromising user experience.

By 2014, though, Snapchat was burning over 100 million a year, and Evan pushed harder to start monetizing the product.

The quote shows the financial pressures Snapchat faced, prompting a shift towards finding revenue streams while still prioritizing product development.

• Snapchat looked to Asian messaging apps for revenue models.
• Asian apps monetize through sponsored messaging and virtual goods.
• The potential for Snapchat lay in ephemeral offers and online-to-offline services.

Evan and Bobby with their board members Mitch Lasky and Michael Linton, first look to asian messaging companies like Line and the Tencent own WeChat, which make money from sponsored messaging and inapp purchases for virtual goods like stickers and games.

This quote outlines the inspiration Snapchat took from successful Asian messaging apps in exploring monetization options that would fit their platform.

• Snapchat does not encourage brands to grow organic followings.
• Brands are expected to pay for ads if they want a presence on the app.
• This contrasts with Facebook and Twitter, which initially encouraged free organic growth.

Evan told reporters he found it annoying when brands tried to act like people on Snapchat by creating an account.

Evan's quote reflects his annoyance with brands attempting to humanize themselves on social platforms and his desire to keep Snapchat focused on personal, not commercial, connections.

• Snapchat makes it difficult to find and follow people, focusing on close friends.
• This contrasts with other platforms that encourage following a wide network, increasing ad exposure.
• Evan's approach aligns with the philosophy of quality engagement over quantity.

But Evan is focused on keeping Snapchat as the antithesis of Facebook and Twitter.

The quote shows Evan's commitment to maintaining Snapchat's unique approach to social media, prioritizing personal interactions over broad networking and ad exposure.

• Evan distinguishes between privacy and secrecy, emphasizing context in communication.
• He criticizes social media's push for popularity and performance in personal relationships.
• Evan argues that social media's capitalistic nature conflicts with authentic human expression.

Unfortunately, privacy is too often articulated as secrecy when, as Nissenbaum points out, privacy is actually focused on an understanding of context, not what is said, but where it is said and to whom.

Evan's quote, referencing Helen Nissenbaum, clarifies the difference between privacy and secrecy, suggesting that privacy is about appropriate sharing within context, not hiding information.

Social media businesses represent an aggressive expansion of capitalism into our personal relationships.

This quote criticizes the intrusion of commercial interests into personal spaces on social media, highlighting Evan's perspective on the negative impact of treating human interactions as marketable commodities.