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- [00:00]
Guy Raz
Wondery subscribers can listen to how I built this early and ad free right now. Join Wondery in the Wondery app or on Apple Podcasts. Peloton has what you need to achieve your fitness goals. No matter why you got started. From four week strength building classes to running, indoor and outdoor workouts and everything in between, Peloton will push you to achieve your goals. Peloton also helps you get stronger with workout generators and personalized programs on the peloton Tread and StrengthPlus app. It's backed by thousands of members whose lives have been changed by Peloton and the community around it. Find your push Find your power with peloton@1peloton.com so here's something pretty cool to think about. Have you ever been lying in bed at an Airbnb, maybe scrolling through your phone when you realize, wait a minute, could I do this too? I recently stayed at an Airbnb with a pool that overlooked an olive grove. It was incredible. Find out how much your place is worth@airbnb.com host and now a quick vital break. A little more from our sponsor, Vital Proteins. What is Vital Proteins? It's a supplement that has four benefits all in one product. It helps support healthy hair, skin, nails, bones and joints. Because as we get older, especially after age 30, our body's natural collagen production can start to decline by 1% per year, which can lead to things like fine lines, saggy skin, and your bones and joints just not moving the way they used to. Vital Proteins can help. They're the number one brand of collagen peptides in the U.S. i take a serving of Vital proteins every day to help me look, feel and move my best, and I can really, really see the results. Get 20% off by going to vitalproteins.com and entering promo code BILT at checkout. These statements have not been evaluated by the Food and Drug Administration. This product intended to diagnose, treat, cure or prevent any disease. You are contacted by Facebook and you and Bobby go meet with Mark Zuckerberg. What do you remember about that meeting?
- [02:25]
Evan Spiegel
We were pretty nervous. He was telling us about working on a new Poke app, which ultimately ended up being a copycat of Snapchat.
- [02:32]
Guy Raz
At the time, did he say, do you guys want to collaborate? At that time?
- [02:38]
Evan Spiegel
I don't remember the exact substance of the dunking.
- [02:40]
Guy Raz
You remember. Of course you remember. You were 22. It must have been incredible to be asked to come meet him because it's a validation of what you guys were building.
- [02:48]
Evan Spiegel
That's not how it felt at the time, it felt like, oh no, there's a really big company that everyone's been warning us about, you know, and has said they're working on something similar. We knew that a copycat product was coming, you know, and then I think that Christmas it did.
- [03:10]
Guy Raz
Welcome to How I Built this. A show about innovators, entrepreneurs, idealists and the stories behind the movements they built. I'm Guy Raz, and on the show today, how Evan Spiegel turned disappearing photo messages into Snap, one of the biggest social media platforms on earth. Here's the story of Snap, once known as Snapchat, that you might have heard. Evan Spiegel and two friends from Stanford built a social media app in 2011. And just two years later, Mark Zuckerberg offers them $3 billion. Now this story is true. This really did happen. And if you think about it, it was kind of nuts for Evan to turn down that offer. I mean, there's a pretty large graveyard of once high flying tech companies that soon withered out and died. But Evan had a lot of conviction in his product and the data was there to back that up. Within a year of launching, Snapchat had close to 5 million daily users. Today that number is over 450 million daily users. And what is it about Snapchat that makes it so compelling? Well, as a parent who tries to ban all social media apps from my kids phones, the one argument I couldn't win was over Snapchat. Middle and high school kids use Snapchat in the same way adults use text messaging. In other words, Snap has figured out how to build a moat around a major way teenagers communicate. Now, Evan's rocket ship trajectory was not as smooth and seamless as it sounds. For starters, he was just 21 when SNAP launched. He was, as he admits, really bad at being a CEO. In the early days, he didn't know how to run a business and the learning curve was really steep. And during the first few years of Snap's rise, a legal battle with one of the co founders cast a shadow over the company. Today, Snap is still one of the biggest players in social media. And despite a somewhat lackluster performance on Wall street, the company still has a market cap hovering between 13 and 15 billion dollars. Lately the company's decided to roll the dice on another hero product, Spectacles. Augmented reality glasses that will bring much of the Snapchat experience right into your field of vision. It's a pretty risky bet given the performance performance of wearables so far. But a little more on that later. For now, what you need to know is that. Evan grew up in the Palisades neighborhood in Los Angeles, an area, of course, devastated by the recent fires. Both of his parents were lawyers by training, but his mom eventually gave up law to take care of the kids. And watching his dad work really, really long hours, Evan says he knew pretty early on what he'd didn't want to be.
- [06:17]
Evan Spiegel
One thing I knew for sure was that I did not want to be a lawyer. My dad was always called away from family trips. He would get phone calls and, you know, that would basically say, hey, you got to cancel your trip or you can't go to this thing with Evan, or whatever it was. So I remember thinking growing up, like, I want to be the guy on the phone calling my dad, telling him that he can't take our family on vacation.
- [06:40]
Guy Raz
So I know you went to Stanford, and this is like 2008. You're coming into, obviously, this financial crisis, but it's like the beginning of Web 2.0, right. I think a couple years before you, Kevin Systrom and Mike Krieger graduated. And they would go on, of course, to found Instagram. We'll talk about that in a bit. But there was probably already on campus just conversations around all these amazing things that people were doing, recent graduates were doing. Do you remember having those conversations and thinking, like, this is really cool. What's going on?
- [07:11]
Evan Spiegel
At that time, it was still really early. I mean, when I go to campus now, it feels like almost everybody has a startup. Yeah, almost everybody's creating a company. But that's not what it felt like at the time. I mean, to your point, it was sort of in the, you know, around the time of the financial crisis, a lot of folks were still, you know, studying econ. That was a really popular major at the time. So it's sort of in that transitional phase between a lot of folks being really focused on. On econ to more computer science and things like that.
- [07:40]
Guy Raz
So I read a story about this experience you had. You took this class at the business school, and Scott Cook of Intuit, founder of Intuit, came to the class. And I don't know if that was a turning point for you, but what happened when you saw him and met him? Because I think it was kind of a turning point for you as a student.
- [08:00]
Evan Spiegel
Yeah. Taking that class. It's called Entrepreneurship and Venture Capital. It's taught by Peter Wendell and Eric Schmidt. It's still taught by today. I try to guest lecture once a year. And that class was an absolute game Changer for me. And Scott Cook was one of the guest lecturers and gave the whole case study Intuit. And during the case study, I guess I asked a couple questions in the class about how they were capitalizing the business at the time or something like that. So we'd had an opportunity to engage a little bit. And after class, I talked to him and basically begged him for a job. And so he gave me an internship at Intuit that really sort of changed my trajectory because on a very small team of people, I think it was three or four of us, we made web apps at the time, actually for touchpad phones, not touchscreens or anything like that. But I learned that with a really small team, you could build software and deploy it all around the world. And so it sort of demystified a lot of the process of building stuff.
- [08:56]
Guy Raz
So after doing that, I mean, did that then kind of set in motion wheels in your head, like, wait, I could do something cool. There's something cool to be done?
- [09:05]
Evan Spiegel
Yeah, I think beyond that, it just showed that it wasn't that hard, that with a couple friends, that we could make something too, without the infrastructure of a huge company. And things like the cloud were getting built out at the time. So all this stuff that had been so hard before, needing to rack your own servers, invest all this capital, have a huge team that wasn't required to create software experiences anymore.
- [09:28]
Guy Raz
Got it. All right, so while you were at Stanford, you had a friend named Bobby Murphy who I guess he lived across the hall from you, and later he would actually become one of your co founders at snap. And we'll talk about that. But before that, you. You guys. You and Bobby started another company. It was completely different. It's called Future Freshmen. Can you tell me a little bit about that?
- [09:47]
Evan Spiegel
Like what.
- [09:48]
Guy Raz
What was the business?
- [09:49]
Evan Spiegel
Well, we had both experienced the college process that was super complicated. And one of the really challenging parts is all the different requirements of all of these different colleges when you're trying to apply. So it's a massive organizational project that could be better handled by soft. So we started trying to build really a beautiful software that could do that well. So you would just check all the box for all the schools you wanted to apply to. We would go out and gather all the requirements, the essay questions, everything, put it all in one place. So it made it really, really easy for you to fill out the application and do that kind of thing.
- [10:21]
Guy Raz
And you guys didn't need a whole lot of funding for this, it sounds like. Or any.
- [10:25]
Evan Spiegel
No, we didn't take any funding at that time. We were just trying to.
- [10:28]
Guy Raz
Just building a website and trying to build, like, a user interface.
- [10:32]
Evan Spiegel
Yeah, exactly.
- [10:33]
Guy Raz
Were your coding skills good enough to make something nice, like, look good?
- [10:36]
Evan Spiegel
I thought it was really cool. I mean, I did most of the design, and Bobby did most of the coding. And, you know, I think that the software was great. The big problem was that nobody used it.
- [10:46]
Guy Raz
How did you try to get people to use it?
- [10:48]
Evan Spiegel
Well, at that time, both of our siblings were applying to college, so we tried to get them on it to start giving us feedback. And, you know, we would tell schools that it was available. But that was a big lesson for us because our competitor at the time, they were called Naviance, they were getting distribution through all the college counselors. So if you were in school, your college counselor would tell you and your parents, hey, use Naviance to apply to college. And so they had a massive distribution advantage.
- [11:12]
Guy Raz
And how long did you guys kind of work on this before you came to the conclusion that you just were not going to be able to compete in that space?
- [11:19]
Evan Spiegel
I think about 18 months total. We invested a lot of time into it, and that was a really painful decision to shut it down. But I think ultimately we just realized, you know, we didn't have the distribution. And ultimately we were solving a problem where even if we were really successful, our customers would essentially leave us every year, so we'd have to go get more customers the next year. And so it was just a really, really tough business, I think, to. To get off the ground.
- [11:44]
Guy Raz
It's like diapers. You just got to get new customers in every year. As Mark Laurie said on the show many years ago, all right, so this takes us to roughly to the spring of 2011. You are, I think, a junior at Stanford. And was it sort of like, okay, you know, let's kind of spitball other ideas, come up with something else?
- [12:06]
Evan Spiegel
Yeah, exactly. We had a couple other ideas that we were playing around with and working on at the time, including just really easy ways to connect with friends and share files and this sort of thing. But it wasn't until we started working on Picaboo that I think we found something that we were really excited about.
- [12:22]
Guy Raz
Tell me about the idea for Picaboo. How did that come about?
- [12:25]
Evan Spiegel
Well, I had come back from studying abroad in Cape Town. I was living in a dorm back on campus, hanging out with a friend of mine, and he was like, man, it'd be really cool to be able to send disappearing photos. We were like, oh, that's A super interesting idea. So we started prototyping what that could look like and came up with the name Picaboo. And ultimately I presented it to my design class. And I think the first piece of feedback we got was basically, that's not going to work because you can always take a screenshot. And that piece of feedback was really, really helpful because I think early on there were some other competitors in the space. They were all very focused on like, security. But what we found was that what people loved using was just sending pictures back and forth really, really quickly. MMS was really slow. I mean, I think it took more than a minute to send a photo via text message at the time. And so our friends just started using it to send photos all day.
- [13:15]
Guy Raz
All right, so Picaboo, right? Like peekaboo, but spelled like pic P I C. Picaboo is this idea. And the idea is you can send a photo that will be ephemeral. You could just quickly see it and it'll disappear in 10 seconds. I mentioned this earlier, but 2011, I mean, a year earlier, Kevin Systrom and Mike Krieger, who were on the show eight or nine years ago, also Stanford graduates, they launched Instagram. So I have to imagine that they were sort of like kind of legendary status, because once they launched Instagram, it really blew up. What do you remember about hearing about those guys or talking about those guys? Or was it inspiring to you and to your friends in some way? Just because the parallels are so. They're so clear. You know, it's like two friends at Stanford a couple years before you with the photo app. Right. And then that just becomes huge.
- [14:05]
Evan Spiegel
You know, at the time, I think we were. We just really felt that like social media was taking itself too seriously. So Instagram and Facebook at the time, the whole focus was, you know, on posting the prettiest possible pictures and getting lots of likes and comments. And there was like a real focus on, you know, how many friends do you have, how popular are you? And of course, you know, also a lot of concerns about like the permanence of images. I mean, at the time there were all these stories of people getting job offers rescinded because somebody found their Facebook profile.
- [14:34]
Guy Raz
Yeah.
- [14:34]
Evan Spiegel
So I think there was for us just a real need for something different, something that you could actually use to talk with your friends and have fun. Because Instagram and Facebook at that time were much more focused on this very public and permanent sort of status based social media.
- [14:50]
Guy Raz
Tell me, from the time of the idea to the time where you kind of like launch A version of Picaboo. I think it's just a couple of months. It's just like four or five months, right?
- [15:00]
Evan Spiegel
I think something like that, yeah.
- [15:02]
Guy Raz
How did you guys build it? Because you built it, obviously, as an app. Kind of take me into doing that. Did it require any money, or could you just do. Do it on your own at Stanford?
- [15:13]
Evan Spiegel
Yeah, it didn't require any money. We could just do it. I just sketched out on one piece of paper the screens, you know, the different flows. And one of the things we learned from future freshmen is not to build something huge and complex. It was to build something as simple as possible and get people's feedback as quickly as possible. And so we really just started with a couple key screens. You know, add a friend with their username, tap to send them a snap. But there were a couple principles that we really anchored to, like opening up to the camera, for example, so you never missed a moment. You could just open up to the camera and snap really quickly.
- [15:46]
Guy Raz
And so when you had this prototype, did it look good? Did it look anything like what it would eventually look like?
- [15:52]
Evan Spiegel
We thought it looked good. I mean, I think today we might say that there was room for improvement, but at the time, you know, it was fun and playful and colorful and different, and I think that was really the whole point.
- [16:04]
Guy Raz
And you designed it initially for the iPhone to work on the iPhone?
- [16:07]
Evan Spiegel
Yeah. It was iPhone only to start.
- [16:09]
Guy Raz
All right, so when you have this app ready to launch, it, was it just to test with friends that you knew, or was it like a public launch where anybody could use it?
- [16:19]
Evan Spiegel
We put it on the app store so anyone could use it, but obviously nobody knew about it except our friends. So in the early days, it was just our friends. You know, my sister, my cousin, folks just trying it and playing around with it with their friends.
- [16:31]
Guy Raz
And what was the feedback like? I mean, what were people saying to you about it?
- [16:36]
Evan Spiegel
Just that it was really fun. I think it really lowered the bar in terms of what a picture was. It wasn't about saving a perfect moment. It was about communicating. And people loved that. So they started asking us for all these communication features, like, hey, can I add a caption? Can I add a drawing? In the beginning, there weren't all these communication tools that we have today.
- [16:54]
Guy Raz
Got it. Okay. So I want to raise something that is a little bit sensitive, and I know there are things that you can and maybe cannot talk about because there was litigation. So I'm going to try and fill in some gaps because it's important that we at least acknowledge it. But you were working on Picaboo with two of your classmates at Stanford. It was Bobby Murphy who we've talked about. He'd worked with you before on future freshmen. But then there was another classmate in the picture, a guy called Reggie Brown. And he would later file a lawsuit and say he was also involved in building Peekaboo. And from what I understand, you guys had a falling out. But tell me a little bit about maybe what happened or what you wished you would have done differently, or maybe the communication wasn't clear about the roles that people were playing and who was doing what.
- [17:42]
Evan Spiegel
Yeah, I definitely really appreciate his contributions. I mean, he came up with the idea of sending disappearing photos and share that with me. But I think one of the challenging things, Bobby and I had had this history of working together, so we had a really strong working relationship, and I think those expectations were really clear. So I think to your point, for founders thinking about creating their own businesses, being really clear about those expectations up front, including getting a piece of paper that really outlines those responsibilities, I think is really important. But it's not something you're thinking about when you're just playing around and trying to create something with your friends.
- [18:15]
Guy Raz
Yeah. So, all right. From what I understand, like, initially, the app really took off among high school students in the Palisades and Malibu area. So I'm assuming that that was like, something that maybe you were able to do. You were able to bring it to students there and encourage them to use it.
- [18:33]
Evan Spiegel
Well, we definitely shared it with our friends, and a lot of that growth happened informally. I mean, some of the things we tried, you know, like buying Facebook ads and stuff like that, didn't work because people didn't understand the service until someone explained it to them, until a friend used it with them. You know, it only works if you've got a friend to use it with. So I think just the fundamental nature of the service is ultimately what drove its growth.
- [18:54]
Guy Raz
Because the virality was inbuilt.
- [18:57]
Evan Spiegel
Yeah. And it was different than social media virality, because social media virality is very network based. Right. You would want to have the largest graph possible, but the reason why Snapchat was able to grow is because you really wanted to use it with your one or two or three best friends. And so the growth trajectory was different than traditional social media, but it still required a friend to use it.
- [19:17]
Guy Raz
In order to use it, somebody else has to have it. So then you get this next user and then the next user, and so it sort of self perpetuates I think.
- [19:26]
Evan Spiegel
That'S one of the fun things about Snapchat. It's not a single player experience. You've got to do it together with a friend. And some of the changes we made, especially calling it Snapchat, talking about the importance of visual messaging rather than focusing on disappearing photos, that's when people really started to understand, hey, this is for communicating.
- [19:44]
Guy Raz
And you had to call it Snapchat because there was another company called Picaboo, right?
- [19:48]
Evan Spiegel
Yeah, exactly. We got a cease and desist from a Picaboo company and maybe one of the best things that ever happened to us.
- [19:54]
Guy Raz
And it happened early enough where your brand wasn't known, so it didn't matter.
- [19:57]
Evan Spiegel
Yeah, exactly.
- [19:59]
Guy Raz
So to get to January 2012, where you have, you know, 30,000 users, you could do that with almost no money.
- [20:07]
Evan Spiegel
Yeah. This was one of the huge benefits of cloud infrastructure is we could pay for what we used. But, you know, the server bills started getting more and more expensive. You know, my grandparents had left me $10,000. Bobby had some money from one of his prior jobs, and so he chipped that in. My dad, I think, put in maybe five or $10,000, but he wasn't quite keen to put in any more to help people send photos back and forth. So we had to pretty quickly start looking for fundraising because the server bills got to be about $10,000 a month.
- [20:37]
Guy Raz
When you talked about this idea to your dad or your mom, or did anybody. Was anybody skeptical? Like, why would somebody want to do that? Or this just seems like it's going to be used by weirdos to send naked pictures. Aside from the media, which we'll get to in a minute, but just people you knew, did anybody ever express skepticism about this?
- [20:59]
Evan Spiegel
Yeah, teachers, friends, of course. But I think that feedback was helpful and that skepticism actually helped fuel the growth of the product. They're like, wait a minute, I don't understand this, but so many people are using this. Or, wow, my friends are using it. I got to check it out and see what this is all about.
- [21:14]
Guy Raz
All right, so let's talk about fundraising. You are a senior, I think, at Stanford, and you're on campus, so I imagine it's not impossible to make connections between professors and other people on campus to sources of fundraising just to reveal what happens. In March of 2012, you get almost half a million dollars in seed funding from Lightspeed, which probably among their greatest investments ever. But tell me about getting that money. And I should remind people, listening the stories we don't hear about are all the Times at Lightspeed and Sequoia and Benchmark and others made $500,000 in seed funding, and it went nowhere. They lost it. We only hear about the times when it worked. So there's a lot of money that they put out there that goes nowhere. But how did you make the case? Was it hard? Was it easy to get the money?
- [22:06]
Evan Spiegel
We had a lot of unsuccessful meetings with venture capitalists. I think the places where we got more traction, saw success was anyone whose teens were using the product or they had friends who were using the product. And so, you know, ultimately Barry, who was a partner at Lightspeed, you know, told another one of his partners, hey, my daughter is using Instagram, Angry Birds and Snapchat. You know, that's what she's doing all day long. We know about Angry Birds and Instagram. What's this Snapchat thing? Let's go find these guys.
- [22:33]
Guy Raz
So they went to look for you?
- [22:34]
Evan Spiegel
They went to look for us, Yeah. I got a Facebook message from Jeremy Liu at Lightspeed.
- [22:39]
Guy Raz
Yep.
- [22:39]
Evan Spiegel
And we'd be getting all sorts of messages from folks that seemed kind of spammy or suspicious. But Jeremy's Facebook profile, he had a photo of himself and Obama in the profile picture. So we were like, oh, he must be legit. We'll respond. And we ended up meeting up with Jeremy. And I think the thing that really helped them understand the business is we just shared the data. We just shared the retention data and the usage of Snapchat. So we had a lot of data that showed that once people started talking with their friends on Snapchat, they kept doing it. And ultimately, I think that's what gave them the conviction to invest.
- [23:09]
Guy Raz
When they put half a million dollars into Snap, what was the valuation?
- [23:14]
Evan Spiegel
4.25 million.
- [23:15]
Guy Raz
That's a good investment.
- [23:17]
Evan Spiegel
I think so. Actually, my favorite part of that story is a school nearby invested $15,000 and ended up making. I think they ended up building a new gymnasium or something. It's pretty cool.
- [23:28]
Guy Raz
A school nearby?
- [23:29]
Evan Spiegel
Yeah, a school, I guess, affiliated with one of the Lightspeed folks. I think they were on the board or on the finance committee or something. They were like, we should.
- [23:35]
Guy Raz
Oh, they invested in that seed round?
- [23:37]
Evan Spiegel
Yeah, they invested $15,000 in the seed round. And ultimately, how much money do you.
- [23:41]
Guy Raz
Think they made out of that? Tens of millions of dollars.
- [23:43]
Evan Spiegel
Potentially enough for a new gym, I think.
- [23:46]
Guy Raz
Yeah. Did you. I mean, so up until that point, you didn't need a whole lot of money. Right. But now with $500,000, I'm assuming, like, you've got to build an infrastructure. Like, how did you first deploy the money? Like, did you start to make hires? Because you're still a senior in college at that point, right?
- [24:04]
Evan Spiegel
Yeah. The first thing we did was hire friends of ours, Daniel. I was really fortunate enough to meet Daniel my freshman year during a product design seminar. And one of his friends. Actually, I didn't know they were friends at the time, but I was visiting a friend of mine in her dorm and she was like, hey, you should meet this guy David across the hall. He's a really cool guy, super smart. So I just went and knocked on his door, introduced myself. Turned out he and Daniel were best friends. So David and Daniel joined the team and I think there were about five of us there. It was me and Bobby and Dina and David and Daniel.
- [24:34]
Guy Raz
And who's Dina? She's also a Stanford student.
- [24:36]
Evan Spiegel
Yeah, we had been friends in school. She'd helped with future freshmen and, you know.
- [24:40]
Guy Raz
Was that investment from Lightspeed, was that what prompted you to drop out?
- [24:45]
Evan Spiegel
Yeah, that and just that it was becoming impossible to do both at the same time. I mean, I felt just a huge sense of responsibility. I mean, we thought $485,000 was like infinity money and we had a huge obligation to our investors. So, I mean, I can remember I was in a CNC machining class in the back of the class, refreshing my Wells Fargo account. And as soon as I saw the $485,000, I went up to the professor and I was like, I'm just so sorry, like, I can't continue.
- [25:14]
Guy Raz
When we come back in just a moment, Evan realizes that he should have looked at the terms of that Lightspeed deal a little more closely. And then later, Snapchat goes head to head with one of the biggest social media companies in the world. Stay with us. I'm Guy Raz and you're listening to How I Built this. Maybe you've stayed at an Airbnb before and thought to yourself, this actually seems pretty doable. Maybe my place could be an Airbnb while you're away. Your home could be an Airbnb like the place I just stayed at in Palm Springs with an incredible kidney shaped pool and palm trees. It was just perfect. Maybe you're planning a trip for a long weekend while you're gone, you could Airbnb your home and make some extra money towards the trip. Whether you could use a little extra money to cover some bills or for something a little more fun, your home or spare room might be worth more than you think. Find out how much@airbnb.com host you've heard of speed dating, but if you're the owner of a growing business, you may wonder, what if there was a feature like speed dating only for hiring? Some way you could meet multiple interested qualified candidates at once? Well, good news there is. It's zip intro from ZipRecruiter. You can post your job today and start talking to qualified candidates tomorrow. And right now you can try Zip Intro for free at ZipRecruiter. Zip Intro helps you quickly assess great candidates for your job via back to back video calls. Simply choose a time and Zip Intro will find and schedule meetings with qualified candidates for you. Enjoy the benefits of speed hiring with new Zip Intro only from ZipRecruiter rated number one hiring site based on G2. Try Zip Intro for free at ZipRecruiter.com Biltine Again, that's ZipRecruiter.com BILT Zip Intro post jobs today. Talk to qualified candidates tomorrow. Did you know that 2 in 5 homeowners experience water leak damage? That means nearly half of us are at risk of experiencing catastrophic water damage, whether it's a slow hidden leak or a sudden pipe burst. And the worst part? Most people don't realize they have a water leak until it's too late. That's why I have the Moen Flow Smart Water Monitor and Shutoff, a smart device that helps you better your odds against water damage before it happens. Moen Flow has FlowSense technology and uses AI to analyze your water usage patterns and runs daily microleak tests to detect any irregular activity, including leaks as small as a drop per minute. Moenflow sends real time alerts straight to your phone if it detects any abnormal activity and automatically shuts off your water if it senses a catastrophic leak is about to occur. And the app is super simple and super easy to use. Visit moen.com flow to learn how to protect your home and help stop leaks before they start. That's m o e n.com Flo because when it comes to water damage, Moen knows it's not about luck, it's about being prepared. Automatic shutoff and real time alert capabilities will operate when the device is configured with the proper settings. Hey, welcome back to How I Built this. I'm Guy raz so it's 2012 and Evan has just dropped out of Stanford to focus on his photo messaging app Snapchat. He's recruited a group of friends to the company and they've all moved down to LA to work out of his dad's dining room.
- [29:08]
Evan Spiegel
We had the dining room because he has an old Mustang that he kept in the garage, like a 60s Mustang. So we were not allowed to use the garage. That was for the car and we were in the dining room.
- [29:18]
Guy Raz
And he probably liked having you at home. I mean, I would love to have my kids at home after they finish college.
- [29:23]
Evan Spiegel
I think in hindsight. Yeah. When we finally moved out, he was like, oh, actually that was really awesome. But you know, we were working like 24, 7. At some point there were seven or eight of us there, so it was a lot.
- [29:33]
Guy Raz
Tell me about your life on a day to day basis. You'd wake up and you would just work all day until late at night and then go to sleep.
- [29:42]
Evan Spiegel
Yeah, basically that. Seven days a week. Yeah.
- [29:45]
Guy Raz
And what were you doing? What do you remember about 2012? Like were you on the phones, were you in meetings, were you working on the user experience? What were the things you specifically were doing?
- [29:58]
Evan Spiegel
There were a couple of big things happening at the time. One is we started working on the Android application, so Daniel and David were spending a lot of time doing that. The other thing that we were doing was really starting to work on video because at the time it was only photos. And we had invented this really cool idea that back in the day you had to toggle between photo and video on your smartphone. So you'd open the camera app and then if you wanted to make a video, I'd just press the video button. It would flip into video mode. There was a lot of friction. So we had invented this idea that you could just tap to take a photo or hold the button and start recording a video. And that at the time, based on the way the camera worked, was actually quite difficult to engineer. And then a lot of time hiring. One of the challenges we were up against around that time, maybe a little bit later, we had decided to stay in la. But up until we were in la, which doesn't have the same sort of tech ecosystem or tech talent that San Francisco or the Bay Area has. So hiring was very time consuming, especially for tech talent and really trying to convince people to come move to LA to work on Snapchat. And then fundraising, of course, at that time was also a pretty big project. And then I was answering all the support email as well at the time, Evan.
- [31:05]
Guy Raz
The first time I think I heard about Snapchat was when I used to read the New York Times regularly and it was, if you're in the New York Times, it was such a big deal. And I think in May of that year of 2012, they ran a story about Snapchat. And the story implied that, hey, this could be used for sexual content or nudity. And that became kind of like a narrative for a while. Like, oh, here's this sexting app and stuff. Tell me a little bit about. And I've read your responses to that at the time, and I could sense in your responses just irritation with this. Tell me about how you felt about that narrative. Because it was out there. It was real. People were saying, this is what it's going to be used for.
- [31:48]
Evan Spiegel
Yeah, I think it was frustrating just because it felt like people didn't understand what was really happening with Snapchat. And we would try to share the data and show that people were sending 50, 100 snaps back and forth all day long, communicating. And so we felt that. But kind of pigeonholing us into that wasn't a fair reflection of what was happening.
- [32:06]
Guy Raz
So, all right, there's this narrative. Obviously you're annoyed by it. And look, people, I'm sure, were using it to send nude photos. There's nothing you can do to prevent that. It's like you can have a car company and somebody can speed. You can't prevent that. But was there anything you could do to discourage that in any way, or was it just sort of something that might happen and it wasn't really anything that you cared about?
- [32:30]
Evan Spiegel
I think what's really important is just continuing to talk about the service as a way to visually communicate and obviously to, you know, discourage folks from doing things that were inappropriate or illegal. We invest a huge amount of money trying to stop, you know, illegal behavior or misuse of our platform and our service. So I think there's a lot that we do do and that we can do to help keep our platform Safe.
- [32:52]
Guy Raz
All right, 2012, this is like your first kind of full year. The year you dropped out, you've got your first seed money, and probably by this point, you have a lot of people approaching you to invest. Is that happening throughout the year? Are you getting messages? Are you getting investors approaching you?
- [33:08]
Evan Spiegel
Yeah, we definitely got more inbound interest in the company, for sure. But we realized very quickly that we had a problem, because in our initial convertible note that had been issued from Lightspeed, we had agreed to a right of first refusal. So as we were getting offers from other VCs, we were so excited, we took them to Lightspeed and said, hey, check this out. We got this offer to invest really high valuation. And they said, well, you do know about this, right of first Refusal thing. And we were like, sorry, what, what.
- [33:38]
Guy Raz
Did that, what did that mean?
- [33:39]
Evan Spiegel
Yeah, the, the right of first refusal allowed Lightspeed to buy up to 50% of the next round. And because of the way that a convertible note works, that meant that they would control that series of stock. So they would control the Series A of stock. And that meant that other investors weren't interested in leading the Series A, because the minute that they decided to invest, they wouldn't control the series anyways.
- [33:59]
Guy Raz
Did you know that when you signed that, when you got that seed money, was that clear to you?
- [34:04]
Evan Spiegel
Yeah, we read the terms, but at the time that was our impression that they were just standard terms. And we were so excited that someone was willing to invest in the business that wasn't as important to us. But I think one of my big takeaways and one of the things I always share with entrepreneurs is just that there's no such thing as standard terms. And to be really careful as you're evaluating the terms of these investments.
- [34:26]
Guy Raz
It's so true. I have seen throughout my life and career contracts this is just boilerplate. And you're like, well, I don't like the boilerplate. So all right. So I mean, I'm sure you're very grateful to Lightspeed. And I think they subsequently did make more investments, but initially you were hamstrung because the next round they had the right to lead it, which meant that it could discourage other investors from being involved because it, if they couldn't lead it, they might not want to be involved.
- [34:54]
Evan Spiegel
Yeah. And ultimately by discouraging other investors, that meant that the market for our stock, the valuation could have come way down.
- [35:02]
Guy Raz
Because there was no competition.
- [35:04]
Evan Spiegel
Exactly.
- [35:05]
Guy Raz
So I mean, how did you get around that?
- [35:08]
Evan Spiegel
Well, one of the interesting things about that point in time is that convertible notes were very new. So what we discovered was that the language in the convertible note actually allowed us to convert, convert that note into any type of stock. It didn't specify the type of stock that we were required to convert the Note into. And that gave us a lot of flexibility to think about, do we just want to convert this Note into a different series of stock and ultimately then create a new series that another investor can come into? So it helped us reach a positive and constructive solution with Lightspeed. Who understood, okay, we'll find a solution here. We understand this right of first refusal is, it might not be the best thing for the business. You know, early VCs, early venture capitalists are actually quite open to having more founder friendly terms early on. Right. Because the amount of capital is much lower. And, you know, the idea is either, you know, you make something really, really successful, or, you know, it goes to zero. So the. But we've always shared with, you know, our friends who are starting businesses. You know, you can. You. You have three things you can optimize for when you're raising money. You can optimize for the people you're working with, like the venture capitalists. You can optimize for the terms, you can optimize for the valuation. But pick two. And we, you know, with other investors, picked really the terms and the investors. And so that ultimately, I think, served us well over time.
- [36:31]
Guy Raz
All right, 2012, by the end of that year, I think it's in December or maybe, maybe in the fall of that year, you are contacted by Facebook and you are. You and Bobby go meet with Mark Zuckerberg. Was that the first time you had met him?
- [36:49]
Evan Spiegel
Yeah, it was.
- [36:50]
Guy Raz
Tell me what you can tell me about that meeting. It must have been kind of amazing. I mean, you know, this is now after, I think, the social network had already come out. He was already kind of legendary. What do you remember about that meeting?
- [37:03]
Evan Spiegel
Well, I mean, obviously it was really cool to meet such an accomplished entrepreneur. We were pretty nervous. He was telling us about working on a new Poke app, which ultimately ended up being a copycat of Snapchat at the time. So that was our big takeaway, was like, yikes, he's building something that's really similar to what we're doing.
- [37:22]
Guy Raz
But he was clearly interested in seeing if you guys wanted to work together, right?
- [37:26]
Evan Spiegel
I think so, yeah. I mean, he's had a great track record of identifying companies pretty early on and finding ways to work with them.
- [37:35]
Guy Raz
Did he say, do you guys want to collaborate? Do you guys want. I mean, we're open to bringing this, you know, into our fold.
- [37:42]
Evan Spiegel
At that time, I don't remember the exact substance of.
- [37:45]
Guy Raz
You don't remember? Of course you remember. And it was a. You were 22. It must have been incredible to be asked to come meet him because it's a validation of what you guys were building.
- [37:55]
Evan Spiegel
Yeah, it didn't really. That's. That's not how it felt at the time. It felt like, oh, no, there's a really big company that everyone's been warning us about who's now really interested in what we're doing, you know, and has said they're working on something similar.
- [38:06]
Guy Raz
So you left that meeting nervous.
- [38:07]
Evan Spiegel
Yeah, we knew that a copycat product was coming, and then I think that Christmas. It did, yeah.
- [38:13]
Guy Raz
December of 2012. I mean, you're just full year into this thing and Facebook, the biggest social media company at that point, launches essentially a clone, a Snapchat. Were you worried?
- [38:26]
Evan Spiegel
We were really worried. But I now talk about it as the best Christmas gift of all time. Because that Christmas morning we woke up and everyone had been getting their new iPhones. And remember at the time, the new iPhone had a front facing camera, which was a really big deal because people could take selfies. And so people were getting their new iPhones with front facing cameras and they were downloading Snapchat and Snapchat was at the top of the app store. And so that for us was just a huge sigh of relief.
- [38:53]
Guy Raz
How many people said to you in 2012, Facebook is just going to crush you? Because I think it would have been not an unreasonable thing to think. I mean, it was a giant and they're launching a clone. They had an order of magnitude more users that they could just basically just send this out to everybody. How many people said that to you or implied that?
- [39:15]
Evan Spiegel
That was probably the most common piece of feedback we got from potential investors? I think that was, you know, if you remember back then, there was sort of this idea that like, if you have a really, really big social network, there are these network effects and no one can compete with a business that has network effects. And at the time, people had not yet understood that, like, if you have a big network but you're only talking to three or five or seven people in that network, that actually the size of the network doesn't matter that much. What matters is that those people that you talk to all the time are a part of it. And so that's how Snapchat was able to grow. It wasn't focused on being the biggest network. You didn't have to have the most number of friends, but your number one best friend, or your partner, in my case, my wife, is the person you talk to half the time or all the time. And so if just that person is part of the network, then the network's really, really valuable to you. And so I think back then, though, people didn't understand that you could grow another messaging service. They just thought that the person with the largest social network would always win.
- [40:15]
Guy Raz
When investors were asking you, but what's the advantage you have? 2012, 2013, everybody was on Facebook. Who is the person who's using Snapchat versus the person who might use Poke or whatever Facebook might offer in the future? What would you say?
- [40:31]
Evan Spiegel
I think the advantage was just that our vision was very different. We talked about this a little bit before, but this notion that social media was really for posting pretty imperfect photos and trying to collect the greatest number of friends possible to basically participate in this huge popularity contest, and that Snapchat was actually focused on your real friends, your close friends, your family, and communicating the full range of human emotion with them as a messaging service, not as a social media broadcast service.
- [41:00]
Guy Raz
So when people would describe it then and now as a social media platform, do you like, recoil at that idea? Would you push back and say, that's not really what we are?
- [41:09]
Evan Spiegel
We've always pushed back against that. But I think, you know, some of our services, like Stories, for example, which we really viewed as like one to many communication with your close friends and family. I think that, you know, people's adoption of Stories and then ultimately subsequent platforms also integrating stories as well, led to that feeling that, like, hey, Snapchat's like social media, even though on Stories there are no public likes and no comments, and the stories disappear after 24 hours.
- [41:37]
Guy Raz
Eamon, I'm curious about. By the end of 2012, right, do you remember how many people you had? Was it more than a dozen working with you?
- [41:45]
Evan Spiegel
Maybe about seven, seven, eight.
- [41:48]
Guy Raz
Okay, so still a small team.
- [41:49]
Evan Spiegel
Yeah, something like that.
- [41:51]
Guy Raz
Tell me a little bit about how you structured it. Because when I was like 22, 23, I went to go become a foreign correspondent around that time, and I had a couple people working for me and it was hard. I did not know how to do that. I didn't know how to lead a team. I didn't know how to manage people I didn't know. I felt like I was a kid, you know? And I'm curious how you felt, because you were the CEO, right? And Bobby was what, the cto?
- [42:17]
Evan Spiegel
Yeah, he's the cto.
- [42:18]
Guy Raz
How did you manage that? How did you even know what to do, how to be a boss?
- [42:23]
Evan Spiegel
Well, I think the best part of not knowing anything is that you get to ask all sorts of questions and just approach every situation as an opportunity to learn and never be embarrassed about not knowing. I never had to be the smartest person in the room. No one ever expected me to be experienced because I. I hadn't ever run a company before. And I think that was just a massive, massive advantage to just be able to ask questions, ask why? The technology industry is just an incredibly generous industry when it comes to people helping each other out.
- [42:54]
Guy Raz
Yeah. Who helps you? I mean, who are some of the mentors? Just to understand how to deal with equity or deal with investors or just deal with things like the beginning that are very complex even for a really intelligent 22 year old who helped you kind of navigate that.
- [43:12]
Evan Spiegel
One of my really fond memories was when so Eric Schmidt I got to know through that class, entrepreneurship and venture capital.
- [43:19]
Guy Raz
And he was the seat, I think the chairman of Google at the time.
- [43:22]
Evan Spiegel
I think so, yeah, I think so. And so he would say, you know, hey, I'm coming to la, I'll come by you and Bobby, just make a list of all the questions you have and I'll help you answer them. And you know, at that time our questions were like, do we need a cfo? Like, you know, this kind of thing. And for Eric to just sit down and let us ask all of our questions and say, like, no, you don't need a cfo, you're not making any money. That was just really helpful to have that sort of unbelievable expert advice.
- [43:49]
Guy Raz
I wonder about just personally, right? You're working all day, all night, seven days a week, non stop, right? And there are still stressors. You know, this other co founder, Reggie, sues the company and then you've got this legal dispute, it was settled and he was given a payment, a payout. But did that create stress for you and Bobby knowing that, look, this is hovering over us, this is a real thing. Was it distracting in any way?
- [44:20]
Evan Spiegel
It wasn't so much like the stress of the legal process. It was sad because this had been one of my best friends in college. So I think that personally, that part of it was terrible.
- [44:29]
Guy Raz
You didn't reconcile, you and Reggie, personally.
- [44:34]
Evan Spiegel
We haven't talked in a long time.
- [44:37]
Guy Raz
All right, you guys raise a Series A, $13 million led by Benchmark. So clearly you were able to work something out with lightspeed because the round was led by a different firm. And that's serious. I mean, you've got a lot of Runway there. And then a couple months later, several months later, it's a series B, 80 million, right? And now you've got a lot of wind in your sails. In 2013, that year, you had three rounds, an A, B and C round where you raised really a substantial amount of money. So my impression is that your feeling was, let's bring in a bunch of money and really try and grow big fast. I mean, I can't imagine how just chaotically nonstop 2013 would be because it's just, you've got to grow, you've got to hire people, build a headquarters. But what did you start to think? This thing could be.
- [45:35]
Evan Spiegel
At that point we were really just trying to keep up with the growth of the service overall. We had some ideas about how to evolve it, things like Stories, for example. And we were playing around with some added value features at the time. Ultimately now we have a service called Snapchat Plus. But you know, a lot of, a lot of the folks at that time was really on building out the team and then ultimately making the decision to really commit to building out the company in Los Angeles, which, you know, up until then was kind of up in the air.
- [46:02]
Guy Raz
And the business model was going to be still primarily advertising.
- [46:07]
Evan Spiegel
It wasn't clear at the time what the business model was going to be. And one of the things I learned from Stanford and being up in the Bay Area, which was different than how I learned about business growing up, was the real focus on getting to scale and investing to get to scale rather than focusing on profitability early on. And that the more that you can grow and expand your total opportunity over time, ultimately the business can generate a ton of profit and whatnot down the road. But that, that would not be the right thing to focus on early. And so the idea is if you can grow something that's really big, that's valuable to people, that you can figure out how to monetize it later.
- [46:41]
Guy Raz
By the way, do you think that model is still viable today, like in terms of starting a business saying, we'll figure out the business model later, let's just get the users?
- [46:50]
Evan Spiegel
I think it depends. I think that that strategy is most effective when it comes to new platforms. So if you look at the advent of desktop Internet, that was really the strategy very early on for players like an Amazon, for example, where they were like, we're just going to invest to grow, we'll worry about profitability. I think the same was true about the mobile platform development, right? Where same thing like, you know, let's just try and build really popular scale services and then focus on profitability. So in those moments of big technological change and disruption and new platforms, I definitely think that's the right approach.
- [47:23]
Guy Raz
But it's risky, right? I mean, and there are lots of examples of brands and businesses that did get a lot of users and then just didn't work or couldn't monetize it. But I mean, the idea here was let's just get people in the door and probably, you know, we could advertise, we could have a subscription, we could try different things. But once we've got the users who love this product, we can sell them something. We can make this sustainable.
- [47:45]
Evan Spiegel
Yeah. And I think, to be clear, the areas where that typically doesn't work is when the company is not a tech company. So I think, like, tech has some very interesting economies of scale in the sense that, like, we design the app once and we build the app once, and it scales to now, you know, more than 850 million people around the world. I think you run into challenges with that. Grow big first and then monetize model when you don't have those same economies of scale.
- [48:08]
Guy Raz
All right, this has been widely reported. The Wall Street Journal did a big piece on this in 2013, and I want to dig into it a little bit because it's really extraordinary. But that year, apparently it may have happened. In your first meeting with Mark Zuckerberg, it was reported that you were offered a billion dollars to sell the company and then apparently $3 billion in cash. A cash offer, all cash offer to acquire Snapchat. I mean, you were like 23 being offered $3 billion Instagram. And we had Kevin and Mike on the show, as I say, nine years ago. And, you know, subsequently, I think they've expressed some regret about what happened and having sold it, but they sold it for a billion dollars a year in, you know, you're like a year and a half in. This would have been a massive, massive win. I mean, a huge exit. All your investors would have done great. You would have done great. Your partners. Tell me about rejecting that offer.
- [49:07]
Evan Spiegel
Well, I think, as you mentioned, we did have the benefit of learning from Instagram, and it was very clear that Instagram had sold way too early and mobile, at that point in time, mobile as a platform was. Was still nascent. I mean, it was only just growing. If you remember, there were a lot of questions at the time, like, will Facebook be able to monetize on mobile? Will anyone use Facebook on mobile? So it was very, very, very early on. And I think ultimately Bobby and I just loved what we were doing. We loved working together, and we saw a huge opportunity for the business. And ultimately we were able to convince our investors that we saw a way bigger opportunity out and, you know, out in the future. And so ultimately it just made more sense to stay independent. And I think there was also just a feeling that the companies were very different. I mean, they have different priorities. We're offering very different products. And I think Instagram really fit into the Facebook model of social media. But Snapchat was really designed to be an antidote to that, the opposite of that.
- [50:04]
Guy Raz
I wonder, though, I mean, was it a Hard decision to make. I mean, you know, we had Andrew Mason on the show a while back. He famously founded Groupon, and famously, they were offered up to like, $6 billion for an acquisition from bidders like Google and Yahoo, which of course, they turned down, which proved to be a mistake. Right. I mean, the value of the company is pennies on the dollar today. Was there any, I don't know, any just sleepless nights over, like, maybe we should just do this. Maybe this is just the best thing to do now?
- [50:35]
Evan Spiegel
I think one of the things that our investors had done very wisely is in one of those early financing rounds, Bobby and I were both able to cash out, like 10 million do. So we were set for Life.
- [50:45]
Guy Raz
Yeah. At 22, having 10 million with compound interest. Yeah, exactly. I mean, 4 or 5% return every year, you're good to go.
- [50:53]
Evan Spiegel
So we, I don't think, felt that pressure of, you know, is this it or we not? You know, if this goes to zero, what's going to happen? We were able to really swing for the fences and try to build something really big.
- [51:04]
Guy Raz
In that same article in the journal in 2013, there's somebody quoted in there with some skepticism about the decision that you took. And this person said, look at the fate vine has suffered. Vine was huge. Again, proved wrong. But at the time, there was no part of you at all that looked at things like vine and just thought, what if that happens?
- [51:29]
Evan Spiegel
One of the things that helped give us confidence is we had a roadmap. I think one of the big questions in technology always, and especially when it comes to these acquisitions, is, is this a feature or a platform? And it's very important to know if you're building a feature or a platform. And so for us, maybe in the early days of Snapchat, of photo messaging, that was maybe more of a feature. But by the time we'd added things like stories, and we would go on to add all of our augmented reality lenses, of course, memories, our map later on, all these different pieces of our service that have really diversified it and made Snapchat much more of a platform. We had a bunch of that vision. So we knew that we were going to be able to continue innovating. We knew that we weren't just going to be standing still. I mean, one thing for sure in the technology industry is if you're just standing still, it's really easy for competitors to catch up, especially if they're a lot bigger. But we really believed in our ability to keep innovating.
- [52:20]
Guy Raz
When you turned down that Reported second offer from Facebook. Business is business. This is what our show is about. And business is like war. I'm not casting any moral judgment. I think a good business leader has to think about, has to plan to win a company like, like Facebook. Zuckerberg has to think, how are we going to out compete these guys? Which eventually they would start to do things with Instagram, right? Like Instagram stories and other things that they would put out there. Did you anticipate that that would happen?
- [52:57]
Evan Spiegel
We thought that that would happen, yeah. I think the one thing that we didn't anticipate was that Instagram would actually perfectly copy stories, like carbon copy it. Because in the past they had sort of tried different rifts on our products. Like they would take the core idea but then try to make it better and ultimately that wouldn't work. And so I think that to have that sort of confidence to just say, like, hey, we're going to take what we see working and put it in our service. That was impressive and not something we'd seen from Facebook before.
- [53:25]
Guy Raz
I think I know the answer to this question, but do you consider yourself to be a competitive person?
- [53:30]
Evan Spiegel
I don't actually, no. And I think, in fact, I think zero sum thinking or that sort of competitive thinking is very dangerous. And so what we try to do is run our business differently, which is to create new things, to create new open space, not to think of the world or our community as something to divide up or fight over.
- [53:50]
Guy Raz
So when Instagram does something like that, did you take it personally? Did you think, like, screw those guys, they're a bunch of assholes?
- [54:00]
Evan Spiegel
No, we admired the audacity, really.
- [54:03]
Guy Raz
You didn't take it personally at all. You weren't angry in any way. You just like, whatever.
- [54:08]
Evan Spiegel
It wasn't a whatever. It was like, hey, we got to take this very seriously. But I think at the same time a real respect that Kevin had just come out and said, hey, this thing works really well and we're going to do the exact same thing.
- [54:22]
Guy Raz
When we come back in just a moment. Snapchat drops the chat and tries to make the leap from your phone to your face. Stay with us. I'm Guy Raz and you're listening to How I Built this. This episode is sponsored by Canva. If you make decks at work, you should make the switch to Canva presentations. Canva presentations might be the most visually impressive presentations you'll ever use. Start with a stunning template, drag and drop images, graphics, charts and data visualizations from Canva's massive media library. Add Animations plus interactive polls and quizzes to really set your slides apart. Built in AI also lets you generate slides and text in seconds from a prompt. And you can share your Canva presentations with anyone and instantly collaborate in real time. Canva is used by 95% of Fortune 500 companies. Whether you work at a small or big company, in a team of two or two thousand, Canva empowers workplaces everywhere to create captivating presentations, save time and be more productive together. You'll love the presentations you can easily design with Canva. Your audience will too love your work with canva presentations@canva.com One of the hardest parts about B2B marketing is reaching the right audience. So when you want to reach the right professionals, use LinkedIn ads. LinkedIn has grown to a network of over 1 billion professionals. And that's where it stands apart from the other ad buys. You can target your buyers by job title, industry, company role, seniority, skills, company revenue, all the professionals you need to reach in one place. Stop wasting budget on the wrong audience and start targeting the right professionals only on LinkedIn ads. LinkedIn will even give you a $100 credit on your next campaign. So you can try it yourself. Just go to LinkedIn.com built this. That's LinkedIn.com builtthis. Terms and conditions apply only on LinkedIn ads. Hey, welcome back to How I Built this. I'm Guy raz. So it's 2016 and Snapchat is still growing fast with another round of fundraising valuing the company at 16 billion. And despite copycatting by Instagram and other competitors, Evan is locked in on an even bigger, longer term vision for his company. You guys rebranded to Snap. You're no longer Snapchat in 2016, and I guess that was you started to talk about Snap as a camera company. Tell me about that.
- [57:18]
Evan Spiegel
One of the things that we really wanted to make clear was that we weren't a single product company, that we had aspirations beyond that. And we'd been working on wearables for a long time, initially starting with the idea of let's get the camera out of people's pockets and facing out into the world with our camera glasses called Spectacles. I think the first version we launched back in 2016, of course, initially was used for recording moments. With Snapchat, it became primarily used for communication, which was a huge change in the way that cameras are used. And I think in the future, and even today with the fifth generation of Spectacles, cameras are really used to overlay computing on our environment. And to better integrate computing with our day to day lives.
- [58:01]
Guy Raz
I want to ask you about something that's more personal to me about snap. And it's as a parent, you're a parent and I've got two teenagers and they use it and it's the only social media app we allow because essentially their argument was we won't be able to communicate with our friends because they all have. So we relented. But I remember around this time, around 2016, this is not long when they got on Snap, but around the time you guys changed to Snap, there was a TED Talk. And I was at that TED conference and it was a talk about how young people get hooked on social media. And I say this as somebody who's really, I have to take all the social media off my phone every couple of weeks just to not use it. But something that you guys really innovated was this SNAP streak where. Where every time you snap, you get a streak. And kids were incentivized not to break the streak. And I wonder, from a business perspective, it's brilliant. And I love free markets. I believe in free markets. I don't believe in blaming businesses for the way people use the products, but I mean, it is a way to get kids hooked on it. And I wonder how you respond to that kind of sentiment or pushback.
- [59:14]
Evan Spiegel
Yeah, well, I think it's really important to look at the way that streaks work. And with the Snapchat streak, it doesn't change every time you send a snap. It just increments every day that you send a snap back and forth with a friend. And so what it does is celebrate that every day you've been in touch with that person, you've checked in, you've seen what they're doing. And I'm sure have seen the research that shows the importance of just staying in touch, even in light ways with your close friends and your family. And I think, you know, just in the way that we often set reminders for ourselves to do something that's important. I think streaks are an important reminder for folks to just stay in touch with the people that they really care about just once a day.
- [59:50]
Guy Raz
It's interesting because philosophically I just, maybe it's just because I'm older. I just fundamentally disagree with that. I don't think people need to be in touch about every detail of their lives all the time. Like, I have cousins and relatives, I love them, but like, I don't need to tell them about everything that I'm doing all the time. We can talk every few months and it's okay every few weeks. And so I wonder, I mean, you can talk to any parent of a teenager and they will say it becomes increasingly hard to pull your kid away from Snap or TikTok. And I wonder whether you can see that argument and say, I hear you on that.
- [60:27]
Evan Spiegel
I definitely hear you on that. But I also just recognize that these services work really differently. And that's one of the reasons why in our house too, we're really supportive of Snapchat and less supportive of other services because we want our 14 year old to engage with his friends, to talk to his friends. And oftentimes when I'm working late, I'll get a snap from my wife with our kids, saying goodnight and we get to send those snaps back and forth. And that's something that really adds a lot of value to my life. So I think what's really important is that beyond just talking about screen time, we really talk about the way that we're using our screens and what we're using them for to go a layer deeper and to really figure out how we can use technology to support things that really matter, like relationships and friendships. For us as parents, we just talk about the importance of everything in moderation and having a healthy relationship with technology.
- [61:14]
Guy Raz
You took the company public in 2017 at a $24 billion valuation and the stock price is going to go up and down and up and down. I think at one point it was like $80 over $80 a share, something like that, or $75 a share. Now it's about, as we speak, about 1060 a share, market cap, 17 billion. Very impressive, but lower than the IPO. And that's just the reality of it. How do you view that? Most of your quarters you're not profitable because it's all public. But at the same time, you clearly believe in this business, the future of this business. You've got hundreds of millions of users, so it's a robust business. But how do you manage how it's seen by outsiders and investors? Now it's valued.
- [62:05]
Evan Spiegel
Well, what's really important for us is just clearly articulating our vision for the business and our just consistent desire to invest in the long term, going after really, really big opportunities. And consistency in doing that is key. So as we look at the long term future of augmented reality, for example, and our desire to build a new computing platform that better meets people's needs by actually being integrated in the world around them, that's a really big and expensive bet. And the only way we're going to be able to make progress towards that is if we really invest consistently. And so we've really prioritized going after that long term opportunity compared to short term profitability. And it doesn't mean, you know, we're generating free cash flow. We, you know, Q4, we generate positive net income. So it's not like we disregard our finances. We've actually run a very conservative balance sheet with billions of dollars of capital so that we can consistently invest over the long term. But I think what's most important with investors and the broader public is to be clear about those expectations, to be clear that we are going to invest in the long term, that we're not going to optimize for the quarter to quarter share price and we're just going to make consistent progress towards our long term vision.
- [63:15]
Guy Raz
Many years ago I interviewed Ken Chenault, the former head of American Express, and he said, when I ran American Express, I always thought we need to become the business that's going to put us out of business. Look, the reality is in 10, 20 years, maybe five people may not be sending text messages, people may not be communicating that way. We don't know. I say this because, as you know, some members of your team came up here to San Francisco to show me this new product that you guys are working on, which is the latest generation of your spectacles, which are these augmented reality glasses. I tried them. Super cool. You can do some fun things. And I know you guys have invested a lot of money in this. I mean, there's a lot of technology packed in those glasses. Is that the future of the business? Is that where you see snap headed?
- [64:01]
Evan Spiegel
I think that's critical to our long term future. I mean, ultimately, if you look at all the products we built, we've tried to make technology work better for people. So much of technology in the past has forced people to change their natural human behavior to fit how technology expects them to behave. That certainly could be said of social media, right? Where instead of having ephemeral conversations in chronological order, social media has everything permanent and in reverse chronological order. And it feels inhuman. I don't think we should settle for the way that computers work today, for staying hunched over these small screens as the best way to get the value out of computing. I think computers can do so much more, can be so much more. And ultimately we were talking a little bit about wanting to make sure young people in particular have a balanced relationship with technology. But what would it look like to build a computer that you really wanted your kids to use? You know, frequently, because it's the best way to learn, the best way to play together with their friends. It's something they could actually use outdoors. These are all the sorts of things that glasses, I think, can really provide people over the longer term.
- [65:02]
Guy Raz
But, you know, people have been talking about this for a long time, going back to Google Glass, and, you know, Meta has released something which is not augmented reality. It's essentially, you know, a very high quality camera and speakers and AI in your, you know, on these glasses. But we've thought for a long time that this is going to be how people will use it. Like they'll wear the glasses, they'll be able to see augmented reality. But so far, we as humans haven't adopted this technology at scale yet. So tell me why you're bullish about it.
- [65:36]
Evan Spiegel
I think because it allows for a computing experience that can be shared together with people, which is really different than the way that we use computers today. Right now. Sometimes computing can feel isolating. Even if you're text messaging a friend, it's something that you're doing alone. I think what's so powerful with glasses is if you can put on glasses together with your friends and share experiences is a really powerful benefit of this technology. Of course, having it actually grounded in the real world rather than being a screen that separates you from the real world, I think is a tremendous benefit as well. And then as you probably experienced, the idea that you can just use your hands and your voice and engage with computers in a much more natural way, I think is going to be really helpful to people as well and make computers easier, much easier to use.
- [66:21]
Guy Raz
I want to ask you about your place in the sort of the social media ecosystem. Even though I know kind of recoil when you hear that with Snap. But it is considered that for better or worse, right? And if you looked at the inauguration, you saw, you know, Mark Zuckerberg was there, Sundar Pichai was there, obviously Elon Musk was there, the TikTok CEO was there. So like Twitter, Meta, Google, TikTok, they're all represented there. What about Snap? I mean, do you feel like, is it important for your business that you are engaged at that level?
- [66:58]
Evan Spiegel
Look, we have a different set of challenges. We're a really small company compared to those companies.
- [67:03]
Guy Raz
Yeah. How many employees? About 3,000.
- [67:06]
Evan Spiegel
Approaching 5,000 now. But, you know, I think one of the, one of the reasons why those large companies are engaging so closely with the government is because they've been accused of monopolistic practices. I mean, they represent two of Them represent the vast majority of the online advertising business. And so that is a critical issue when it comes to continuing to grow their businesses or trying to acquire new companies or thinking about, you know, their avenues for growth in the future. You know, they. They are the advertising market. And so I think it makes sense that they're dedicating a lot of their time and focus to engaging with the government.
- [67:39]
Guy Raz
What do you think about what seems to be traditionally kind of tech. The tech sector is in California. It's been left of center, maybe slightly libertarian, but kind of left of center. And the momentum seems to have shifted towards more right of center. Obviously, Elon Musk is super influential, right? He has a massive role in kind of reshaping government right now. Is that something that you think is an interesting trend or a positive trend, or do you have any feeling or view on it?
- [68:10]
Evan Spiegel
I think what you've seen from technology companies in the past is that they've generally tried to align themselves with whatever administration is currently serving the country at the time and tried to be helpful. I think it makes sense. If you're an American company, you want. We want our government, our president, to be successful. And I think that's an important part of businesses strategies here in the United States. So I wouldn't look at it as a new thing. I would look at it as kind of a constant. If we look over American history and certainly business history, do you.
- [68:40]
Guy Raz
For your. Not just for the business, but just for you, Evan Spiegel, as a person, do you think it's better? Obviously, Mark Zuckerberg was a contributor to Democrats for a long time, then stopped contributing to politics, and now he's. I think his views on politics have changed. Do you think it's better for you, Evan Spiegel, to be engaged, to be a contributor, or better for you to be apolitical as much as you can?
- [69:06]
Evan Spiegel
Well, I think it's super important to be an engaged citizen. What you're talking about is sort of engaging at the highest levels of government. But I think civic engagement at all levels of government, especially local government, is really, really valuable and important. And personally, I'm a registered independent, which is I believe, actually the largest party in America. I don't do political giving, although I did give to Michael Tubbs, who lived across the hall from me in college.
- [69:31]
Guy Raz
Stockton mayor.
- [69:32]
Evan Spiegel
Former Stockton mayor. Yeah, former mayor of Stockton and great guy. But no, I think for me personally, we just try to engage where we think we can add value. And I don't think that has to be at the Federal level. I think there's a lot of opportunity, even just locally to help the community.
- [69:46]
Guy Raz
Evan, you're so young but very experienced and you have your whole life ahead of you. I mean, if you're like Brian Johnson, you could look live until 200 years old. Realistically, do you think that Snapchat is the end of the story for you? Snap is the end. Is that this is going to be the thing that you're going to do for the rest of your life, or is there a world where one day you could imagine trying something else?
- [70:09]
Evan Spiegel
I'm not sure. I think there's a lot more to do here at snap, and there's a lot more work to fulfill our vision for augmented reality and for glasses. We've been working on that for a decade, but it's going to take quite a lot longer. If you look at how much computers evolved from the 80s to today, I mean, there's a lot of work to do to fulfill that vision. But over the longer term, I'm definitely going to look for more ways to give back. I mean, I think that is really the perk of building our business and learning a bunch as a leader is being able to give back. I mean, that's kind of the whole point, I guess. So that's what hopefully I can do more of.
- [70:44]
Guy Raz
When you think about what happened, you know, because if you, if you were to just be. If you were like to land right from Mars and an alien was here and I said, oh, I'm going to tell you a story about this guy, Evan Spiegel. He's 20 years old. He comes up with this idea with a friend and then within a year they get a billion dollar offer and then two years later, 3 billion, and they raise all this money. It would sound like this, very simple. Of course, we've talked for a while now, so it's not, but it would sound like a very simple, like, oh, he just went from success to success. It was easy for him because he was smart and he went to Stanford and he got the money. And obviously it's much more complicated than that. But when you reflect on where you are now at 34 and what you've achieved, how much of it do you attribute to your intelligence and the work you put in? And how much do you think has to do with getting lucky?
- [71:37]
Evan Spiegel
I think all of it's an extraordinary blessing, actually. The first time I was ever invited to give a speech, that's how I started the speech. I said, I've been unbelievably lucky. Life isn't fair. And it's been extraordinary to have these gifts of, you know, growing up in the Palisades, being able to attend a great school, having the opportunity, the safety net to go pursue a business. I mean, but I think beyond luck, there are so many generations of my family that did so much work to enable me to do this. You know, my father, his father, I mean, my grandfather's dad was one of, you know, seven orphans spread all throughout the country after their parents died. You know, at 12 years old, he was working in the copper mine. You know, so I just think about all the work that generations of my family have put in to give me this opportunity. So one of the most important things is waking up every day just realizing that it's all luck.
- [72:28]
Guy Raz
All luck.
- [72:29]
Evan Spiegel
It's all hard work, too, but it's luck.
- [72:35]
Guy Raz
That's Evan Spiegel, co founder and CEO of snap. By the way, Evan also happens to be a Francophile. He loves France so, so much. He even became a dual US French citizen back in 2018. The French government waives its residency requirements for certain people who it believes will contribute to French culture or the economy. Hey, thanks so much for listening to the show this week. Please make sure to click the Follow button on your podcast app so you never miss a new episode of the show. And if you're interested in insights, ideas and lessons from some of the world's greatest science entrepreneurs, please sign up for my newsletter@guyraz.com or on substack. This episode was produced by Alex Chung with music composed by Ramtin Arablouei. It was edited by John Isabella with research help from Kathryn Seifer. Our engineers were Patrick Murray and Gilly Moon. Our production staff also includes Chris Masini, J.C. howard, Casey Herman, Iman Ma'ani, Sam Paulson, Kerry Thompson, Neva Grant, and Alex Lane Coates. I'm Guy Raz and you've been listening to How I Built this. If you like How I Built this, you can listen early and ad free right now by joining Wondery plus in the Wondery app or on Apple Podcasts. Prime members can listen ad free on Amazon Music. Before you go, tell us about yourself by filling out a short survey@wondery.com survey.
- [74:12]
Evan Spiegel
Running a business can be exhausting.
- [74:15]
Guy Raz
Building your website shouldn't be. With wix, you can express your ideas.
- [74:19]
Evan Spiegel
Give direction, then leave the heavy lifting to AI.
- [74:22]
Guy Raz
From site creation to branded content and images. Have fun with the details, customize what.
- [74:28]
Evan Spiegel
You want the way you want, and.
- [74:30]
Guy Raz
Manage your whole business from a centralized.
- [74:32]
Evan Spiegel
Dashboard with expert AI tools, build, scale.
- [74:35]
Guy Raz
And enjoy the incredible results. You can do it all yourself on wix.