Snapchat was set up by Evan Spiegel and Robert (Bobby) Murphy. It is a photo messaging application. Using the application, users can take photos, record videos, add text and drawings, and send them to a controlled list of recipients. These sent photographs and videos are known as “snaps” and ‘disappear’ after a prescribed time.
The background set up story to Snapchat is not without its controversies. In fact, the story shows major similarities to the legal issues that Mark Zuckerberg and Facebook infamously faced with the Winklevoss twins in the initial start up stages of that company.
Evan Spiegel, born close to Malibu and a son of successful Silicon Valley lawyers and Bobby Murphy from Berkeley, a son of state employees, claim that they came up with the concept of Snapchat in their fraternity house at Stanford University in California back in 2010. The controversy lies in the fact that a former fraternity member and acquaintance of Spiegel and Murphy, Reggie Brown claims that it was he who came up with the disappearing image concept that is fundamental to Snapchat. When Brown was involved, the concept was not known as Snapchat but ‘Picaboo’. Since then, Brown has been involved in legal wrangling with Spiegel and Murphy that has yet to be resolved.
The official set up of Snapchat was in late September 2011, so it is an application still in its infancy. Having grown up at a time when Facebook was just beginning, Snapchat CEO Spiegel, who only turned 24 this past June, perhaps reaped some of the energy that surrounded Zuckerberg’s start-up and turned it to his advantage. Throughout his schooling, Spiegel showed signs of ingenuity and an interest in technology. In fact, it is said that he built his first computer in the sixth grade, experimented with Photoshop in his school’s computer lab and he spent weekends at a local high school’s art lab. At Stanford, Spiegel and Murphy were well placed for their start-up, studying complementing college courses, with Spiegel studying Product Design, while Murphy studied Mathematical and Computer Science.
Interestingly, in the initial stages of start-up, the Snapchat concept was being created for desktop and it was, in what could be described as a ‘light bulb moment’, at a later stage of set up that it was realised that Snapchat (or Picaboo as it was still known) was ideal for mobile/cell phone use.
By summer of 2011, Picaboo had a total of 127 users. It was beginning to stop before it even began. In mid August, Brown contacted his two Picaboo colleagues to lay his cards on the table. It is apparent that at this stage he wanted around 30% (according to Murphy’s legal deposition) and listed his contributions: the initial idea, the Picaboo name and the ghost logo. Spiegel and Murphy totally disagreed and contended that Brown was being false in his assumptions. Things turned very sour at this stage with Spiegel and Murphy in effect closing Brown out, changing administration passwords and crucially, changing the name from Picaboo to Snapchat, although it is said that this might also have been due to another firm sharing a similar name.
Spiegel and Murphy added photo-caption capabilities to the app at this stage but neither fully focused on the Snapchat project. Spiegel went back to his final year studies and Murphy began a coding job with a company called Revel Systems. However that autumn, Snapchat began to gain momentum in terms of popularity, so much so that the founders were having difficulty in funding the server costs. Venture capitalist firm Lightspeed Venture Partners and namely Jeremy Liew was first on board as an investor. He felt compelled to seek out the Snapchat founders following a conversation with one of his venture capitalist partners about how the app was taking off in her daughter’s Silicon Valley school. In April 2012 Lightspeed put in $485,000 at a valuation of $4.25 million. When this went through, Spiegel dropped out of Stanford just weeks before graduation.
Following this, Spiegel and Murphy set up Snapchat HQ at Spiegel’s Dad’s house in L.A. They assembled a small team who focused heavily on development, design and coding. In terms of office space the company today resides in what can still be described as an underwhelming, unassuming facility. HQ is now a 6000 square foot Market Street office in Venice, California. The employee count is still only around the 50 mark so the company is still in its infancy despite its worldwide phenomenal popularity and growth.
Aside from the legal issues hanging over the company in terms of Brown, Snapchat has also been hit with some privacy and hacking concerns. In January of 2014, 4.6 million Snapchat users’ phone numbers and usernames were leaked online. At the time Snapchat played down the issue but had to work with law enforcement to resolve matters. In a separate controversy, they also settled charges with U.S. regulators in 2014, which accused it of deceiving consumers by promising that photos sent on its service disappeared forever after a period of time.
Today, the Snapchat app, which still operates without revenue and currently does not have ads, is the third most popular app among millennials after Facebook and Instagram. This ‘young people’ demographic is highly coveted amongst advertisers so it is no surprise that companies are eager to be a part of its success.
Reports suggest that ads are soon to be a part of the Snapchat business model in the form of something called ‘Snapchat Discovery’. Obviously it could be all mere speculation but various media reports suggest a November 2014 release which will also include a news addition to the app. Sources in the USA say that the Mail Online (the most visited newspaper website in the world, with over 189.5 million visitors per month) is currently in talks with Snapchat to deliver a news element to the app.
In its time Facebook was seen as a revolutionary new way of staying in touch with friends. However, in the 10 years since Facebook began, people have accumulated ‘friends’ who perhaps they no longer view as ‘friends’ but mere acquaintances. Snapchat’s attraction therefore maybe more than just the disappearing image feature (which can be screenshot by the fast fingered). Perhaps the attraction is the ability to share with those contacts in your phone those who you actually want to communicate with. Furthermore, Facebook’s increase in popularity with the ‘older’ generation may have hit that app’s popularity also, sending younger users to the more hip and new application that is Snapchat.
Evan Spiegel was criticised and at times ridiculed for turning down Mark Zuckerberg and his $3 billion offer just last year. Many commentators pointed to his business naivety and immaturity on the decision. However, with The Wall Street Journal reporting and citing unnamed sources this week that the venture-capital firm Kleiner Perkins Caufield & Byers has agreed to invest in the app at a valuation of almost $10 billion it seems that Spiegel may have been extremely shrewd in his decision. Time will only tell.
