Evan Spiegel is the co-founder, chief executive and enfant terrible behind Snapchat, one of the largest and fastest-growing social networks on the internet. At 24, he runs a start-up with 330 employees and a valuation north of US$15 billion that claims more than 100 million mostly young users. He’s also incredibly secretive.
Now he is ready to talk about a major turning point for his company. More than three years after Mr Spiegel founded Snapchat at Stanford with his fraternity brother Bobby Murphy, 26, he is trying to turn it into a real business. After starting to run select video advertisements this year, Snapchat is about to begin soliciting other big advertisers with some new numbers that assert its audience is bigger, younger and more obsessive than anything on television.
In a 23-page sales pitch it is sending to advertising agencies, the company says more than 60 per cent of 13 to 34-year-old smartphone users in the United States are active on the service and together view more than 2 billion videos a day. That is already about half the number of videos people watch on Facebook.
“When Snapchat started out, I thought it seemed trivial. I was completely wrong,” says Chamath Palihapitiya, a former Facebook executive and high-tech investor who has not backed Snapchat but watches it closely. “I don’t think anyone saw coming what they are building. At worst, they are the next-generation MTV. At best, they are the next-generation Viacom.”
Snapchat’s ascent has been rocky. The company pioneered a new genre of online messages that disappear seconds after being opened. It suffered a series of public relations crises caused, ironically, by the publication of internal deliberations and embarrassing old emails.
In late 2013, Business Insider posted leaked video depositions of Mr Spiegel and Mr Murphy in a lawsuit, since settled, filed by a former Stanford classmate who had the original idea for messages that disappear and felt unfairly cut out of the company. Then there were the bawdy emails Mr Spiegel had sent as a student to his fraternity at Stanford, leaked to Gawker and published online last May. Finally there were the emails that came out in December in the hack of Sony's computer systems, which exposed secret deliberations about business strategy among Mr Spiegel and Snapchat board members, including Michael Lynton, the chief executive of Sony Entertainment.
It all combined to give Mr Spiegel a reputation as a cocky Los Angeles rich kid with entitlement issues. On top of that, he was considered egotistical and foolish for turning down a more than $3bn all-cash acquisition offer from Facebook in late 2013, when Snapchat’s revenue was zero dollars a year.
Now Mr Spiegel is eager to set the record straight. Over the course of a 90-minute interview, he leaves an overall impression of an independent thinker who is taking the opposite path of many of his rivals not because he is full of himself, but because he believes that young internet users are not well served by other for-profit social networks. He eschews data in decision-making, ignores design conventions with his app and has placed his headquarters near the Muscle Beach in California made famous in the 1970s by Arnold Schwarzenegger, among others.
And his unconventional attitudes extend to advertising. “A lot of people look at internet advertising as a tax on the system,” he says. “That’s sort of discouraging if you care about making new products and especially discouraging if you feel like you can solve problems.”
Snapchat’s office, a two-storey loft, is one of about a dozen buildings the company leases in Venice, a block from the skateboard parks and T-shirt vendors that line the Pacific Ocean. A glass enclosure visible from the lobby is Mr Spiegel’s office, and although he declines to offer a tour, a portrait of Steve Jobs is visible on the wall inside. “This is why we don’t allow guests in here,” he says grumpily when asked about it.
In person, Mr Spiegel is a lot like Snapchat – earnest, raw, and unpredictable. He is occasionally modest (“everyone here is stupidly way smarter than me”), while also prone to bouts of inadvertent smugness (“I literally just invented this in my head,” he says, drawing a chart on a paper demonstrating the basic elements of the service). And he can be irritable. When asked a tedious question – What’s your long-term vision for the company? – he replied: “These are the kinds of questions I hate, dude”.
Mr Spiegel says that in the beginning, Snapchat was less about disappearing selfies and more about letting people capture a moment that they can share freely online with whomever they want without considering broader consequences. In a world where everything on Facebook or Twitter could become part of their permanent internet persona, impermanence had value to young users.
“Before that, most of social media stuff, you take a picture and give [it] to everyone on Earth,” he says. “Our idea was not that grandiose. It was simple. Let’s just take a shot at restoring some context” to the pictures we exchange online with friends.
Mr Spiegel and his colleagues then took that basic idea and riffed on it. Users can illustrate their snaps with playful graphical flourishes and make them available to groups of friends by posting them, sometimes in sequence, to a daily story, a kind of visual diary of their day. Snapchat also culls from those stories to create compilations of snaps from college campuses and major cities around the world. Even those vanish after 24 hours.
That is not the only way Snapchat is different. The service is not accessible on the conventional web, only through smartphones, and a central tenet of the company is that video and photos should take up the entire smartphone screen.
While Facebook and Google focus on technologies that advance material based on what is popular or useful, Mr Spiegel feels he has a responsibility to show Snapchat's impressionable young audience things that are meaningful, not just popular. Instead of software decoding a user's interests from search terms, clicks and shares, he has placed a bet on traditional media and old-fashioned editors. Earlier this year he signed up 11 media brands, including CNN, Comedy Central, ESPN and People magazine, and invited them to contribute daily channels of videos and articles that disappear every night at midnight. "There's a sort of weird obsession with the idea that data can solve anything," Mr Spiegel says. "I really haven't seen data deliver the results that I've seen a great editor deliver."
Snapchat’s media partners say traffic to the new Discover page in the Snapchat app started strong when it was introduced in January and fell off dramatically after the initial surge of interest. But they say it remains a good way to tap into a hard-to-reach demographic and a mass audience.
Mr Spiegel is averse to most kinds of online advertising. He finds targeted advertising creepy, especially the experience of shopping for a certain product on one site only to later see advertisements for it on another. He has also ruled out advertisements on Snapchat that accompany private one-to-one messages between users, judging it too invasive.
Instead, Snapchat started inserting full-screen video ads from such brands as Coca-Cola, McDonald’s and Samsung into feeds in the media channels and in various stories from cities and college campuses.
The ads are about 10 seconds and resemble conventional TV spots, not some novel internet format. Their most unusual aspect is that they fill the screen when a smartphone is held vertically, without the user having to turn the phone sideways, a distinction the company asserts is important. In its sales document to advertisers, Snapchat claims its users are nine times more likely to watch an entire advertisement because they don’t have to rotate their phone.
Snapchat’s vertical orientation also means that advertisers cannot repurpose their existing ads, which are in a horizontal format for YouTube and Facebook.
But Snapchat may have overestimated the pull it has with advertisers. It started its programme by charging about $100 per 1,000 views, or more than $750,000 for a day-long campaign, more than double the rates of YouTube or Hulu. Big advertisers with large experimental budgets chalked the rate up to research and development costs and fell in line, just to be first with a chance at wooing a millennial audience.
Occasionally the advertisements do find a symbiosis with the content. This month, for example, spots from Coca-Cola and the jobs site Indeed.com congratulated students in advertisements that were interspersed in daily stories culled from snaps on college campuses during graduation day.
Other companies have baulked at ponying up for advertisements on a service that still lacks some of the basic targeting and measurement tools now standard in digital advertising. The advertisements also do not receive the crowd feedback that businesses are used to getting on other social media sites because there is no way to comment on spots or share them.
This month Snapchat announced it would start to charge $20 per 1,000 views, a fraction of its earlier price, agencies said. The company itself declined to say where prices started.
In addition to addressing doubts about advertising on a messaging service, Mr Spiegel must combat continual scepticism about his leadership. Can a 24-year-old with a few blunders in his past lead a hot social start-up through its next stage of growth and beyond, towards an initial public offering? (At a tech conference in northern California on Tuesday, Mr Spiegel said Snapchat would eventually go public, but he declined to say when.)
Some users criticise Mr Spiegel for developing a service that is difficult to use and remains somewhat mystifying to anyone born before 1985. For example, there are no intuitive buttons, just cryptic icons and swipe gestures that trigger different functions. It is nearly impossible to search for other users unless you know their Snapchat names or mobile numbers. He says the company could simplify the service and develop such features as a user directory, but he is more interested in innovating – 70 per cent of the company’s engineers are working on new products.
Naturally, he will not elaborate on these, but it is not that hard to guess – anything that young people want to share, interact with, and talk about, such as games, products to buy, and other kinds of media, such as music and movies.
In the emails between Mr Spiegel and Mr Lynton at Sony, published in the leaked Sony email troves in December, Mr Spiegel talked about efforts to form partnerships with the music services Vevo and Spotify and even expressed interest in buying a record label so he could promote its artists on Snapchat.
In the end, Mr Spiegel shies away from saying Snapchat’s mission is to change a culture that seems bent on exposing everything.
“We don’t have the skills to solve that yet,” he says. “I am 24 years old. We have been doing this for four years. I’m not going to stand up and make a statement that is that ludicrous. We just don’t have the capability to solve that. I’m sorry. We help people share pictures.”
* Bloomberg News
