Snapchat is gearing up to a $ 25 Billion IPO. We recall the app’s success.
Snapchat’s story is almost identical to the beginning of “The Social Network”, a movie dedicated to Facebook (NASDAQ : Facebook [FB]).
The story still takes place at a top university, Stanford versus Harvard, and ends up in court with Snapchat co-founders Evan Spiegel versus Bobby Murphy.
Snapchat has survived some difficult beginnings, and is now poised to go public with a valuation of 25,000 million dollars. Snapchat is now a giant social media company, and it all started as a million-dollar idea about disappearing pictures.
Like many startups, Snapchat’s beginning point is Stanford University. This is where Evan Spiegel, a young man from Los Angeles, met Reginald Brown (Reggie). They decided to join Kappa Sigma fraternity, where Bobby Murphy, Snapchat’s co-founder, was also a member. However it would take a few years before the concept of a social network that makes photos disappear became a reality.
Snapchat was not Spiegel’s first startup. Murphy had reached out to Spiegel, a Kappa Sigma member, to help him realize an idea about a social networking site. FutureFreshman was a website that facilitates college applications. It was launched in 2010. Although the idea did not take off, Spiegel was inspired to pursue a career in business.
Snapchat was not invented until Spiegel was in his junior year of college. In April 2011, Brown said to Spiegel, “I wish that the photos I send to this girl would disappear.” Brown’s friend was immediately excited by the idea of making the photos disappear, and told Brown it was a million-dollar business. Thousands of dollars. This idea is now worth billions of dollars five years later. Evan Spiegel was told by Reggie Brown that he wanted some photos to disappear. This seeded Snapchat.
Snapchat was created in the summer 2011. Picaboo was the original name of the app when it was launched in the App Store. Brown, Spiegel, Murphy and others spent the summer working on it. Spiegel even created the famous ghost icon Ghostface Chillah.
Picaboo wasn’t a huge success. It had only 127 users at the end of the summer. Brown, Spiegel, Murphy and others began to fight for control of the company. After the fight ended, Spiegel hung up the phone and blocked Brown from accessing all startup accounts. He was later fined millions.
In September 2011, Murphy and Spiegel renamed Snapchat to celebrate their anniversary. Although the app was not yet a success, it was slowly gaining popularity when Spiegel’s cousin began using it at a Los Angeles high-school. It was a simple way for teens to send messages and photos that disappear within seconds of being opened.
The application was used by just over 100 people in spring 2012. This number has now increased to 100,000 users per day. This created a problem, as server costs increased. Spiegel and Murphy were spending nearly $ 5,000 per month to maintain the app. Just as they were about running out of money, Lightspeed Venture Partners’ Jeremy Liew arrived and gave Spiegel his first check.
Spiegel quit school after he got the money even though he had only three credits to graduate from Stanford. Spiegel and his team, which now included two developers, moved into Spiegel’s Los Angeles home. Snapchat had reached one million users per day by the end 2012
Snapchat was given a wonderful gift by Facebook at that moment. He launched Poke, his Snapchat competitor, in December 2012. Although he was initially worried that it would end his application, Spiegel quickly realized that Snapchat had surpassed Poke. Spiegel believes this was Snapchat’s best Christmas gift.
Venture capitalists continued to pay more attention to the app as it grew. The Snapchat story became a drama similar to “The Social Network.” Reggie Brown, the man who invented the idea of making photos disappear, sued Murphy and Spiegel and Snapchat in February 2013.
Snapchat’s growth did not slow down despite the lawsuit. Snapchat Stories was launched in the fall 2013 by the company. This was the first step to make its content more permanent. Snapchat users could upload photos to create a story that would last for 24 hours. This is Snapchat’s closest attempt at launching something similar to Facebook’s timeline.
Mark Zuckerberg was quickly attracted to the rapid growth of Snapchat and the apparent defeat by Facebook Poke. Evan Spiegel was offered $ 3 billion by the CEO of Facebook. Spiegel tried to negotiate with Facebook but was ultimately rejected.
Rumours circulated that Google attempted to outbid Facebook, offering $ 4 billion. Spiegel refused to sell the company, in any case.
Snapchat was hacked a month later. Snapchat’s username and phone number were revealed, infuriating its users. The app was still considered to be a sexting application (for sharing racy images) and users were afraid of losing their data. Although the young CEO initially didn’t feel the need to apologize, the response was quick. A few months later, Snapchat opened a dispute against the Federal Trade Commission. They claimed that Snapchat had misled its users and required the company to amend the user agreement.
Valleywag, a Silicon Valley news site, published emails in May 2014 from Spiegel’s time at Stanford. The emails, which included subjects such as “What do you …”,?” cast a negative spotlight on Spiegel, who they had already been comparing to Steve Jobs.
Snapchat’s success didn’t stop there. Snapchat added a chat function and launched Live Stories. The company was valued at $ 10 Billion by investors in July 2014. The company’s value has risen from just one million dollars to $10 billion in three years.
Nick Bell claims that Snapchat’s Live Stories feature was inspired in part by David Blaine, an illusionist who visited the Snapchat office. To see how his friends captured the magic trick, he watched them all and then merged all of their perspectives to find the secret. They realized that it was better to tell a story from many perspectives than just one.
The company started to grow, moving out of the Venice Beach bungalow where it had been relocated after leaving Spiegel’s home. It moved into larger offices. The CEO, then aged 24, began to hire specialized staff. Imran Khan, the company’s chief strategy officer, joined the company in January 2015, after he left Goldman Sachs. Drew Vollero, the Snap CFO, is a former Mattel employee who joined in August 2015. Spiegel, however, was still in control and decided the next steps for the company.
Snapchat started accepting external content. It added the Discover section to its site in January 2015. This allowed publishers to publish news. It was no longer just about photos. Now it allows you to share content of any kind, including Discover articles and live chats.
Snapchat found a way for investors to earn money. He began to place ads on his geofilters. You could also share a photo of you covered in fries if you were at McDonald’s.
But the geofilters weren’t the end. Snapchat bought Looksery and added the iconic lenses that made Snapchat the most popular app right now. It was used by 100 million people every day at the end of 2015.
Bitmoji, a popular drawing application, was also secretly purchased by Snapchat. This news was confirmed by Spiegel’s engagement to Miranda Kerr in July 2016, an Australian model whom he had been seeing for over a year.
Spiegel and Murphy began working together on a new secret project, sunglasses. The 2014 Sony Hack revealed that Vergence Labs was the manufacturer of Epiphany Eyewear smart sunglasses. Snap Labs, a division of the company, was so secretive that very few people knew it was working on hardware projects.
News broke in June 2016 that Spiegel was photographed wearing a prototype of the glasses by paparazzi while on vacation with Miranda Kerr.
Snapchat announced the news about the Spectacles in April – a surprise to even its employees – and also that it had changed its company name to Snap Inc. in September. Motto: Snap Inc is now “a camera business.”
This was a clear indication that Snap Inc. was ready to go public.
Snap Inc. filed its IPO on February 2, 2017. This will end the lack of IPOs in tech companies. The app is used by more than 158 million people every day. Snap Inc. attributes this to the fact that they “eat, sleep, and use our phones to go to the toilet every single day.”
We found out how much Snap paid Reggie Brown to get out of the way in the IPO application: $ 158million.
Although it might seem like a large number, Snap Inc. intends to raise $ 3Billion from its IPO. The company stated in its application that when they started, many people didn’t know what Snapchat was. They thought it was just for sexting. However, we knew the app could be used for much more. This is evident in its transformation from a photo-disappearing app worth millions to a camera company.