Snap: Evan Spiegel

What started as a design project for Stanford student Evan Spiegel quickly flourished into one of the most-used social media platforms in the world: Snapchat. It only took two years for Mark Zuckerberg to make a multi-billion offer for the company. But Evan turned it down — convinced of Snap’s potential to disrupt human communication in an even bigger way. And while Evan’s path has been anything but smooth, today Snap is valued at more than $13 billion, with ambitions beyond its hero mobile app. This episode was produced by Alex Cheng with music composed by Ramtin Arablouei. It was edited by John Isabella with research help from Katherine Sypher. Our engineers were Patrick Murray and Gilly Moon. You can follow HIBT on X https://twitter.com/HowIBuiltThis & Instagram https://www.instagram.com/howibuiltthis, and email us at [email protected]. Sign up for Guy’s free newsletter at guyraz.com http://guyraz.com/ or on Substack. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Guy Raz?

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• 0:46Guy Raz?

  build the prototype, analyze the market, maybe even come up with the idea, what separates the people who actually build something from everyone else? I don't have a clean answer yet, so I've been sitting with it with Claude. There's hope in hard questions. Ask yours at claude.ai/hibt. We get support from U.S. Bank. A question I love asking founders. What's the one decision you almost didn't make? The one that changed everything? Because it's never the obvious stuff. It's never, I decided to start a company. It's the small, boring, Tuesday afternoon decision you barely remember making until you realize it's the reason everything after it either worked or didn't.

• 1:32Guy Raz?

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• 2:16Guy Raz?

  on gas and EV charging, office supply stores, cellphone service, and restaurants. You pick up an extra $750 cash back as a bonus. And you've got a low APR on purchases and balance transfers for 12 months while you're scaling. Same business, same expenses, two completely different outcomes based on one small decision. Visit usbank.com/business to learn more. The creditor and issuer of this card is US Bank National Association, pursuant to a license from Visa USA, Inc. Some restrictions apply. If you travel often, you'll want to hear about this unprecedented offer. For the first time ever,

• 3:00Guy Raz?

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• 3:45Guy Raz?

  or bring a guest to the Delta Sky Club. Make every trip feel more rewarding with the car that upgrades your travel. Apply today at delta.com/cardsocial. Offer ends November 4, 2026. Minimum spending requirements and terms apply. Flights are fulfilled as flight certificates valid for Delta Comfort or Delta Maine to select domestic destinations. Book 21-plus days in advance. Up to $80 per person and taxes and fees apply. Other restrictions apply. When I pull up to a gas pump to fill my car, I'm not thinking about chemistry or engineering. I'm thinking about getting in, filling up, and getting on with my day. And it reminds me a little bit of the founders I talked to on this show, because the best

• 4:27Guy Raz?

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• 5:19Guy Raz?

  You are contacted by Facebook, and you and Bobby go meet with Mark Zuckerberg. What do you remember about that meeting?

• 5:28Speaker 01

  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.

• 5:37Guy Raz?

  Did he say, "Do you guys want to collaborate?" at that time?

• 5:41Speaker 01

  I don't remember the exact substance of the conversation.

• 5:43Guy Raz?

  You don't 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.

• 5:51Speaker 01

  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, and has said they're working on something similar. We knew that a copycat product was coming. And then I think that Christmas, it did.

• 6:13Guy Raz?

  Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

• 6:24Guy Raz?

  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.

• 6:45Guy Raz?

  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.

• 7:29Guy Raz?

  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,

• 8:10Guy Raz?

  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. 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

• 8:53Guy Raz?

  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 didn't want to be.

• 9:21Speaker 01

  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 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.

• 9:43Guy Raz?

  So I know you went to Stanford, and this is like 2008. I mean, you're coming into, obviously, this financial crisis, but it's like the beginning of Web 2.0, right? I think a couple of 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, like, 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?

• 10:15Speaker 01

  At that time, it was still really early. I mean, when I go to campus now, it feels like almost everybody has a startup.

• 10:20Guy Raz?

  Yeah.

• 10:21Speaker 01

  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 was sort of in that transitional phase between a lot of folks being really focused on econ to more computer science and things like that.

• 10:43Guy 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 if it, what was, what happened, you know, when you saw him and met him? Because I think it did, it was kind of a turning point for you as a student.

• 11:03Speaker 01

  Yeah, taking that class, it's called Entrepreneurship and Venture Capital. It's taught by Peter Wendell and Eric Schmidt. It's still taught today. I try to guest lecture once a year. And that class was an absolute game changer for me. And, you know, Scott Cook was one of the guest lecturers and gave the whole case study on Intuit. And during the case study, I guess I asked a couple of questions in the, 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.

• 11:37Guy Raz?

  Hmm.

• 11:37Speaker 01

  That really sort of changed my trajectory because on a very small team of people, we were, you know, I think it was three or four of us, we, we made web apps at the time, actually for, you know, 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's sort of demystified a lot of the process of building stuff.

• 11:59Guy 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.

• 12:09Speaker 01

  Yeah, I think beyond that, it just showed that it wasn't that hard, that with a couple of 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.

• 12:32Guy 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 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? Like, what was the business?

• 12:53Speaker 01

  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 software. And 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.

• 13:25Guy Raz?

  And you guys didn't need a whole lot of funding for this, it sounds like, or any?

• 13:28Speaker 01

  No, we didn't take any funding at that time. We were just trying to...

• 13:31Guy Raz?

  Just building a website and trying to build like a user interface?

• 13:35Speaker 01

  Yeah, exactly.

• 13:36Guy Raz?

  Were your coding skills good enough to make something nice, like, look good?

• 13:40Speaker 01

  I thought it was really cool. I mean, I did most of the design and Bobby did most of the coding. And I think the software was great. The big problem was that nobody used it.

• 13:50Guy Raz?

  How did you try to get people to use it?

• 13:52Speaker 01

  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 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.

• 14:15Guy 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?

• 14:22Speaker 01

  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 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 get off the ground.

• 14:47Guy Raz?

  It's like diapers. You've 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 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?

• 15:09Speaker 01

  Yeah, exactly. We had a couple of 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 Pickaboo that I think we found something that we were really excited about.

• 15:26Guy Raz?

  Tell me about the idea for Pickaboo. How did that come about?

• 15:29Speaker 01

  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 like what that could look like and came up with the name Pickaboo. And ultimately, I presented it to my design class. And I think the first piece of feedback we got was basically, you know, 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.

• 16:11Speaker 01

  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.

• 16:18Guy Raz?

  All right, so Peekaboo, right, like peekaboo, but spelled like pic, P I C. Peekaboo is this idea. And the idea is, you can send a photo that will be ephemeral. It'll just, you could just quickly see it, 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 this show nine years, eight years, 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. And 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?

• 17:01Guy Raz?

  It's like, two friends at Stanford a couple of years before you with the photo app, right? And then, and that just becomes huge.

• 17:09Speaker 01

  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, 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.

• 17:37Guy Raz?

  Yeah.

• 17:38Speaker 01

  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, were much more focused on this very public and permanent sort of status-based social media.

• 17:53Guy Raz?

  Tell me, from the time of the idea, to the time where you kind of like, launch a version of Peekaboo, I think it's just a couple of months, it's just like, four or five months, right?

• 18:03Speaker 01

  I think something like that, yeah.

• 18:05Guy Raz?

  How did you guys build it? Because he built this, obviously, as an app. Kind of take me into doing that. Did it require any money? Could you just do it on your own at Stanford?

• 18:17Speaker 01

  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 of key screens. You know, add a friend with their username, tap to send them a snap. But there were a couple of 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.

• 18:50Guy Raz?

  And so when you had this prototype, did it look good? Did it look anything like what it would eventually look like?

• 18:56Speaker 01

  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.

• 19:07Guy Raz?

  And you designed it initially for the iPhone, to work on the iPhone?

• 19:10Speaker 01

  Yeah, it was iPhone only to start.

• 19:13Guy 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?

• 19:23Speaker 01

  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.

• 19:35Guy Raz?

  And what was the feedback like? I mean, what were people saying to you about it?

• 19:39Speaker 01

  Just that it was really fun. I think, you know, I think it really lowered the bar to, you know, 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, right? Like, hey, can I add a caption? Can I add a drawing? All the, you know, in the beginning, there weren't all these communication tools that we have today.

• 19:58Guy 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.

• 20:14Guy Raz?

  But maybe you were working on Peekaboo with two of your classmates at Stanford. It was Bobby Murphy, who we've talked about. He'd worked with you before on Future Freshman. 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 like communication wasn't clear about the roles that people were playing and who was doing what.

• 20:45Speaker 01

  Yeah, I definitely really appreciate his contributions. I mean, he came up with the idea of sending disappearing photos and shared 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 like to your point, for founders thinking about creating their own businesses, being really clear about those expectations upfront, 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.

• 21:19Guy 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?

• 21:36Speaker 01

  Well, we definitely shared it with our friends, and a lot of that growth happened informally. I mean, some of the things we tried, 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. 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 because-

• 21:58Guy Raz?

  The virality was inbuilt.

• 22:00Speaker 01

  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's still required a friend to use it.

• 22:20Guy 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.

• 22:30Speaker 01

  I think 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.

• 22:47Guy Raz?

  And you had to call it Snapchat because there was another company called Pickaboo, right?

• 22:51Speaker 01

  Yeah, exactly. We got a cease and desist from a Pickaboo company and maybe one of the best things that ever happened to us.

• 22:57Guy Raz?

  And it happened early enough where your brand wasn't known, so it didn't matter.

• 23:00Speaker 01

  Yeah, exactly.

• 23:02Guy Raz?

  So to get to January 2012, where you have 30,000 users, you could do that with almost no money?

• 23:10Speaker 01

  Yeah, this was one of the huge benefits of cloud infrastructure is we could pay for what we used. But the server bills started getting more and more expensive. 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 $5,000 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.

• 23:41Guy Raz?

  When you talked about this idea to your dad or your mom, 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. I mean, aside from the media, which we'll get to in a minute, but just people you knew, did anybody ever express skepticism about this?

• 24:03Speaker 01

  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.

• 24:18Guy 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. I mean, just to kind of reveal what happens, in March of 2012, you get almost half a million dollars in seed funding from Lightspeed, which probably were their greatest, among their greatest investments ever. But tell me about getting that money, because, and I should remind people listening, the stories we don't hear about are all the times that 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.

• 25:01Guy Raz?

  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?

• 25:09Speaker 01

  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 ultimately, Barry, who was a partner at Lightspeed, told another one of his partners, "Hey, my daughter is using Instagram, Angry Birds, and Snapchat. 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."

• 25:36Guy Raz?

  So they went to look for you?

• 25:38Speaker 01

  They went to look for us, yeah. I got a Facebook message from Jeremy Liu at Lightspeed.

• 25:42Guy Raz?

  Yep.

• 25:43Speaker 01

  And we'd begin 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.

• 26:12Guy Raz?

  When they put half a million dollars into Snap, what was the valuation?

• 26:17Speaker 01

  4.25 million.

• 26:19Guy Raz?

  That's a good investment.

• 26:20Speaker 01

  I think so. Actually, my favorite part of that story is a school nearby invested $15,000 and ended up making, I think, I think they ended up building a new gymnasium or something. It's pretty cool.

• 26:31Guy Raz?

  A school nearby?

• 26:33Speaker 01

  Yeah, a school, I guess affiliated with one of the Lightspeed folks.

• 26:36Guy Raz?

  Oh, I see.

• 26:36Speaker 01

  I think they were on the board or on the finance committee or something. They were like, we should put-

• 26:39Guy Raz?

  Oh, they invested in that seed round?

• 26:40Speaker 01

  Yeah, they invested $15,000 in the seed round and ultimately-

• 26:44Guy Raz?

  How much money do you think they made out of that? Tens of millions of dollars, potentially?

• 26:48Speaker 01

  Enough for a new gym, I think.

• 26:50Guy 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?

• 27:08Speaker 01

  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 Deena and David and Daniel.

• 27:37Guy Raz?

  And who's Deena? She's also a Stanford student?

• 27:39Speaker 01

  Yeah, we'd been friends in school. She'd helped with future freshmen and, you know.

• 27:43Guy Raz?

  Was that investment from Lightspeed, was that what prompted you to drop out?

• 27:48Speaker 01

  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, you know, 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.

• 28:17Guy 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.

• 28:46Guy Raz?

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• 30:13Guy Raz?

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• 30:58Guy Raz?

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• 32:24Guy Raz?

  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.

• 32:42Speaker 01

  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.

• 32:52Guy Raz?

  And he probably liked having you at home. I mean, I would love to have my kids at home after they finish college.

• 32:56Speaker 01

  I think in hindsight, yeah, when we finally moved out, he was like, oh, actually, that was, 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.

• 33:06Guy 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?

• 33:15Speaker 01

  Yeah, basically that. Seven days a week. Yeah.

• 33:18Guy Raz?

  And what, 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?

• 33:31Speaker 01

  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, you know, 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, you know, a lot of time hiring. One of the challenges we were up against around that time, maybe a little bit later,

• 34:13Speaker 01

  we had decided to stay in LA. But up until then, 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.

• 34:39Guy Raz?

  Evan, 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, right, 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.

• 35:21Speaker 01

  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 pigeonholing us into that wasn't a fair reflection of what was happening.

• 35:39Guy 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?

• 36:03Speaker 01

  I think what's really important is just continuing to talk about the service as a way to visually communicate and obviously to discourage folks from doing things that were inappropriate or illegal. We invest a huge amount of money trying to stop 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.

• 36:25Guy Raz?

  All right. 2012, this is like your first full year, the year you dropped out, you get 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?

• 36:42Speaker 01

  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. You know, we got this offer to invest, really high valuation. And they said, well, you know, you do know about this right of first refusal thing. And we were like, uh, sorry, what?

• 37:11Guy Raz?

  What did that, what did that mean?

• 37:12Speaker 01

  Yeah, 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.

• 37:33Guy Raz?

  Did you know that when you signed that, when you got that seed money? Was that clear to you?

• 37:37Speaker 01

  Yeah, we read, we read the terms, but at the time, that was our impression that, you know, they, they were just standard terms. And we were so excited that someone was willing to invest in the, in the business, that that, 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, you know, there's no such thing as standard terms and to be really careful, you know, as you're evaluating the terms of these investments.

• 37:59Guy Raz?

  It's so true. I have seen throughout my life and career contract, you're like, this is just boiler plate. And you're like, well, I don't like the boiler plate. So, all right. So, I mean, I'm sure you're very grateful to Lightspeed and I, 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 if they couldn't lead it, they might not want to be involved.

• 38:28Speaker 01

  Yeah, and ultimately, by discouraging other investors, that meant that the market for our stock, the valuation, right, could have come way down, so.

• 38:36Guy Raz?

  Because there was no competition.

• 38:37Speaker 01

  Exactly.

• 38:38Guy Raz?

  So, I mean, how did you get around that?

• 38:41Speaker 01

  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 that note into any type of stock. It hadn't, 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, you know, understood, okay, we'll find a solution here. We understand this, this right of first refusal, it might not be the best thing for the business.

• 39:20Speaker 01

  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 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.

• 40:05Guy 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?

• 40:23Speaker 01

  Yeah, it was.

• 40:24Guy 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?

• 40:36Speaker 01

  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.

• 40:55Guy Raz?

  But he was clearly interested in seeing if you guys wanted to work together, right?

• 40:59Speaker 01

  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.

• 41:08Guy Raz?

  Did he say, do you guys want to collaborate? Do you guys want, I mean, we're open to bringing this into our fold at that time?

• 41:16Speaker 01

  I don't remember the exact substance of the conversation.

• 41:19Guy Raz?

  You don't remember? Of course you remember. And it was, 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.

• 41:28Speaker 01

  Yeah, it didn't really, 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, and has said they're working on something similar.

• 41:39Guy Raz?

  So you left that meeting nervous?

• 41:41Speaker 01

  Yeah, we were, we knew that a copycat product was coming, and then I think that Christmas, it did.

• 41:46Guy Raz?

  Yeah, December of 2012. I mean, you're just, you know, full year into this thing. And Facebook, the biggest social media company at that point, launches essentially a clone, a Snapchat. Were you worried?

• 41:59Speaker 01

  We were, 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.

• 42:26Guy 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, as 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?

• 42:48Speaker 01

  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, those, you know, 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 you know, your number one best friend or your partner, in my case, my wife, is the person you talk to, you know, half the time or all the time.

• 43:32Speaker 01

  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 know, you could grow another messaging service. They just thought that the person with the largest social network would always win.

• 43:49Guy Raz?

  When investors were asking you like, well, but what's the advantage you have? Everybody's, I mean, 2012, 2013, everybody was on Facebook, right? Who is the person who's using Snapchat versus the person who might use, you know, Poke or whatever Facebook might offer in the future? What would you say?

• 44:05Speaker 01

  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 and perfect photos and trying to, you know, collect the greatest number of friends possible to, you know, 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.

• 44:34Guy 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?

• 44:43Speaker 01

  We've always pushed back against that. But I think, you know, some of our services, like Stories, for example, which we really viewed to 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.

• 45:11Guy Raz?

  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?

• 45:19Speaker 01

  Maybe about seven, seven, eight.

• 45:22Guy Raz?

  Okay, so so simple team.

• 45:23Speaker 01

  Yeah, something like that.

• 45:24Guy 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 of 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?

• 45:50Speaker 01

  Yeah, he's the CTO.

• 45:52Guy Raz?

  How did you manage that? How did you even know what to do? How to be a boss?

• 45:57Speaker 01

  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 hadn't ever run a company before. And I think that was just a massive, massive advantage to just be able to ask questions, to ask why, you know? The technology industry is just an incredibly generous industry when it comes to people helping each other out.

• 46:28Guy Raz?

  Yeah, who who helped you? I mean, who were some of the mentors who just just to understand how to, you know, 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 helps you kind of navigate that?

• 46:45Speaker 01

  One of my really fond memories was when so Eric Schmidt, I got to know through that class, entrepreneurship and venture capital.

• 46:53Guy Raz?

  And he was the seat, I think, the chairman of Google at the time.

• 46:56Speaker 01

  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 the 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.

• 47:22Guy Raz?

  I wonder about just personally, right? You're working all day, all night, seven days a week, nonstop, right? And there are still stressors. 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?

• 47:53Speaker 01

  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.

• 48:03Guy Raz?

  You didn't reconcile, you and Reggie?

• 48:06Speaker 01

  Personally, we haven't talked in a long time.

• 48:11Guy Raz?

  All right. You guys raise a Series A, $13 million, so 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 of 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, I mean, 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.

• 48:53Guy Raz?

  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?

• 49:09Speaker 01

  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 a lot of the focus 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 up until then was kind of up in the air.

• 49:36Guy Raz?

  And the business model was going to be still primarily advertising?

• 49:40Speaker 01

  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.

• 50:15Guy 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.

• 50:24Speaker 01

  I think it depends. I think that that strategy is most effective when it comes to new platforms. So if you look at like the advent of desktop internet, that was really the strategy very early on for players like an Amazon, for example, right? 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.

• 50:56Guy 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 this 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.

• 51:19Speaker 01

  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 designed 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 sort of grow big first and then monetize model when you don't have those same economies of scale.

• 51:41Guy 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 $1 billion 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 subsequently, I think they've expressed some regret about what happened and having

• 52:24Guy Raz?

  sold it. But they sold it for $1 billion 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.

• 52:41Speaker 01

  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 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 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.

• 53:24Speaker 01

  I mean, they have different priorities. We were 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.

• 53:38Guy 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?

• 54:08Speaker 01

  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 each. So we were set for life.

• 54:18Guy Raz?

  Yeah. At 22, having $10 million with compound interest. Yeah, exactly. I mean, 4%, 5% return every year, you're good to go.

• 54:26Speaker 01

  So we, I don't think, felt that pressure of, you know, is this it? Are 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.

• 54:38Guy 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." You know, Vine was huge. And again, proved wrong, but at the time, like, there was no part of you at all that looked at things like Vine and just thought, "What if that happens?"

• 55:02Speaker 01

  Well, one of the things that helped give us confidence is we had a roadmap, right? So 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, you 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, you know, we would go on to add, you know, 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

• 55:47Speaker 01

  for competitors to catch up, especially if they're a lot bigger. But we really, you know, believed in our ability to keep innovating.

• 55:54Guy Raz?

  When you turned down that reported second offer from Facebook, I mean, business is business. This is what our show is about. And business is like war, you know? I'm not casting any moral judgment. I think a good business leader has to think about... You know, has to plan to win, right? And so a company like Facebook, Zuckerberg, has to think, how are we going to outcompete 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?

• 56:30Speaker 01

  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 riffs 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, like, 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.

• 56:58Guy Raz?

  I think I know the answer to this question, but do you consider yourself to be a competitive person?

• 57:03Speaker 01

  I don't, actually.

• 57:05Guy Raz?

  You don't?

• 57:06Speaker 01

  No, and I think, in fact, like, 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.

• 57:22Guy 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?

• 57:33Speaker 01

  No, we admired the audacity.

• 57:36Guy Raz?

  Really? You didn't take it personally at all? You weren't angry in any way? You were just like, whatever?

• 57:41Speaker 01

  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.

• 57:53Guy 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.

• 58:21Guy Raz?

  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 no longer Snapchat in 2016. And I guess that was-- you start to talk about Snap as a camera company. Tell me about that.

• 58:55Speaker 01

  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 like, 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.

• 59:38Guy Raz?

  I want to ask you about something that's more personal to me about Snap. And it's as a parent, right? And 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 it. So we relented. But I remember around this time, around 2016, this is not one 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.

• 1:00:21Guy Raz?

  But something that you guys really innovated was this Snap streak, 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, it is a way to get kids hooked on it. And I wonder how you respond to that, that kind of sentiment or pushback.

• 1:00:52Speaker 01

  Yeah, well, I think it's really important to look at the way that streaks work. And with a 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, you know, you've, 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, to just stay in touch with the people that they really care about just once a day.

• 1:01:28Guy 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, 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, or every few weeks. And so I wonder, like, I mean, you could talk to any parent of a teenager and they will say, it becomes increasingly hard to pull your kid away from Snap or, you know, TikTok. And, and I wonder whether you can, you can see that argument and say, I, I hear you on that.

• 1:02:04Speaker 01

  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, you know, we get to send those snaps back and forth. And, and that's something that really adds a lot of value to my life. So I, I think what's really important is that beyond, you know, just talking about screen time, we really talk about the way that we're using our screens and what we're using them for. You know, to go a layer deeper and to really figure out, you know, how we can use technology to support things that really matter, like relationships and friendships. You know, for us as, as parents, we just talk about the importance of everything in moderation

• 1:02:48Speaker 01

  and having a healthy relationship with technology.

• 1:02:52Guy Raz?

  You took the company public in 2017. At a $24 billion valuation and the prices, stock prices going to go up and down and up and down. I think at one point it was like, you know, $80, over $80 a share, you know, something like that, or 75 a share. Now it's about, as we speak, about 10, 60 a share. Market cap 17 billion, very impressive, but lower than in the IPO and that's just the reality of it. How do you view that? I mean, 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

• 1:03:33Guy Raz?

  a robust business. But how do you kind of manage how it's seen by outsiders and investors? Now it's valued?

• 1:03:43Speaker 01

  Well, what's really important for us is just clearly articulating our vision for the business and, you know, 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, you know, 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've generated positive net income. So it's not like we

• 1:04:28Speaker 01

  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, you know, the quarter-to-quarter share price, and we're just going to make consistent progress towards our long-term vision.

• 1:04:52Guy Raz?

  You know, many years ago, I interviewed Ken Chenault, the former head of American Express, and he said, you know, when I ran American Express, I always thought, we need to become the business that's going to put us out of business. And, 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. And 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

• 1:05:36Guy Raz?

  you see Snap headed?

• 1:05:38Speaker 01

  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, right, has forced people to change their natural human behavior to fit how technology, you know, 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, you know, 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, you know, staying hunched over these small screens is 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, you know, we were talking a little bit about, you know,

• 1:06:22Speaker 01

  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, is 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.

• 1:06:40Guy 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.

• 1:07:13Speaker 01

  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.

• 1:07:57Guy Raz?

  I want to ask you about your place in 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 Mark Zuckerberg was there, Sundar Pichai was there, obviously Elon Musk was there, the TikTok CEO was there. So 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?

• 1:08:35Speaker 01

  Look, we have a different set of challenges. We're a really small company compared to those companies.

• 1:08:41Guy Raz?

  How many employees? About 3,000?

• 1:08:43Speaker 01

  Approaching 5,000 now. But I think 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 their avenues for growth in the future. 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.

• 1:09:16Guy Raz?

  What do you think about, you know, what seems to be, I mean, traditionally kind of tech, the tech sector, it's in California. It's been left of center, maybe slightly libertarian, but kind of left of center. And that, the sort of 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 a, is an interesting trend or a positive trend? Or do you have any feeling or view on it?

• 1:09:48Speaker 01

  I think what you've seen from technology companies in the past is that they've generally tried to align themselves with, you know, whatever administration, you know, is currently serving the country at the time and, and try to be helpful. I mean, I think it makes sense. If you're an American company, you know, you 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 would kind of, I wouldn't look at it as a new thing. I would look at it as kind of a constant if we look, you know, over American history and certainly business history.

• 1:10:17Guy Raz?

  Do you, for your, not just for the business, but just for you, Evan Spiegel, as a person, do you think it's better, like, obviously, you know, 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?

• 1:10:44Speaker 01

  Well, I think it's super important to be an engaged citizen. You know, 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, I'm a registered independent, which is, I believe, actually the largest party in America.

• 1:11:02Guy Raz?

  Yep.

• 1:11:02Speaker 01

  I don't do political giving, although I did give to Michael Tubbs, who lived across the hall from me in college.

• 1:11:09Guy Raz?

  Stockton mayor, former Stockton mayor, yeah.

• 1:11:11Speaker 01

  Mayor of Stockton, and great guy. But no, I think for me personally, you know, 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.

• 1:11:24Guy 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 live until 200 years old. Realistically, I mean, 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?

• 1:11:47Speaker 01

  I'm not sure. I think there's a lot more to do here at Snap. And you know, there's a lot more work to fulfill our vision for augmented reality and for glasses. You know, we've been working on that for a decade, but it's going to take quite a lot longer. I mean, 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 you know, over the longer term, I'm definitely going to look for more ways to give back. I mean, I think that's, 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, that's kind of the whole point, I guess. So that's what hopefully I can do more of.

• 1:12:22Guy Raz?

  When you think about what happened, you know, because if you, if you were to just be, if you were like to land 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, and then two years later, three billion and they raise all this money." It just, 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,

• 1:13:06Guy Raz?

  how much of it do you attribute to, to your intelligence and the work you put in? And how much do you think it has to do with getting lucky?

• 1:13:15Speaker 01

  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, he had 12 years old, he was working in the copper mines. You know, so I just think about all the work that generations of my family have put in to give me this opportunity.

• 1:14:00Speaker 01

  So, one of the most important things is waking up every day, just realizing that it's all luck.

• 1:14:06Guy Raz?

  All luck.

• 1:14:07Speaker 01

  It's all hard work, too, but it's luck.

• 1:14:12Guy 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 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 apps 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 entrepreneurs, please sign up for my newsletter at guyraz.com or on Substack. This episode was produced by Alex Cheng with music composed by Ramtin Arablouei.

• 1:14:57Guy Raz?

  It was edited by John Isabella with research help from Katherine Seifer. Our engineers were Patrick Murray and Gilly Moon. Our production staff also includes Chris Messini, J.C. Howard, Casey Herman, Iman Maani, Sam Paulson, Kerry Thompson, Neva Grant, and Elaine Coats. I'm Guy Raz, and you've been listening to How I Built This.