Betrayal, sneaking conversations, unfair maneuvers and shouting discussions. Building a successful company is not an easy task, but few have a start as controversial, cinematic and full of chiaroscuro as Snapchat.
The project, which was born under the leadership of a trio of young students from Stanford, soon became that of a duo that would later become part of the elite of new entrepreneurs of the 2.0 era.
Evan Spiegel, current CEO, and Bobby Murphy, CTO, take the reins of one of the companies with the most potential in the technology industry but, however, has not yet managed to take off from its core business niche and continues to face one of the main challenges of this type of startups: earn money.
Everything was born almost a decade ago. Going out at night and enjoying his youth were one of the priorities of the young Frank Reginald Brown. In Stanford, where he studied English, he spent his spare time together with his fellow Kappa Sigma fraternity.
During one of those breaks, in April 2011, with some drugs involved, he imagined: "I would like to be able to send photos that later disappear." His main motivation was to be able to send them, and also respond, intimate photos to the girls he dated. But he didn't want a record left, so they couldn't "chase him".
Brown kept thinking in silence, while he pondered that idea. Photos that disappear. The first conclusion was that I had to tell the right person, the one who could set this idea in motion and who knew what the best steps were to take to shape it.
He ran the halls of the university and untimely opened the door of one of the bedrooms. "It's a millionaire idea," said Spiegel, who studied Product Design at the Californian institution.
Both joined Bobby Murphy, also a brotherhood partner of the two, to be responsible for writing the code for the platform. Meanwhile, Brown would take care of the marketing area.
In the beginning it was called Picaboo, a mixture between the acronym of picture and the children's game peek-a-boo, with the famous ghost logo from the beginning, designed by Spiegel himself. The first attempt was a computer system, although they quickly realized that it worked better only for mobile.
They worked all summer from the house of Spiegel's parents until they managed to have the prototype ready. But in those months, internal fights began to flourish. First secretly, with talks behind each other, until finally everything broke out in August 2011.
It's not us, it's you
Brown believed that the company's ownership would be shared equally among the three. Spiegel and Murphy didn't think the same. They felt that while they worked to tune the mobile app, their contribution was lower. Therefore, they devised a plan to leave it out of business.
One of the first steps of their strategy was directly related to an old project in which they worked together. In 2010, the duo had tried to launch Future Freshman, a platform to facilitate the processes and applications of freshmen from the university.
While it did not work, they used this same society to record what Snapchat would be. It was 60% of Spiegel and 40% of Murphy. They simply changed the name to Toyopa Group.
What they didn't know was that, secretly, Brown listened to their conversations and began to plan his ‘revenge’. Since his idea was to study law, his partners commissioned him to present the documents to patent the idea.
Reggie did it but, although Spiegel expressly asked him to register it only in Murphy's name, he put all three surnames on the form. He even placed first. This angered the now executive director of the firm, with whom he had a heated discussion via conference.
Brown wanted a third of the share package and the rest did not think he deserved it. Then they chose to change the passwords of the startup servers and blocked it from all revenue.
Everything culminated in 2013 with a lawsuit by his former friend, who claimed his share. A year later, they agreed to compensation in exchange for, like the photos that are sent through the app, Brown disappeared. The sum was USD157 million and it just came to light in 2017.
From Picaboo it was passed to Snapchat, name with which Spiegel and Murphy would officially start the business (September 2011) already with his former friend and partner far from the company.
Between teens and hostile offers
The app became popular among younger generations, especially teenagers. The youngest used it to spend notes at school and share content, while sexting (the first thing Reggie Brown thought) was one of the uses that the elders gave him.
By the second quarter of 2012 it had already reached 100,000 daily active users. That is, they entered the application at least once a day.
With the buzz came the first financial injection. Jeremy Liew, partner of Lightspeed Venture Partners, found out about the company and found little information about it. After several failed attempts to contact its founders, it finally hit Spiegel through the Stanford student network of Facebook.
He offered a contribution of almost $ 500,000 in exchange for a participation and preferential right to veto and finance the next round. Later, Spiegel and Murphy would regret signing this agreement and give the fund a discount to acquire Snapchat shares in exchange for canceling that clause.
Spiegel left his university career unfinished, just a few subjects to be received, to move with a couple of developers to his father's garage, where he would temporarily install the headquarters of the firm.
Mark Zuckerberg offered $ 60 million to the duo of entrepreneurs to keep the firm and even threatened to launch Poke, a tool to send photos that later disappear through Facebook. They rejected him, and although the businessman finally kept his word, Poke failed to beat Snapchat.
A year later, the founder of Facebook tempted them again, this time with an offer of $ 3 billion. The number was much more attractive but, although he managed to make them doubt, they closed the door again.
The company continued to grow while many wondered what their limit was by having only one product to offer. In 2013 he got his first big round of financing. Benchmark led the A series for $ 13.5 million.
In 2015, Snapchat reached 100 million daily active users. At that time, Spiegel was only 25 years old. That same year he acquired the startup Looksery for $ 150 million. The operation gave him access to the technology necessary to launch the Lenses, better known as photographic filters.
Another five rounds would arrive later and the F series, held in 2016, reached $ 1600 million. That same year Google tried to buy the social network, now for $ 30,000 million. The company's response was, again, negative.
Snapchat made its independence clear, although its growth began to be less and less due to the growing competition of Instagram and its Stories section, which had no qualms about copying the most popular feature of the Spiegel and company platform.
Get out of the snaps
Instagram Stories took eight months to surpass Snapchat users daily, reaching 200 million (more than Snapchat currently has) after this period. Thus, the business plan had to be diversified.
In this context, the IPO (March 2017) meant a real change of course. It stopped being called Snapchat, which became the social media unit of Snap Inc., now the company's parent company. "A camera company," emphasized its website.
Its main launch, and the first one outside the application, were Spectacles smart glasses, which allowed the user to film content and take photos in the first person. After a first attempt not very successful in 2016 with 220,000 units sold, Snap released a second version in 2018.
This year, the holding company announced the presale of the third Spectacles model, this time with reduced production and capable of generating 3D content. The price? About US $ 380, more than three times above the first, which cost US $ 129.
The social media business paradigm
Painting their balances blue is a pending account of many companies born in the last two decades. Many of them, despite being very popular among users, do not find the formula to turn their financial red. Snap Inc. made it clear in the documents presented on the Stock Exchange: he said he might never make a profit.
Its business model is based purely on advertising revenue. He tried to use all his creativity to expand his panorama, although always under the same range: from traditional ads in stories to geolocated filters created by brands or alliances so that users could buy products focusing them with their camera.
According to the initial public offering prospectus, the company lost $ 514 million in 2016, during which it billed $ 404 million, 700% more than the previous year. At that time, he pointed out that its growth depended exclusively on the situation of the mobile advertising industry worldwide: if it proliferated, so would Snap.
However, it did not take into account the fierce competition that Instagram would present, whose advertising model rivals that of the firm commanded by Spiegel and has managed to exceed in turnover, by having the entire Facebook commercial device po
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