How to Turn Down a Billion Dollars: The Snapchat Story

by Billy Gallagher

Later recalling the story, Evan said, “When everyone is tired and the night is over, who stays and helps out? Because

those are your true friends. Those are the hard workers, the people that believe that working hard is the right thing to do.”

business. One aphorism from the book was particularly relevant to the challenges the upstart Snapchat faced: Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win.

venture capital firms see their returns follow a power law, where one investment makes them the majority of their money while most of their investments fail. If the founders have $10 million sitting in their pockets, they will be more likely to aim the company for the bigger, longer-run

A conversation with a friend at Flavors is not transcribed and then published on the Internet, searchable by future job prospects. It is simply left as a memory. And when we retell the story tomorrow, we might misquote our friend or forget some details—but that’s OK. That’s what human interaction is about. That’s what Snapchat

Without likes and comments, Snapchat’s new feature needed a different way to reward users for posting and capture its users’ psychological craving for attention. With Snapchat messages, the sender could see when the other person opened it (I have their attention!), and the recipient knew the sender had scrolled through a list and manually touched their name to send it to them (they chose me!). With Stories, users could see a list of names of everyone who viewed their story.

If ads on mobile are more engaging for the consumer and more relevant than desktop ads then the addressable ad market for mobile will be bigger than desktop ad market and the valuations of

mobile companies will be greater than desktop, all else equal on audience, size…. If Facebook knows this to be true it would result in them being willing to pay higher valuations for mobile companies than other acquirers because Google won’t know nor will Yahoo Microsoft etc. because none of them have the scale in mobile to understand these powerful secular trends and in essence they undervalue mobile vs FB, and thus under invest and fall farther and farther behind.

It forced users to send back a photo to the sender in order to unlock the picture they had received. This would ideally create a virtuous cycle in which people sent each other picture after picture in order to see what the other person was sending.

Although the past hundred years have seen consumers move from the radio to TV to the internet to smartphone apps, the advertising industry has consistently made up about 1.3 percent of US GDP. In the advertising business, the only way to make money is to steal someone else’s share of the pie.

After communication, [music is] the highest frequency behavior on your phone, and so that, in our view, makes it a really interesting opportunity, and it’s something that we are thinking about.”

Thanks to Van Natta’s hiring at Facebook not working out, Zuckerberg knew exactly what he needed in a COO by the time he hired Sandberg. Zuckerberg spent over 100 hours with Sandberg before he hired her, making sure they would work well together and outlining her role. Sandberg joined the company in early 2008 when Facebook was four years old. When Emily White joined Snapchat, the company was about two and a half years old. That may not seem like a big difference, but it’s an eternity for a company growing as fast as Snapchat was in 2013 (and Facebook in the 2000s).

The artificial scarcity let Snapchat portray Spectacles as a toy, avoid harsh scrutiny about sales numbers, and run one of the most unique marketing campaigns in recent memory.