Founders - #22 How To Turn Down A Billion Dollars: The Snapchat Story

Episode Date: March 20, 2018

What I learned from reading How to Turn Down a Billion Dollars: The Snapchat Story by Billy Gallagher. ---I'm not going to work for someone else (0:01)Early design decisions of Snapchat (7:45)Evan idolized Steve Jobs and Edwin Land (10:00)How Snapchat convinced people to download the app (13:00)How Facebook created the environment for Snapchat to grow (16:00)The problem of standard (21:00)Evan on conforming (23:00)Mark Zuckerberg's first move on Snapchat (27:00)A great quote from Jeff Bezos (34:30)Digital Dualism (36:30)Snapchat Stories (39:00)Evan's framework for Snapchat and the Internet Everywhere (44:45)Learning from messaging apps in Asia (50:00)Brands are not social. People are. (55:00)Evan's philosophy on the distinction between privacy and secrecy (59:00) ----Founders Notes gives you the ability to tap into the collective knowledge of history's greatest entrepreneurs on demand. Use it to supplement the decisions you make in your work.  Get access to Founders Notes here. ----“I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — GarethBe like Gareth. Buy a book: All the books featured on Founders Podcast

Evan decided to study product design, to learn how to look at the things he used in his daily life and see how he could make them better and cooler. David Kelly, the head of Stanford's famed design school, took Evan on as his advisee. One thing was clear, as he frequently put it, I'm not going to work for someone else. And this gave him freedom from the heavy grind of Stanford. Nobody would ever see his resume or grades, so he took classes for what he actually wanted to learn. So that's from one of the first chapters of the book that I want to talk to you a little bit about today, and it's called How to Turn Down a Billion Dollars, the Snapchat Story by Billy Gallagher.

So this book might be a little different than the ones I've done in the past. I guess the podcast would be a little different, I should say. I'm going to go in chronological order, but there's just a lot of, when I went back and started preparing for this podcast, what I realized is a lot of my highlights, a lot of my notes, they're very short. They're just one paragraph I wanted to pull out and bring to your attention, stuff like that. There's some areas where we'll get a little longer. Like I particularly find the strategic battle between Evan and Mark Zuckerberg interesting. So I'll go into a little bit more detail on that. But I do think it is still going to be worth your time to listen because there are some interesting ideas here. I just, obviously, as I've said in the past, I'm not trying to make a cohesive story. I'm just trying to share ideas

and interesting things from the book and hopefully get you excited to read it yourself. So I'm just going to jump right in. And Evan's got a lot of interesting ideas that really resonate with me. So I just want to get right to them. So the background of this little note I left for myself, it says there's more value in being original. And it talks about one of Evan's first startups that he created was this thing called Future Freshman, which was basically a platform for people applying to colleges to obtain information about the schools they wanted to go to.

And it didn't work out, but he realized something that he used for Snapchat. So it says, Future Freshman found itself battling for mindshare and dollars with well-established companies that had deep pockets

and large sales teams. And there were signs all too close to home that the product wasn't connecting with its intended users. Both of my siblings were applying to college at the time and neither of them used it, Evan later said. So that was a sign that that was probably not the right way to go. Eventually, they pulled the plug on future freshmen. While the outcome was disappointing, Evan learned a valuable lesson.

In order to avoid getting destroyed by better-funded competition, his next idea had to be more original. So it's kind of echoing something I've talked about a few times on the podcast, which is this idea of the Blue Ocean Strategy, that you can wind up making a lot more money while simultaneously having less competition with more original ideas. So moving ahead a little bit in the book, as you can probably imagine from the title, How to Turn Down a Billion Dollars, that obviously was turning down the acquisition offer from Facebook a few years ago. And as such, throughout the book, there's a lot of Evan's insights as to why Facebook actually created the environment for Snapchat to grow. And so I have left several notes for myself, just different little insights Evan has about Facebook.

And so this is when they're kicking the idea about a disappearing photo app. They had an idea, possibly a big one. More than one member of the frat lived in fear that photographs of their debauchery would come back to haunt them once it came time to get serious and have a career. What if people could send each other wild pictures of themselves partying without worrying about future consequences. Jack listened intently, nodding along as Evan spoke in fast clip sentences. Evan talked about how weird it was that whoever started the internet and Facebook just decided that everything should stick around forever. And moving ahead, so they build this app and it's it's very crude messaging app that just has disappearing photos it gets the reputation that just for

sexting and you know it was probably created somewhat with that in mind at the beginning but it definitely morphs and changes over time and so at the time snapchat is really really small and it's actually called peekaboo okay so I want to add something into our critics don't know shit segment and this is the first time Evan is pitching the app and he's doing it at Stanford in front of a bunch of entrepreneurial students and venture capitalists and let's just read what their reactions are. Finally, it was Evan's turn. Showtime. He approached the front of the room like the entrance to a party, strutting confidently to show the crowd what he, Reggie, and Bobby

had been working on tirelessly for the past six weeks. Confident and comfortable, Evan enthusiastically explained to the other 30 students, two professors, and half a dozen venture capitalists that not every photograph is meant to last forever. He passionately argued that people would have fun messaging via pictures. The response? Less than enthusiastic. Why would anyone use this app? This is the dumbest thing ever.

One of the venture capitalists suggested that Evan make the photos permanent and work with Best Buy for photos of inventory. The course's teaching assistant, horrified, pulled Evan aside and asked him if he'd built a sexting app. The scene was reminiscent of another Stanford student's class presentation half a century earlier. In 1962, you got on longtime listeners of the podcast will remember this from the podcast I did on the shoe dog, which is Phil Knight's fantastic book about starting Nike. In 1962, a student at Stanford's Graduate School of Business named Phil Knight presented a final paper to his class titled, Can Japanese Sports Shoes Do to German Sports Shoes What Japanese Cameras Did to German Cameras with Japanese cameras due to German cameras. Knight's classmates were so bored by the thesis that they didn't even ask him a single question.

That paper was the driving idea behind a company Knight founded called Nike. The VCs sitting in Evans' classroom that day likely passed up at least a billion dollar investment return, but it's very easy to look at brilliant ideas with the benefit of hindsight and see that they were destined to succeed. With the benefit of hindsight, we can see that Facebook developed the conditions that allowed Snapchat to flourish. But it wasn't at all obvious watching Evan's pitch in 2011

that this was a natural Rebellion against Facebook or that it would grow beyond our small Stanford social circle he's saying our um or our I always mispronounce that that word our small Stanford social circles because the um the author of this book uh went to Stanford a few I think he was like two years younger That then Evan was when so the basically they were at Stanford together and he actually interviewed Evan really early for I think the Stanford the Stanford newspaper I'm gonna skip ahead a little bit again again. This is just random thoughts. So this could seem like it's um Well, it's not supposed to be a cohesive story.

So this is the early design of Snapchat, which I found interesting. While Evan's class hadn't loved the idea of disappearing photos, it was different from what other people were working on. And Evan thought that was important. So there's that idea again. Evan talked Reggie and Bobby, these are his two co-founders, through the design choices and constraints he wanted to build into it. Peekaboo would always open directly to a camera so that users could quickly take a photo of whatever they wanted to share with friends. They realized users didn't want their impermanent photos to be screenshotted and saved forever. So this word impermanent and permanence is used

multiple times throughout the book and as we'll see later, it's the main thesis for Evans' view on using basic technology to more accurately mimic how humans naturally communicate anyways. Okay, so they realized users wouldn't want their impermanent phone to be screenshotted and stay forever. Lacking a way to make it impossible for users to take a screenshot, they came up with a clumsy alternative. Users would have to keep their fingers on the phone to view a photo, making it more difficult to press two iPhone buttons and take a screenshot. They also worked out a way to notify a user if the recipient took a screenshot of their photo.

Evan, this is also a really interesting idea. Evan studied the 100 most popular apps in the App Store and noticed that none had yellow logos. To make Peekaboo stand out, he put the Ghostface Killer logo on a bright yellow background. Ghostface Killer, Chilla, I should say, in case you didn't know, is the name of the logo, that ghost. So I'm going to skip over. I'm going to move ahead in the book. I'm going to skip over most of the parts about where Reggie, which is one of the co-founders, he's actually the one that came up with the idea at Stanford to send disappearing photos. And he wanted to do it, obviously, for sexting reasons or just not to get in trouble like in the future if he's just

partying in college. So I'm skipping over most of that, though, because I think the most interesting part of this idea of this book rather is the ideas and influences that that kind of we can see why Evan makes some of the decisions he makes when guiding Snapchat to this day. But the book does go into quite detail if you're interested in that. It has been reported elsewhere though. So for the purpose of this podcast, I'm going to skip over that. This is an interesting anecdote about Steve Jobs and Edwin Land. I did a podcast a long time ago. I don't think I published it anymore on Edwin Land, which is he was Steve Jobs' hero and the founder of Polaroid and the inventor of like instant photography. And one of the most prolific inventors in history. I think he's got

like 500 something patents. There's a few different books I read on Edwin Land, none of which I think, like there's a lot of good ideas in there, but they're the kind of books that are like, let's say 400 pages and maybe like 50 pages of good stuff. So even though I'm interested in Edwin Land and his ideas, I haven't found a book that I'd actually recommend to read unless you're really like nerding out on them. So that's why he hasn't really appeared on the podcast, even though he is a very interesting thinker. So I want to talk a little bit about this. So Evan wanted to build Snapchat as an art and technology company, modeled after two of his heroes, Edwin Land and Steve Jobs.

Jobs had also considered Land a personal hero and someone he modeled his career after. This is the interesting part. In the 1980s, then-Apple CEO John Scully and Steve Jobs went to see Dr. Land at his lab on the Charles River in Cambridge, Massachusetts. In a 2010 interview, Scully recalled the visit. Now I'm just going to read directly from the interview. Dr. Land and Steve were both looking at the center of the table the whole time they were talking. Dr. Land was saying, I could see what the Polaroid camera should be. It was just as real to me as if it was sitting in front of me before I'd ever built one.

And Steve said, yeah, that's exactly the way I saw the Macintosh. He said if I asked someone who had only used a personal calculator what a Macintosh should be like, they couldn't have told me. There was no way to do consumer research on it. I had to go and create it and then show it to people and say, now what do you think? Both of them had this ability to not invent products but discover products.

I kind of like that idea. Both of them said these products have always existed. It's just that no one had ever seen them before. We were the ones who discovered them. That's the end of the John Scully interview. Like land and jobs, Evan was more of a discoverer than an inventor. He explored the world around him in college and pulled Snapchat out of it. He also didn't believe users could tell them what they wanted.

He simply had to discover what was next and show it to them. Oh, so this is an interesting part. This is how some of the techniques that Snapchat, that Evan and Bobby used to get some of the earliest users of the app. Evan and Bobby knew Snapchat had value because everyone who used the app used it all the time. They just needed to get it into more people's hands and make it grow, even if they had to force this growth at first. So they started showing it to people one-on-one, giving tutorials, explaining why it was fun, even downloading the app for them what's interesting to to me is uh my brother-in-law a few years ago actually did this exact same thing when he's

like hey you should really be using snapchat um and you know if you've used it before especially less so now but a few years ago the ui was extremely confusing so it's really helpful having somebody sit there and and give you a tutorial. And then once you have like that one-on-one, um, like interaction, it's easy to see why Snapchat becomes so addicting. Uh, continuing this, Evan was willing to try anything to get users. When he was home, he would go to the shopping mall and hand out flyers advertising Snapchat. I would walk up to people and say, hey, would you like to send a disappearing picture? And they would say, no. Evan later recalled that next page, this is really interesting where one of their first big breaks comes from. So they're using an analytics dashboard

called Flurry. So in October, Evan opened up Flurry, the analytics dashboard he was using to monitor Snapchat users. And notice that new users were signing up in Orange County, California, and their activity was spiking between 8 a.m. and 3 p.m. Evan's mother had told his cousin, a high school student, about Snapchat. She and her friends downloaded the app on school-distributed iPads, which blocked Facebook. They started using the app as a way to pass notes in class. Snapchat fed the high schoolers' desire for attention, as they could see when the recipient opened their Snap. Snapchat started catching on in small clusters at various high schools in Orange County and Los Angeles that fall. Then, these

high school students went home for the holidays and many found iPhones with front-facing cameras in their stockings. Teenagers began taking selfies using the front-facing camera and sending them to each other via Snapchat, having entire conversations through images of their faces. From December to January, Snapchat's user base grew by a factor of 10, growing from just over 2,000 daily active users to over 20,000. Snapchat broke out from a note-passing gimmick to a full-fledged communication tool, replacing texting for many teens. And so here's some more insights into the opportunity caused by Facebook. Facebook notifications, once a thrilling red marker signifying that you had your friend's attention, now came with a mark all as red button more reminiscent of an email inbox than a fun social app. Because people rarely deleted old posts and photos from Facebook and other less popular social networks, their profiles became dusty collections of the mementos they had posted over the years.

That's a huge problem and one of the reasons why I deleted Facebook a few years ago. This wasn't as big of a problem for people who signed up after a certain point in their life. When they arrived to the Facebook party, they came as their mostly formed selves. This is really important too, actually. Snapchat did not resonate much with this older crowd. But for college and high school students, they had signed up for social networks at a time in their lives of enormous change and growth. So these profiles came to represent weird versions of themselves that they

no longer wanted to be associated with. Like outgrown sneakers or clothes that had gone out of style, these profiles needed to be tossed out and replaced with something fresh and new. And of course, for people of this age, there was always the fear that something dumb they posted on social media would get them in trouble with their parents, college admissions officers, this is another good insight. Teachers, teenagers also felt pressure to post the most glamorous representations of their lives on Facebook, Twitter, Instagram, and other social media sites to rack up likes. This, I love this one sentence. I love all this part. It keeps hanging over and over again. Evan designed Snapchat as an anecdote to this obsession with likes and retweets. Snapchat was not meant to be a social network. Real quick, let me just interject here. I'm recording this podcast early 2018.

Recently, Snapchat just went through a major redesign that's got heavily, heavily criticized because it separated your friends that you actually Snapchat with, and then people you follow on Snapchat to watch your stories, like celebrities and people like that, into two separate parts. And people are really mad about this. And Evan keeps saying, like, these people are not your friends. That's they're over there it may feel like you're they're your friends but they're not and um it kind of makes sense because this book was published before that the update when he goes back and it's like he explicitly designed snapchat as an anecdote to to the modern like incarnation of the social network uh they continue this thought here snapchat had no likes no no permanence, no social anxiety.

You could just send whatever you thought was funny or cool or interesting, even if that was an otherwise unflattering image of yourself. Evan and Bobby carefully set up Snapchat to maintain and promote this intimacy. While most other apps at the time let you find and add your friends via Facebook login or by uploading your email contacts, Snapchat only let you add people if you had their phone number or if you knew their Snapchat username. Because of this, most people had a smaller group of closer friends on Snapchat than on other social networks. They managed to make Snapchat feel like a small, cool club to belong to. It was a welcome escape from the Facebook empire.

In the early days, if you sent a Snapchat to the team's Snapchat account, Evan or Bobby would occasionally reply with a selfie. Additionally, they didn't let users upload photos from the camera roll. Any photos sent via Snapchat had to be taken in the app and immediately shared giving it an unparalleled sense of real-time interaction when you receive the snapchat for 10 seconds you were transported to where your friend was at that exact moment let's move ahead a little bit here's a interesting thought, really quick, just one sentence. The difference between Instagram and Snapchat, according to Evan.

Evan launched into his pitch, explaining to Lou that he wanted to be the camera for the world. If Instagram is the prettiest 1% of photographs, Snapchat would happily host the rest of the 99%. Another random sentence, which Evan's in the book several times saying this. He goes, it seems odd at the beginning of the internet, everyone decided everything should stick around forever. He said, I think our application makes communication a lot more human and natural. Another good idea. There's actually two good ideas on two adjoining pages here. And this is the problem with standard.

When Jeremy Liu and Lightspeed had invested just a few weeks prior, Liu had included terms giving Lightspeed the right of first refusal to invest in Snapchat's next round of funding, as well as rights to take 50% of the next round. Essentially, Lightspeed controlled Snapchat's next round of funding and made Snapchat unattractive to other investors who would want to take a larger stake in the series a round evan was furious he felt betrayed and taken advantage of lou had told him these terms were standard evan would warn warn other students about this betrayal for years to come as he did in a keynote address at the at a stanford women in business in 2013. Now there's a direct quote from Evan. One of my biggest mistakes as an entrepreneur involved a term sheet. This particular term sheet was our first. And when we talked to the venture capitalists and we talked to our lawyers, they took refuge in the notion of standard. When I asked a question because I didn't understand something, I was reassured that the term was standard and therefore agreeable.

I forgot that the idea of standard is a construct. It simply does not exist. So rather than attempt to further understand the document, I accepted it. It wasn't until a bit later when the company had grown and we needed more capital that I had realized I had made a very expensive mistake." He also warned in a 2015 talk at the University of Southern California,

�If you hear the word standard terms, then figure out actually what the terms are, because they are probably not standard and the person explaining them to you probably doesn't know how they work. And then on the very next page, this is his idea on conforming. And he drops out of Stanford, like, really close to graduating. I think he was like, let's say, maybe five classes or less. And he just decided, you know what, I'm just going to go all in on Snapchat. But he still decides to walk as if he was getting his degree. And so here's some ideas on her, some thoughts on this. While Evan wasn't

graduating, he chose to walk for the ceremony and receive a blank diploma rather than skip the celebration where all his friends were. After all, he was never really there for the grades anyway. It was a strange final act of conformity for Evan before fully departing Stanford and returning south to Los Angeles to build Snapchat. Three years later, Evan delivered a commencement address at USC's Marshall School of Business reflecting on how he later regretted walking. It's a direct quote from him. It only recently occurred to me while preparing this address how totally absurd this whole charade was. It reminded me that oftentimes we do all sorts of silly things to avoid appearing

different. Conforming happens so naturally that we can forget how powerful it is. We want to be accepted by our peers. We want to be part of the group. It is in our biology. But the things that make us human are those times we listen to the whispers of our soul and allow ourselves to be pulled in another direction. Okay, so jumping a little bit ahead in the book, this is where Snapchat was when it was just a year old and how it morphs into a replacement for texting and then some more insights into Evan's personality.

It had only been a year since Peekaboo launched in the App Store. When Facebook was one year old, there was no news feed, no tagging, and no like button. Likewise, there was much ahead on Snapchat's product roadmap. More than 10,000 people, primarily teenagers and 20-somethings, were downloading and joining Snapchat every day that summer. Snapchat grew by a factor of 10, from 100,000 daily active users to a million in just six months.

While the front-facing camera on smartphones helped Snapchat gain early traction, smartphones' address books may have done even more to drive viral growth. Before smartphones were ubiquitous, Facebook and others had to work extremely hard to build a social graph on the web. But with smartphones, people had a computer in their pockets with a complete social graph, their address book. This allowed Snapchat, Instagram, WhatsApp, and others to quickly build enormously valuable services. Snapchat's existing users were also sharing more and more photos. This put a heavy strain on Snapchat's infrastructure as they had to deliver millions of photographs in real time. Because users saw Snapchat as a texting replacement,

they expected messages to be sent and received within seconds. So on the next page, continuing this line, the author is talking about the time that he is interviewing Evan for a piece. It's time that the author's a reporter for TechCrunch. This is 2012. It talks a little bit about some thoughts on Snapchat and what they're doing. I'm going to skip over that because I'm going to go to the part that was most interesting to me. And it said, but most interesting were his comments when I brought up the possibility of selling the company. Quote, there's no way I'm going to work for anybody else, Evan said. I don't think you're going to see us selling anytime soon. Evan wasn't interested in

a quick payday or a steady job at a big tech company, and Mark Zuckerberg would soon give him good reason to rule out working at Facebook. But most of all, Evan wanted to be a founder and a CEO, the captain of his own company, that he could grow to be the next Apple. There were plenty of questions surrounding Snapchat. Is this really a full-fledged company or just a feature that Facebook, Apple, Google, or someone else can copy? Isn't every other company in the valley moving toward collecting more data, not zero data? Okay, so Snapchat has a bunch of traction. A lot of people are using it. Let's skip ahead. This part's one of the longer sections. It's Mark Zuckerberg's first move on Snapchat.

On November 28th, Mark Zuckerberg, having purchased Instagram just eight months prior, emailed Evan, saying he was interested in Snapchat and what they had built and would love to have them over to Facebook's campus. Evan responded coolly. He wasn't sure when he would be next in the Bay Area, delivering the not-so-subtle message that he wasn't going to plan a special trip just to see the Facebook billionaire. Zuckerberg noted that he would be in Los Angeles soon, and they could meet then. Days later, Evan and Bobby traveled to a private apartment in Los Angeles to meet Zuckerberg in secret.

Zuckerberg had obfuscated the purpose of the trip, saying he was going to meet architect Frank Gehry to discuss Facebook's new headquarters. Zuckerberg asked probing questions about Snapchat and their vision for the product and company. He then wondered aloud what Snapchat might look like as a Facebook-owned company, with Evan and Bobby still at the helm, able to take advantage of the social giant's resources and funding to grow more quickly, as Instagram had. And indeed, Zuckerberg had an impressive story to tell. Following his acquisition, Instagram's daily active users grew almost 1,200% in just six months. Perhaps Facebook would be interested in acquiring Snapchat for $60 million, instantly making Spiegel and Murphy millionaires in their early 20s. Evan explained that they weren't interested in selling the company.

In response, Zuckerberg showed them something new that his team had been working on. Poke, a new Facebook app, would be released in a few days. What was it? A messaging app for disappearing photos and videos. The message was clear. Join us or we will crush you. Skipping ahead. So that was in November, right? On December 21st, Evan received a one sentence email from Zuckerberg. I hope you enjoy Poke. Evan had deactivated his Facebook account so he couldn't even access the app. In a panic, he called Bobby who downloaded Poke and made an account. It was an exact replica of Snapchat.

An unabashed copy. Poke even stole Snapchat's user interface for recording video. And in addition to sending disappearing photos and videos, users could send disappearing text messages and even just poke each other to get their attention, like the earliest days of Facebook, when it was fun and weird. But there was nothing fun about Poke.

This was a show of might from Zuckerberg and his team up north. Veteran Facebook director of product, Blake Ross, led a small team in developing Poke in just 12 days. Zuckerberg, who invented poking years prior, even wrote some of the code for Poke, even though he rarely programmed at Facebook anymore. If users dragged their message list all the way up in the Poke app, the text, I'll find

something to put here, appeared, which is the same text Zuckerberg left at the bottom of Facebook.com in its earliest days. And finally, the notification that said Poke to users when they received the message, it was a recording of Zuckerberg saying the word poke. Here's a quote from Mark on this. If you're trying to help convince people that they want to join you, helping them understand all the pain they would have to go through is a valuable tactic," Mark Zuckerberg later said when asked about Facebook's acquisition

strategy. Now he intended to show Evan and Snapchat the pain they would have to suffer to compete with Facebook. On the day it was launched, Poke shot up to the top spot in the iOS app store, pushing Snapchat down to ninth. But just a week later, Poke had dropped to 34th, while Snapchat rose back to third. Now here's a quote from a tech blogger and venture capitalist. And it says, how is it that Facebook, which has some of the smartest folks in the room, can't really invent any new single online behavior that would keep people addicted to Facebook. Why does it have to look at others to come up with new user behaviors and new features?

For instance, check-ins came from Foursquare, while the short status updates were a direct response to Twitter. Facebook answers was nothing but a variation on Quora's offering. Poke is yet another example. End quote. Why did Poke fail? It failed to solve any problems for young users who were more than happy with Snapchat and it solved a problem that didn't exist for older users who still didn't get the appeal of disappearing content. Facebook's strategy with Poke was to have a family of separate, highly successful apps

filling different user needs. Facebook, Messenger, Instagram, and Poke. Instagram, by far Facebook's coolest property, was still just single photo posts at the time and had much more on its immediate product roadmap than adding impermanence. Poke was further hampered by the fact that teens were drawn to Snapchat because it was explicitly not Facebook, which was populated by their parents and collected everything they posted forever. Most of their friends were either on Snapchat or signing up by the day.

They had no interest in Polk messaging with their Facebook friends, who they weren't friends with on Snapchat already. So why would they all pick up and leave Snapchat to share pictures on Poke when half the reason they had migrated to Snapchat was to try to escape the Facebook empire? Within weeks, it became clear that Poke hadn't just failed. It actively helped Snapchat. Searches for and mentions of Snapchat skyrocketed in the weeks following Poke's debut. More importantly, Zuckerberg's failing attempt at an acquisition and then clone validated the ephemeral messaging space

and helped change the sexting narrative that had been dogging Snapchat. Despite users sharing over a billion images through the service, Snapchat struggled to be taken seriously. Many people, particularly those over 25, still thought of it as a sexting app or a toy. An internet revolution was going on, but all anyone wanted to talk about was sexting. By having the dominant, respected social network taking impermanent photos sharing seriously, Poked helped change the narrative, and Snapchat benefited enormously. The logic changed from the photos disappear, Snapchat must be for sexting, to Facebook made a disappearing photos

app. Disappearing photos app must be the next big thing. Evan would later call Poke the greatest Christmas present we ever had. Skipping ahead, these two sentences are just, I think, insight into Evan's personality. They're throwing a New Year's Eve party at Snapchat and directly from the book. In a move seemingly antithetical

to the company's mission, Evan had put, no photos please, on the party invites, hoping the lack of documentation would let everyone loosen up and have more fun this illuminated an interesting contradiction in evan he wanted to throw big inclusive parties but he was also a very private often secretive person this is going to appear random but it's honestly just an excuse for me to include yet another Jeff Bezos quote into the Founders Podcast. Long-time listeners will know that I think he's probably the most influential out-of-the-box thinker on business strategy these days.

And so once I came across this quote, I highlighted it, and I was like, it doesn't really fit into the story, but I think it's a great quote. And we could all use a little bit more of his ideas in our life. Amazon CEO Jeff Bezos summed up this idea in a letter to his shareholders writing, now it's a direct quote from Jeff, we all know that if you swing for the fences, you're going to strike out a lot, but you're also going to hit some home runs. The difference between baseball and business, however, is that baseball has a truncated outcome distribution. When you swing, no matter how well you connect with the ball, the most runs you can get is four. In business, every once in a while, when you step up to the plate, you can score a thousand

runs. This long-tailed distribution of returns is why it's important to be bold. Big winners pay for so many experiments. I like Evan's insight on camera-enabled communication. Let's go into a direct quote from Evan. People wonder why their daughter is taking 10,000 photos a day, Evan later said. What they don't realize is that she isn't preserving images. She's talking.

It's not about an accumulation of photos defining who you are, it's about instant expression and who you are right now. Internet connected photography is really a reinvention of the camera and what it does is allow you to share your experience, it allows you to share your experience of the world while also seeing everyone else's experience of the world everywhere all the time. Skipping ahead a few pages, there's this idea that I don't know if I've heard described this way, but I am definitely familiar with the feeling, and they're going to call it digital dualism. Evan turned his attention to Nathan Jurgen, a PhD student at the University

of Maryland. In 2011, Jergensen, writing on a social sciences blog called Cyborgology, introduced a term he called digital dualism. Arguing that the distinction between the virtual and real worlds is a fallacy, He rejected the distinction between quote-unquote real and quote-unquote virtual worlds or the notion that we live and act one way in person but build and create a separate identity online. In Jurgensen, Evan found a provocative thinker who managed to capture and describe Snapchat's core ethos before he had even heard of the app. Jurgensen would go on to influence Evan's thinking and Snapchat's strategy inos before he had even heard of the app. Jurgensen would go on to influence Evan's thinking and Snapchat's strategy in a deep way. In February 2013, Jurgensen wrote about

Snapchat, quote, the tension between experience for its own sake and experience we've pursued just to put on Facebook is reaching its breaking point. That breaking point is called Snapchat. After reading the piece in the New Inquiry, a non-profit digital magazine, Evan reached out to Jurgensen and convinced him to join Snapchat as a researcher. It is rare for a startup to hire someone so early just to focus on research and new thinking. They may not be directly relevant to a product. Jurgensen would speak with Evan often and Jurgensen's thoughts and writings eventually had a significant impact on the way Evan thought about Snapchat, social media, and the internet more broadly. Evan would frequently quote Jurgensen and

discuss his ideas in interviews with journalists. So one of my favorite products Snapchat ever made was Stories. And this goes back to September 2013. And I was actually surprised. Well, let me just read it and you'll see. Stories, to a certain point, was born as an anecdote to group messaging. Whenever anyone at Snapchat asked users what additional features they wanted, their response was universal. From Oslo to Santa Monica, users wanted group messaging.

Tired of combing through their list of contacts to send a funny picture to everyone in their click, users wanted to be able to create a group the way they could in text messages and other messengers. But Evan and the Snapchat team worried that group messaging would kill the magic of Snapchat. If users could easily fire off mass Snapchats to big groups of people all the time, it might destroy the vibe they had worked so hard to create. Was there a better way to create a one-to-many sharing tool than group messaging? Evan and his team knew what they didn't want to create a one-to-many sharing tool than group messaging? Evan and his team knew what they didn't want to create. One of Evan's strengths is his ability to see issues in his social feeds

and circles and extrapolate them broadly to get into the heads of users. Let me just read that sentence again. Evan and his team knew what they didn't want to create. Okay. When users first signed up for Facebook, it was amazing. All their friends were on it and they could post funny things and goofy pictures. But all these posts built over time and work colleagues, not to mention future friends and colleagues who might want a different you. At some point, were you supposed to go back and unlike Sean Paul? Or would your friends understand that 10 years ago, the song Temperature was just that good? What about 17 new phone need number groups? Is there a button for deleting every photo of you before 2011? Why did you think that haircut was a good idea?

And so users started posting less frequently and started sharing news articles instead of silly pictures. That's the bane of Facebook. The spontaneity, goofiness, and lightness of social media was replaced. Instead of throwing Polaroids at friends across the room, you were curating a gallery of professionally framed, high-gloss photos. A Snapchat rebuild of the newsfeed would obviously have to be impermanent. All of the content would disappear at some point, like the disappearing messages. That way, users would feel comfortable posting whatever suited their mood in the moment without worrying about how it would look months and years later. To get away from the manicured photos filling Instagram and Facebook competing

for likes, Snapchat's feed would do away with likes and comments. Users could post whatever they wanted, and if their friends really wanted to respond, they could send them a reaction Snapchat. Evan argued that it was awkward and insincere when people pretended in real-world interactions that they hadn't been watching their friends' lives unfold via social media. So he argued, why not just show people who's watching their stories? There was some concern that this would deter people from watching as many friends' stories, but ultimately they decided this risk was worth taking for the trade-off of addicting users to seeing all of their friends who had watched their story.

This list turned out to be a psychological candy for users, as they could scroll through and see exactly who had watched their story. This phenomenon was by no means new. Myspace founder Tom Anderson said the number one feature that Myspace users begged for was who's viewed your profile. Snapchat, continuing in the next paragraph down, Snapchat may not look much like Facebook, but with Stories, the company is taking its first steps

towards competing with Facebook's most important product, the newsfeed. Behind Stories is a deep understanding, or perhaps loathing, of the way social apps works today spiegel claims to have no special knowledge of the way we work as social organisms aside from what he learned as a college student but has thus far proven himself and his colleagues to be surprisingly thoughtful about our hidden social behaviors and desires the brilliance of stories was everything that wasn't in it.

No permanence, no fancy editing, no likes, no follower counts, no comments. Users could just post whatever they wanted. So now we're towards the end. We're going into 2014. Snapchat throws another New Year's Eve party. I just found this sentence to be interesting when you compare and contrast it to the one I just mentioned a few minutes ago.

Unlike the previous year's bash, where they simply asked that you not take photos, this year's security confiscated everyone's phones at the doors. Evan's desire for privacy had risen right alongside Snapchat's heightened profile. Deciding our phones were a good trade for the open bar, we entered the party. This is also interesting. Something you talk about in the book is Evan has no public social media profiles. He doesn't have Facebook.

I think he stopped using Twitter, and his Snapchat is not public, which is really bizarre, and I don't mean that as pejorative. Just that, you know, that's like Jack Dorsey having a private Twitter account. But it kind of, now that I've read this book

and have a few more insights into who he is, it kind of makes sense. Okay, so one of my favorite parts of the book is they use a lot of his own words. So this section is a little longer, but it's Evan's framework for what he calls the more personal computer. And you'll start to see more of like his philosophies taking shape and we can kind of guess how it affects the way he creates products. Okay. So he's giving a speech in January, 2014. So I'm just going to jump into the paragraph before he starts talking and I'm just going to jump into the paragraph before he starts talking, and I'm just going to read his words.

Okay, so first he talked about how Steve Jobs tied man to machine with the creation of the iPhone, letting users bring computers with them wherever they go, tied uniquely to them by a phone number. He argued that this should be called the more personal computer era rather than the post personal computer era. Then he unveiled his framework for Snapchat through which everything acquisitions, new features, and revenue was developed. So let's go directly to his words here now. Internet everywhere means that our old conception of the world separated into an online and offline space is no longer relevant. Traditional social media require that we live experiences in the offline world, record those experiences, separated into an online and offline space is no longer relevant. Traditional social media require

that we live experiences in the offline world, record those experiences, and then post them online to recreate the experience and talk about it. For example, I go on vacation, take a bunch of pictures, come back home, pick the good ones, post them online, and talk about them with my friends. This traditional social media view of identity is actually quite radical. You are the sum of your published experience, otherwise known as pics or didn't happen, or in the case of Instagram, beautiful pics or it didn't happen, and you're not cool. This notion of a profile made a lot of sense in the binary experience of online and offline. It was designed to recreate who I am online so that people could interact with me even if I wasn't logged

in on that particular moment. Snapchat relies on internet everywhere to provide a totally different experience. Snapchat says that we are not the sum of everything we have said or done or experienced or published. We are the results. We are who we are today, right now. We no longer have to capture the real world and recreate it online. We simply live and communicate at the same time. Communication relies on the creation of media and is constrained by the speed

at which that media is created and shared. It takes time to package your emotions, feelings, and thoughts into media content like speech, writing, or photography. Indeed, humans have always used media to understand themselves and share with others. And then he goes on to quote Robert Burns, oh would some power the gift give us to see ourselves as others see us. When I heard that quote, I couldn't help but think of self-portraits, or for us millennials, the selfie. Self-portraits help us understand the way that others see us.

They represent how we feel, where we are, and what we're doing. They are arguably the most popular form of self-expression. In the past, life-like self-portraits took weeks and millions of brushstrokes to complete. In the world of fast and easy media creation, the selfie is immediate. It represents who we are and how we feel right now. And until now, the photographic process was far too slow for conversation. But with fast and easy media creation, we are able to communicate through photos, not just

communicate around them like we did on social media. That's a really good, interesting insight. When we start communicating through media, we light up. It's fun. The selfie makes sense as the fundamental unit of communication on Snapchat because it marks the transition between digital media as self-expression and digital media as communication. And this brings us to the importance of ephemerality at the core of conversation. Snapchat discards content to focus on the feeling that content brings to you, not the way the content looks. This is a conservative idea, the natural response to radical transparency that restores integrity and context to a conversation.

Snapchat sets expectation around conversation that mirror the expectations we have when we're talking in person. That's what Snapchat is all about. Talking through content, not around it. With friends, not strangers. Identity tied to now, today. Room for growth, emotional risk, expression, mistakes, and room for you. That one sentence. That is what Snapchat is all about, talking through content, not around it. With friends, not strangers. When I read that, especially the with friends, not strangers part, I immediately thought, again, going back to the the the new snapchat redesign which is which is getting killed by most critics he's very explicit and why he won't change

it back too you're supposed to be communicating with friends not strangers and celebrities are not your friends they're just trying to in most cases just trying to sell you something um that is completely antithetical to think about like Instagram influencers or following Kevin Hart on Facebook or anything else. Like they're not your friends. That's actually a really good point. Another just random sentence. Again, with this whole theme of secrecy with Evan and his companies pops up throughout this book. This is just one sentence.

Two sentences, actually. Snapchat never announces its acquisitions. One day, the startup is fully functioning independently. The next, employees are telling their friends that they are moving to L.A. and can't say anymore. Skipping ahead. This is really interesting. I've mentioned how I really like the podcast Exponent. And if you listen to this podcast, you'd probably like that.

They do a much better job than I do, even though it's different content. They go into really deep, each episode usually about one thing and they go deep into like the strategy behind um why certain businesses mostly technology companies do what they do and i learned a lot because one of the co-hosts lives in i think it's taiwan and um they talk a lot about um messaging apps in asia and how uh how they make money and it's just a different experience than I've had just living in the United States and dealing with the major social media properties that we have here. And on some episodes, they've talked about Snapchat and how it's more of a messaging app than it is a social network,

which kind of echoes some of the quotes that we're seeing from Evan here. So I just want to go into, the book goes into how Snapchat studied some of the messaging apps in Asia and specifically how they make money. So learning about this stuff is interesting to me, so I just want to read a few paragraphs on that here. In 2012, Evan and Bobby had experimented with various ways to make users pay for add-ons and extra features in Snapchat.

After going back and forth on the tradeoffs between focusing on growth and making money, they ultimately decided to focus on growth above all else. Evan continued to discuss plans to generate revenue as Snapchat turned down Facebook's $3 billion acquisition offer. But once again, he decided to focus Snapchat's precious research on product development, building out stories, live, and geo filters. Those are the three products that are working all the time. But once again, he decided to focus Snapchat's precious research on product development, building out stories, live, and geo filters. By 2014, Snapchat was burning over $100 million a year, and Evan pushed harder to start monetizing

the product. Developing Snapchat into an actual business would put the company on a path towards an initial public offering, a major milestone on the way to achieving Evan's dream of becoming the most important tech company in the world. Revenue would let Snapchat invest more in future product development, but a bad revenue scheme would piss off users and could hurt both growth and engagement, so they had to be careful. Evan and Bobby, with their board members Mitch Lasky and Michael Linton, first looked to Asian messaging companies like Line and the Tencent-owned WeChat, which make money

from sponsored messaging and in-app purchases for virtual goods, like stickers and games. WeChat lets users subscribe to brands that message them. Line lets users buy virtual stickers, little cartoon drawings depicting many scenes and emotions to share with friends. In August 2014, Mitch Lasky sent Michael Linton a note quoting a hedge fund manager about Asian messaging companies as the two Snapchat board members debated possible monetization strategies for Snapchat. Here's a little excerpt from that email. It's using online to access goods and services offline. A good example in the U.S. would be something like Uber. But in Asia, it's way, way broader. In China, people use WeChat to buy stuff like clothes, order food, book travel, pay for

taxes, you name it. My partner calls it the mobile phone as a remote control for your life. It's an order of magnitude bigger opportunity than advertising and part of the reason I was so excited about Snapchat's payment experiments. They could be in a unique position to own time-sensitive ephemeral offers, unsold inventory that expires like tickets to a concert. Facebook had been positioning Instagram as an advertising property, aligning its crown jewel acquisition with what it did best.

Snapchat could potentially lead the way in online to offline in the U.S. In China, people do everything inside one app, WeChat. So operating systems like iOS and Android have much less power. That whole idea that in China everything is done in WeChat and that it weakens the actual owners of the operating system, there's a great Exponent podcast on that. If you just Google Exponent WeChat, they've talkedens the actual owners of the operating system, there's a great Exponent podcast on that. If you just Google Exponent WeChat, they've talked about it a few times, but if you're interested, I'd go listen to the podcast. I highly recommend it. If Snapchat could become a dominant online to offline player, it could have as much of

the platform power that Apple and Google enjoy. All right, so this is Evan on brands being social. Unlike other social companies like Facebook and Twitter, Snapchat did not encourage brands to develop their own organic followings on the app. Facebook and Twitter had previously courted media organizations and businesses to create accounts and pages so users could like and follow them. In sharp contrast, Evan told reporters he found it annoying when brands tried to act like people on Snapchat by creating an account. Snapchat only wanted brands on the app if they were paying for ads. Snapchat didn't ban brands from creating their own organic accounts,

but they did nothing to help them grow an organic, free following. In one sense, this was good for companies and brands, as they knew exactly what game they were playing with Snapchat, unlike Facebook, Twitter, and others who spent years telling them to grow their following, only to turn around and charge them to have their posts seen by all of their followers. I love this idea and I have to say I agree with him when he says, Evan told reporters he found it annoying when brands tried to act like people on Snapchat by creating an account. Uh, just in general, there's tons of brands that I, that I love the products they make, but I don't need to hear from them constantly. I don't want

them popping up on the apps I use. You know, like I do want to be aware, like if Apple, uh, Apple's a great example of this because they built the most at this, at the time I'm recording this, the most successful company in history. And they didn't do it through social media. But even if it was, I wouldn't follow them on Instagram or any other platform. I don't need to hear from them all the time. When they release a new product, I'll look at it and see if I want to buy it, and I'll buy it. But why would I have this low-level, constant form of communication with brands? I don't understand. It's bizarre to me when you see like people would like certain brands on Facebook and then constantly get bombarded with communication from them.

I just want to buy the products or use the services and then, you know, get on with living my life. Skipping ahead though, it is interesting how at times, so at the book you're reading this and you realize that they have a philosophy which I respect and actually like. But to some extent they're shooting themselves in the foot because they are at this time primarily an advertising-based business. And yet they want you just communicating with close friends. So this paragraph stuck out to me. It's very hard to find people to follow on Snapchat. Facebook, Twitter, and Instagram are happy to serve up suggestions on which friends and friends of friends

and even celebrities and parody accounts you should follow based on who you already follow. After all, and this is why here's the paradox. After all, the more people you follow on Friend, the more potential content there is for you to see and the more advertisements you can potentially see. But Evan is focused on keeping Snapchat as the antithesis of Facebook and Twitter. Aside from a few celebrities that you love so much you look up their handle, Snapchat is designed to be a place to hang out with your real friends rather than your thousands of online friends or followers.

So what I got from that is, well, yeah, it's good that it's a place to hang out and communicate with your real friends, which I really like, but you're foreclosing all the other content out there from people that are not your friends that keep people engaged and you can show them more advertising. Now, I don't want to be more engaged in social apps. I want to be less engaged. I really like Tristan Harris's idea of time well spent, making sure that we're using these as things that benefit our lives, not just get us programmed into it so we can see more

ads. So I don't know. I guess I'm rooting for this philosophy to win out. But so far, if you look at the financial performance, I mean, Facebook is obviously winning at this um hopefully Snapchat figures it out but um because I do want to see that succeed but I'm not entirely sure how that that's going to play out that's why I think that reading this book was so interesting uh to me just because uh I really do personally agree with a lot of his philosophies and I do think our current environment is broken Yet how do you Unseat a vicious and powerful competitor like Facebook. I'm not entirely sure Okay, and there's so much of this book that I'm going to have to leave out.

But I want to end here. This is Evans philosophy on privacy and secrecy goes back into this whole theme that we've touched on a lot about we're not brands. And just communication, the world of communication in an internet everywhere environment, like the one that we currently live in. So this is from a keynote in April 2014, and it says it reveals his philosophy on the distinction between privacy and secrecy. Okay, so this is now we're just going to end on his direct words.

Unfortunately, privacy is too often articulated as secrecy. When as Nissenbaum, and he's quoting Helen Nissenbaum, who is a professor of media, culture, and communication at New York University. So let me start that over. Unfortunately, privacy is too often articulated as secrecy, when as Nissenbaum points out, privacy is actually focused on an understanding of context. Not what is said, but where it is said and to whom. Privacy allows us to enjoy and learn from the intimacy that is created when we share different things with different people in different contexts. That to me is really just picking up on a fundamental truth of human nature. We share different things with different people in different contexts. Therefore, why are our social apps just a one-to-many?

It doesn't actually make sense. So back to this. Now he's quoting Milan Kundera, who's a French writer and philosopher. Kundera writes, in private, we bowed mouth our friends and use coarse language. That we act different in private than in public is everyone's most conspicuous experience. It is the very ground of life of the individual. Curiously, this obvious fact remains unconscious, unacknowledged, forever obscured by lyrical dreams of the transparent glass house. It is rarely understood to be the value one must defend above all others, end quote. That's the end of Condero's quote. Going back to Evans' quote. In America, before the internet, the

division between our public and private lives was usually tied to our physical location, our work, and our home. The context in which we were communicating with other friends and family was clear. At work, we were professionals, and at home, we were husbands, wives, sons, and daughters. On the internet, we organize information by its popularity in an attempt to determine its validity. This is actually a really important point. So let me start that again. On the internet, we organize information by its popularity in an attempt to determine its validity. If a website has been referenced by many other websites, then it is genuinely determined to be more valuable or accurate.

Feelings expressed on social media are quantified, validated, and distributed in a similar fashion. Popular expression becomes the most valuable expression. Social media businesses represent an aggressive expansion of capitalism into our personal relationships. Let me read that sentence again. Social media businesses represent an aggressive expansion of capitalism into our personal relationships. We are asked to perform for our friends, to create things they like, to work on a personal brand, and brands teach us that authenticity is the result of consistency. We must honor our true self, quote-unquote, and represent the same self to all of our friends or risk being discredited. But humanity cannot be true or false. We are full of contradictions and we

change. That is the joy of human life. We are not brands. It is simply not in our nature. That is a fantastic paragraph. But humanity cannot be true or false. We are full of contradictions and we change. That is the joy of human life. We are not brands. It is simply not