How to Turn Down a Billion Dollars

by Billy Gallagher

  Evan dove into journalism as well, writing for the school newspaper, Crossfire. One journalism class required students to sell a certain amount of advertising for Crossfire as part of their grade. Evan walked around the neighborhood asking local businesses to buy ads; once he had exceeded his sales goals, he helped coach his peers on how to pitch businesses and ask adults for money.

  By high school, the group of 20 students Evan had started with in kindergarten had grown to around 120. Charming, charismatic, and smart, Evan threw parties at his dad’s house that were “notorious” in his words. Evan’s outsized personality could rub people the wrong way at times, but his energy, organizing skills, and enthusiasm made him an exceptional party thrower. He possessed a bravado that could be frustrating and off-putting but was great for convincing everyone that the night’s party was going to be the greatest of all time.

  Obsessed with the energy drink Red Bull and the lifestyle the brand cultivated, Evan talked his way into an internship at the company as a senior in high school. The job involved throwing parties and other events sponsored by Red Bull. Clarence Carter, the head of the company’s security team, would give Evan advice that would stand him well in the years to come: pay attention to who helps you clean up after the party. 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.”

  In the fall of 2008, Evan burst onto the campus scene at Stanford. Known as “The Farm” because Leland and Jane Stanford founded the school on their old Palo Alto farm, Stanford has an idyllic 8,000-acre campus in northern California, just south of San Francisco. He lived on the top floor of Donner, a three-story all-freshman dorm. Evan quickly became friends with the guy who lived right across the hall from him, Reggie Brown. Evan could not possibly have imagined it at the time, but meeting Reggie would become one of the most important things he did at Stanford.

  Reggie was born on January 17, 1990, in Isle of Palms, an affluent coastal town just outside of Charleston, South Carolina. Reggie had a masterful way of making people feel welcome and comfortable around him, like he was genuinely interested in getting to know you. He could come across as a goofball at first, as he smoked and drank and made lowbrow jokes, but he was deeply intelligent and creative. Reggie knew from the day he got to Stanford that he wanted to be an English major and focus on writing. Reggie was a beefy, good-looking kid with shaggy blonde hair that was typically tucked under a backward cap. A wide, silly smile usually brightened his face. His Southern manners set him apart in Northern California, as he would frequently address professors and friends’ parents more formally.

  Evan and Reggie spent a lot of time partying together. The group in Donner was unusually social that year, not least because the two fast friends frequently threw parties in their dorm. This was not common for freshmen because it was frowned upon. These gatherings were typically lubricated by handles of vodka and Red Bull Evan had shipped to him, as he was still working for the company as a brand manager, giving out free samples.

  Most freshmen did not have a car and were adjusting to life without their parents. Evan drove a Cadillac Escalade and thrived in his new environment. In addition to his ever-growing group of friends he met through his and Reggie’s parties, he started dating a pre-med student named Lily, and they were soon attached at the hip.

  Lily was a steady, positive influence on him. She was a very patient, understanding girlfriend and put up with some of his absurdity because the good times—from fraternity parties to adventures for just the two of them to a spring break trip to Cabo San Lucas in Mexico—were so much fun.

  Throughout the year, Evan designed and printed tank tops for his Donner crew. He had befriended the owner of a printing shop and was able to negotiate discounted prices and short turnarounds on orders. Evan created a tank top mimicking the Stanford athletes’ Nike gear. The shirts said STANFORD across the chest, but instead of a team sport underneath “Stanford,” it read HUSTLING. In the spring, a friend tossed out the idea for a “Sun’s Out, Guns Out” tank top; later that day, Evan emailed the dorm a Google doc to collect people’s orders and sizes, and by Friday everyone who paid him could rock their shirt.

  By the time spring quarter arrived, Evan’s reputation had grown—he was the kid from LA who liked to throw parties. Most of his Donner crew joined a fraternity or sorority that spring. Reggie, Evan, and their friend Will rushed the Kappa Sigma fraternity.

  The Kappa Sigma brothers had a work-hard/play-hard ethos; they prided themselves on being able to excel on campus while drinking and throwing ridiculous theme parties. The leaders of the house typically did very well academically and balanced sports teams and other extracurricular commitments with heavy drinking binges. The Stanford Flipside, the school’s beloved Onion wannabe, summed up the culture best with an article titled, “Kid Vomiting in Stall Next to You to Run Fortune 500 Company Someday.”

  In April 2009, Evan, Reggie, and Will were awoken in Donner by Kappa Sigma brothers, offering them Natty Lights and little manila bid cards—invitations to join the fraternity. They were in.

  Evan and Reggie took widely divergent routes through the fraternity pledging process. Most of the new members went with the flow during pledging and did what the older brothers told them to do. Evan constantly questioned: Why do we do it this way? Why are we letting other people tell us what to do? Why can’t we go do this? Reggie, on the other hand, simply couldn’t be bothered to show up or take pledging seriously. During the process, the older brothers frequently wrote out the pledges’ names on a big whiteboard and gave them points for tasks well done, events they showed up to, and generally how much they were liked by the active members. Reggie was always at or near the bottom of the list.

  While he didn’t put any effort into the setting up, cleaning up, or planning of parties, Reggie excelled at one part of the process: the parties themselves. All pledges were given tasks: one had to carry a lunchbox around to classes, another had to roller blade around campus, and a third had to wear a bike helmet to every party. All received nicknames as well: Reggie earned the nickname Blue Suit, given every year to the pledge who parties the hardest. He was handed down a baby blue men’s suit that was rarely, if ever, washed. He had to wear it to every party, adding more layers of liquor stains to its illustrious history.

  Evan moved into the Kappa Sig house his sophomore year and was assigned a room in the Mid, so named because it was located right in the middle of the house, where the bedrooms met the kitchen, lounge, and chapter room to form a T. Five pledges lived in two small bedrooms, with a larger common room connecting them in the middle.

  Choosing to live in the Mid meant committing to a quarter4 where keg stands would take precedence over classes. Mid residents who wanted to get homework done had to escape the fraternity for the library. And it was difficult to get to bed before two o’clock in the morning most nights, as fraternity brothers would drink and party or smoke and play Super Smash Bros. on a beat-up N64 in the middle room. In the larger common room of the Mid, Evan and his friends would throw regular weeknight parties, inviting everyone they knew.

  Evan had a private text group with a bunch of the girls in his year to which he’d regularly send mass texts like, “Raging tonight at Kappa Sig, be there.” Almost inevitably, Evan’s Thursday-night parties would explode into all-campus events. Sorority girls, overeager freshmen, and jaded-but-drunk seniors alike would wander over and cram into the Mid to slam back Natty Lights, take pulls from plastic handles of bottom-shelf vodka, and forget that they had class the next morning. During these parties, Evan was in his element. He could often be found sitting on top of a speaker DJing in a tank top, gauging the mood of the crowd, and making sure everyone was having a blast. He even came close to getting LMFAO, a hip-hop duo best known for their “Party Rock Anthem” hit, to come play at one of the fraternity’s parties.
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br />   Fraternity life posed a continual challenge for Evan—he always wanted to take things to the next level. Instead of planning mere parties, he constantly increased their vision and scale until they became planned events with specially built props and specifically designed tank tops. “Spiegel, we can’t do that” became the most common phrase uttered at house meetings. Evan would type up ridiculous event descriptions for emails and Facebook invites, describing parties in the most absurd, dramatic ways.

  Evan was elected a social chair and quickly went way over budget. As Stanford’s football team embarked on their first winning campaign in nine years and the busy student body started to pay attention to the games, Evan pushed to make tailgates into bigger spectacles. For every home game, he would cart his own enormous speakers down to the dirt parking lot next to Stanford Stadium. The Kappa Sig brothers invited every girl they knew and threw a full-on frat party in the parking lot. Evan worked the crowd with ease, greeting people left and right with a thin, wide smile on his face. When his head wasn’t thrown back laughing, he was typically drinking from his red Solo cup or gesticulating with his long, gangly arms to make a point. The tailgates kept growing, week after week, riding the unstoppable waves of the football team’s success and Evan’s party-throwing acumen.

  In addition to obsessing over his parties looking a certain way, Evan had already begun to think about his future. 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 Kelley, 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 résumé or grades, so he took classes for what he actually wanted to learn.

  Evan was actually unique on a campus where most of the bright sheep were only unique in their own minds.

  During his sophomore year, a family friend introduced Evan to Peter Wendell, the founder of venture capital firm Sierra Ventures. Wendell had been teaching a class for second-year MBA students, Entrepreneurship and Venture Capital, at Stanford’s business school for over twenty years. Stanford MBA students take the class hoping to learn how to start their own businesses. Wendell let Evan sit in on the class and put his visitor’s chair right next to the guest speakers. A thrilled Evan sat on the edge of his seat next to prominent venture capitalists and entrepreneurs like Google’s Eric Schmidt and YouTube’s Chad Hurley. The class poured fuel on the fire of Evan’s desire to found his own company. He learned directly from Silicon Valley superstars who had accomplished exactly what he aimed to do.

  From Red Bull to his dorm-room tank-top business to frat parties to Wendell’s class, Evan threw himself into the endeavors that managed to hold his interest. And, typically, these projects were different from what most Stanford students found captivating.

  After class one day, Intuit cofounder Scott Cook told Wendell he was impressed by the intelligence and reasoning of Evan’s response. Wendell replied, “Well, you will be surprised to know he isn’t an MBA student. He is an undergraduate who is auditing this class.” Wendell introduced Cook to Spiegel, who promptly begged to work with Cook. Cook let Spiegel join him on a small Intuit project called txtWeb, which aimed to make available online information accessible via SMS messages in India. The txtWeb team consisted of Cook, Spiegel, and an engineer. Evan didn’t work there very long, but he learned how much he could accomplish with a small team—and how much he wanted to work for himself, where he could call the strategic shots.

  One day, Evan had coffee with Peter Wendell and talked to him about his experiences working for Cook and his desire to get involved with startups. “Being your own boss is great,” Peter told him. “There’s no boss more kind, more generous than yourself.”

  * * *

  If you made a country out of all the companies founded by Stanford alumni, it would have a GDP of roughly $2.7 trillion, putting it in the neighborhood of the tenth largest economy in the world. Companies started by Stanford alumni include Google, Yahoo, Cisco Systems, Sun Microsystems, eBay, Netflix, Electronic Arts, Intuit, Fairchild Semiconductor, LinkedIn, and E*Trade. Many were started by undergraduates and graduate students while still on campus. Like the cast of Saturday Night Live, the greats who have gone on to massive career success are remembered, but everyone still keeps a watchful eye on the newcomers to see who might be the next big thing.

  With a $17 billion endowment, Stanford has the resources to provide students an incredible education inside the classroom, with accomplished scholars ranging from Nobel Prize winners to former secretaries of state teaching undergraduates. The Silicon Valley ecosystem ensures that students have ample opportunity outside the classroom as well. Mark Zuckerberg gives a guest lecture in the introductory computer science class. Twitter and Square founder Jack Dorsey spoke on campus to convince students to join his companies. The guest speaker lineups at the myriad entrepreneurship and technology-related classes each quarter rival those of multithousand-dollar business conferences. Even geographically, Stanford is smack in the middle of Silicon Valley. Facebook sits just north of the school. Apple is a little farther south. Google is to the east. And just west, right next to campus, is Sand Hill Road, the Wall Street of venture capital.

  Silicon Valley has always had an influence on Stanford, and vice versa. But starting in the late 2000s, tech started to dominate the university. In the fall of 2010, as Evan began his junior year, I arrived on campus as a freshman. Coming from the East Coast, I knew that Stanford and Silicon Valley were closely linked and that tech companies were a big deal out there on the West Coast. I just didn’t realize how big. One of the guys in my freshman dorm made a new social networking app that he was trying to get this tech blog called TechCrunch to write about. My friends and I went to see The Social Network in Mountain View, right next to Google’s campus. You never expect one of your friends to start a billion-dollar company. But watching The Social Network, we all had a strong feeling: This could happen again. Here.

  It wasn’t just the nerds starting companies, either. Even fraternity guys and sorority girls had ideas for apps and companies. Perhaps especially them—the Greek system naturally drew out the more social students, who mixed that outgoing nature with the brains and work ethic that got them into Stanford into a potent recipe for creating popular consumer companies. Instagram cofounder Kevin Systrom was a member of Sigma Nu a couple of years before Evan, Reggie, and Bobby arrived on campus. Other high-profile companies like Chubbies, a men’s shorts and lifestyle brand, and Robinhood, a stock-trading app that would eventually be valued north of $1 billion, would be founded from the fraternities’ members in the years to come. The founder of Hewlett-Packard was a brother in Kappa Sig at Stanford as well, but that was many years ago.

  Most of the ideas people pitched sounded idiotic. And there was a definite fatigue that set in among students who were sick of hearing so many classmates pitching so many apps. But there was nevertheless an energy on campus. People were creating and building.

  CHAPTER TWO

  FUTURE FRESHMAN

  OCTOBER 2010

  STANFORD, CA

  When we last saw him, Stuart was a freshman getting thrown from a shopping cart while trying to join the Kappa Sig fraternity. Six months later, having achieved his goal, he was a sophomore living in the fraternity house. It was a typical Wednesday night, and Stuart was anxious. He was supposed to meet up with some classmates to work on a group project. Instead, he was sitting with two dozen of his fellow pledges in the End, one of the three rooms where new members lived, like a more laid-back version of the Mid. As with the Mid, it was quite cleverly named because it sat at the east end of the house, overlooking a large parking lot.

  The main room, a large, fat rectangle with a vaulted ceiling, was furnished with couches and low tables; the sophomores had set up a big projector and would watch movies on the room’s l
argest wall. They’d managed to jam one desk into a corner for when someone had to work but didn’t want to make the trek to the library. Other guys in the house would come through the room to smoke weed and cigarettes off the balcony. Two smaller rooms, which connected to the main room on either side, were filled with two bunk beds and dressers in one room and three bunk beds and dressers in the other. Sometimes the guy sleeping in the top bunk would drunkenly roll off and crash onto the floor, causing the other inhabitants to run in and check on him.

  The pledges were awaiting the arrival of Evan Spiegel. Stuart wasn’t the only one who was anxious about what fate awaited them. Evan had spearheaded a number of rollouts that fall—these involved active members rolling pledges out of bed in the middle of the night to perform various drinking stunts. Evan’s rollouts were feared because they featured complicated tasks and lots of booze. The practice had become an increasingly vital part of the house shenanigans, as the fraternity had been placed on a year-long probation, banning them from throwing any of Evan’s precious parties.

  But Evan wasn’t focused on rollouts tonight. As he entered the End, he excitedly addressed the group, telling them about a new startup he was working on.

  “It’s going to be this platform where kids in high school can go on and learn about all these different universities,” he told them, his face lighting up with enthusiasm. “They can put in their credentials, then the system will give suggestions on what schools they should apply to.”

  The iPhone had only reached its third generation, the iPhone 3GS, and mobile app development was not ubiquitous, so students and entrepreneurs at the time would still think to build a website first and foremost. Evan explained that he and Bobby Murphy, one of the brothers who had graduated the previous spring, had been working on the website throughout the summer. The problem, Evan said, was that the way high school students searched for college information was tedious, slow, and inefficient. They had to look at every school’s website individually. He and Bobby had designed a site that would solve that problem. Future Freshman would aggregate information on most of the country’s colleges and universities; the site offered ancillary material like videos of college counselors talking about life on campus. Parents and guidance counselors would pay a monthly subscription fee to access the database. It was a potential goldmine.