How to Turn Down a Billion Dollars

by Billy Gallagher

  While Evan had dropped out of classes, he was still able to live on campus for the remainder of the academic quarter. I ran into him at a Cinco de Mayo party in the backyard of 680, one of the non-Greek row houses on campus where seniors lived. We had a number of mutual friends, and I had hung out with him several times before. He greeted me warmly, and I relayed what my editor had told me.

  “That would sink us,” Evan replied, imploring me not to write about Snapchat.

  I was taken aback, but I agreed not to cover the company until he was ready. Most people on campus were excited to be interviewed for the school newspaper, let alone for an outside publication. Facebook had just bought Instagram for $1 billion, and photo apps were all anyone was talking about. How could an app that just shares pictures be worth that much? Surely we were in a bubble, right? I thought Evan would jump at the opportunity to share his story and get his company mentioned in the larger discussion. But he was already worried that too much of a spotlight too early would mess with the small, weird, cool community that Snapchat was nurturing. Evan was perhaps being somewhat paranoid about how deleterious media coverage would be to Snapchat. But he’s always had a secretive side, often preferring to hustle on his side projects, from grand party schemes to Future Freshman to Snapchat, until he was ready for the world to see them.

  The next day, New York Times reporter Nick Bilton, unencumbered by a personal connection, published a short piece about Snapchat, writing, “All of this sexting, as the practice is known, creates an opening for technology that might make the photos less likely to end up in wide circulation. This is where a free and increasingly popular iPhone app called Snapchat comes in.” Bilton reported that Evan had declined an interview, saying he was too busy with schoolwork.

  After Bilton’s story went up, Evan realized the cat was out of the bag on Snapchat and media coverage was coming whether he liked it or not. He emailed me, “We’re receiving a lot of inbound requests after the NYT post yesterday. Lmk when you want to talk-I’d be happy to give you the story.” He’d had interview requests from much more seasoned reporters from the Times, The Wall Street Journal, and elsewhere, but he gave me the story. He knew me, and, more importantly, he knew I understood the product and wouldn’t jump to the conclusion that Snapchat was for sexting. As with every other aspect of his life, he couldn’t have cared less about pandering to the norms and the more established players in the industry. He also probably thought he had a better shot at controlling the message with me than with another reporter.

  We met up at the Stanford Daily’s building at the center of campus (I was running the paper’s news department at the time and liked to use the building for my interviews). In a glass-walled conference room, Evan laid out his vision for Snapchat and a new way of interacting with friends digitally.

  “It seems odd that 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.”

  Evan fired off theories on the internet and communicating with friends at a rapid pace, at times wildly gesturing as he explained why he was so excited about Snapchat and what lay ahead. We talked about Bilton’s article and the sexting narrative surrounding the company, which he dismissed in his typically brash way.

  “The minute you tell someone that images on your server disappear, everyone jumps to sexting,” Evan said, laughing and leaning his chair back against the wall. “I’m not convinced that the whole sexting thing is as big as the media makes it out to be. I just don’t know people who do that. It doesn’t seem that fun when you can have real sex.”

  Just as Snapchat rode a technological wave to early adoption, sexting, too, was taking advantage of the ubiquity of internet-connected smartphones.

  The term “sexting” was first used in a 2004 Globe and Mail article dubbed “Textual Gratification,” which covered text-based sexting. But as more and more people had cellphones with high-quality cameras and less restrictive data and text message plans, sexting took off.

  In June 2011, when Snapchat was still called Picaboo and barely had a working prototype let alone users, The New York Times published excerpts from interviews with groups of teenagers focused on sexting:

  Q. Is sexting ever O.K.?

  Kathy, 17, Queens: There’s a positive side to sexting. You can’t get pregnant from it, and you can’t transmit S.T.D.’s. It’s a kind of safe sex.

  Q. How often do they go viral, really?

  Nate, 16, Lower Merion: About three photos go viral each year and a third of the school sees them. The kids who receive them are in the alpha social group, and they send it to their friends. But everyone hears about them.

  Q. Did you know that sexting under 18 is illegal?

  Saif, 18, Brooklyn: There’s a law? I didn’t know that. How would you catch somebody when everyone does it?

  Social media scholar and Microsoft researcher danah boyd spoke at an industry conference in 2011, noting:

  So the mean girl behavior mixes with the slut shaming mixes with explicit image content. Put these [three] together and you’ve got a ticking time bomb. All of a sudden, prosecutors determined to “teach those kids a lesson” start prosecuting teenagers for creating, possessing, and distributing child pornography of themselves. The age-old practice of “slut shaming” takes on an entirely new meaning when photographs are used. Schools panic and just suspend everyone.

  Kids start committing suicide over the emotional costs of being shamed. Websites panic because they can’t tell the difference between a 17-year-old and an 18-year-old, let alone determine the intention behind the posting of the images. Attorneys general cherry pick which companies they want to pick on. And the news media takes the most egregious cases out there and hypes them as the latest teen craze. In short, sexting has become a disaster for pretty much everyone involved.

  A 2011 University of New Hampshire study that surveyed 1,560 people aged 10 to 17 found only 2.5 percent of respondents had sent, received, or created sexual pictures using a cellphone in the previous year. The researchers found that many of the 2.5 percent included photos in the study that would not even qualify as pornographic.

  Another 2011 study sampling 744 college students found 54 percent had sent sexually explicit photos or videos to a partner at least once, with a third of the sample saying they did this occasionally. A December 2013 McAfee survey of 1,500 people aged 18 to 54 found 49 percent had sent or received sexts, although their definition included both email and messaging. Of McAfee’s sample, 70 percent of 18-to 24-year-olds said they had received sexts before. Additionally, 77 percent of the sexters in McAfee’s group said they sent content to their partners, while 16 percent said they sent it to stranges.

  Of course, all of the information in these studies is self-reported and should be taken with a large grain of salt. The big picture is that a lot of people sext. And yes, they use Snapchat to sext. But they don’t exclusively sext via Snapchat, and they don’t exclusively use Snapchat for sexting.

  While smartphones have caused a surge in sexting, my generation is hardly the first to experiment with naked photographs.

  New York Magazine editor Christopher Bonanos wrote about the phenomenon in his book about Polaroid:

  We will never know exactly who first figured out that using a Polaroid camera meant whatever happened in front of the lens never needed to be seen by a lab technician. It is clear, though, that it happened early on. There are plenty of naughty first-generation Polaroid photos out there to confirm that instant photography’s success was at least in part built on adult fun. At the time, “camera club” sessions were a popular fad: afternoons with a hired nude model, allowing amateur shutterbugs a few hours to indulge their artsy-prurient sides. Bettie Page, the 1950s pinup, got her start in these places, and pornography historian Joseph Slade has noted even frontal nudity in her Polaroid photos from these sessions. The Kinsey Institute has many such Polaroid pictures on file, too. By the 1960
s, ads were appearing in certain magazines for a woman who would pose for nude Polaroid snapshots for a price.

  Did Polaroid itself know? Of course. Donald Dery, Polaroid’s longtime director of corporate communications, puts it this way: “We didn’t acknowledge it, but we always talked about ‘intimacy.’” Sam Yanes, who succeeded him in the job, offers a little more detail: “There was a subject-photographer relationship that didn’t exist with a regular camera … an intimacy, and we felt it was one of our main features. I never saw any research that said X percent of sales went for bedroom pictures, though.

  Reggie originally thought of the idea for Picaboo as a safer sexting app. Evan and Reggie positioned it as such that first summer. Reggie emailed Cosmopolitan explaining how the app “lets you and your boyfriend send photos for peeks and not keeps,” and Evan emailed a Stanford professor to ask him about his sexting research.

  Evan quickly realized it could be much more and worked hard to change the narrative early, focusing on communicating that Snapchat was about lighthearted, impermanent communication between friends rather than sexting between lovers.

  In my initial interview with Evan for TechCrunch, he pushed back against the sexting narrative, explaining that 80 percent of Snapchat photos were sent during the school day when students were bored in class, not late at night when they were home. He savvily introduced me to the mother of a college student, and in doing so he got me to accurately but positively portray the app in this light:

  Snapchat user Marilyn Feldman uses the app to keep in touch with her daughter, who attends college across the country.

  “It’s subtly different even from taking a picture on my iPhone and sending that,” Feldman said. “It’s more immediate and even more casual. Almost like, ‘thinking of you.’ Picture of a red rose in the neighborhood. I didn’t even send her a message, just a picture of the red rose, and she knew what that meant.”

  But it took a lot of time for the sexting narrative to die down. Snapchat had an image that it was only for sexting.

  Ironically, perhaps the most famous sext ever sent was by then-congressman Anthony Weiner, via Twitter. And yet Twitter has no association with sexting. But there is far less of a generational gap on Twitter, and reporters are among its core users. Of course, it didn’t help that Snapchat’s main promotional photos for years were the Turner sisters in bikinis on the beach; in some versions they seemed nearly naked, as imposed images of the app covered their bathing suits.

  In April 2013, Evan and Bobby appeared on The Colbert Report, where Stephen Colbert peppered them with jokes about sexting.

  “Is this a sexting app?” Colbert asked as the crowd cheered at the salacious mention.

  “You can always take a screenshot and you can always take a picture with another camera so it’s not a great way to send inappropriate photos,” Evan replied.

  “Ok … is there a better way to send inappropriate photos?” Colbert retorted. “’Cause I can’t think of one!”

  Since Snapchat started, there have been persistent scandals at high schools and colleges of X-rated Snapchats being saved (usually via a screenshot) and shared widely, fueling sexting concerns. These incidents have often had serious consequences with law enforcement and schools. One 2012 study found that teenagers were more worried about their parents finding out about them sexting than they were about legal consequences.

  Snapchat doesn’t officially allow children under thirteen to use the app, although the policy is merely enforced by a self-reported birthday. In 2015, Snapchat launched a Safety Center with information to help parents understand the app and keep their children safe.

  danah boyd believes parents must give their children more room to potentially get hurt online. “Rather than helping teens develop strategies for negotiating public life and the potential risks of interacting with others, fearful parents have focused on tracking, monitoring and blocking,” boyd argued in a 2014 Time article. “These tactics don’t help teens develop the skills they need to manage complex social situations, assess risks and get help when they’re in trouble. Banning cell phones won’t stop a teen who’s in love cope with the messy dynamics of sexting. ‘Protecting’ kids may feel like the right thing to do, but it undermines the learning that teens need to do as they come of age in a technology-soaked world.”

  Perhaps we should care less about sexting, at least for people over eighteen.

  “It’s time for the cultural norm that says nude photos are shameful or shocking to end,” tech writer Mat Honan wrote in Wired in 2015. “There are simply too many naked pictures of too many people.”

  Like many problems for a startup, growth seemed to be the primary cure for Snapchat’s sexting narrative. As the number of people who used Snapchat daily skyrocketed into the hundreds of millions, it became harder and harder to look at it as just a sexting app. And as Snapchat’s user base grew into older demographics, more people used the app themselves and understood its purpose.

  But that growth did not come overnight, and Evan and Bobby had to battle the sexting reputation for years.

  CHAPTER NINE

  BETRAYAL

  APRIL 2012

  STANFORD, CA

  A few weeks after signing the term sheet with Jeremy Liew and Lightspeed, Evan sat in a machine-shop class, half listening to the professor drone on. He refreshed the Wells Fargo app on his phone again and again, staring at the red and yellow colors as they loaded. Nothing. Nothing. And then there it was! Finally, the cash from Lightspeed appeared. As soon as the class ended, Evan walked up to his professor and told him he was dropping out of Stanford.

  While he had always wanted to follow in the footsteps of Jobs, Gates, and Zuckerberg as an entrepreneur, Evan didn’t really have to follow in their footsteps as a college dropout. He was three credits and a few weeks shy of graduation. Actions like this would eventually lead people to look at Evan as cocky and arrogant. To him though, this was simply a radical expression of his beliefs. Evan had never cared about grades in classes he didn’t enjoy or prestigious internships just because that’s what his peers were doing. He had Snapchat and venture funding—in his mind, what was the point of continuing to put any effort, no matter how small, into getting a degree?

  The spring was not as smooth a ride as Evan had hoped, though. In May, Evan opened his email and saw a new message from Reggie. Reggie started off praising Evan for his success with Snapchat thus far, but quickly brought up their falling out and his stake in the company:

  As I expressed to Bobby this past summer, I understood both then and currently that my role in the process was of a different nature, and was thus willing to accept a significantly less portion of equity than either of you. Unfortunately, these discussions lead [sic] to you changing the passwords to the accounts and servers, limiting any continued involvement on my part and cutting off communication.

  Reggie went on to note that he had hired lawyers who told him he currently owned one third of Snapchat’s intellectual property. Reggie threatened to contact Snapchat’s current and potential investors, noting that this could be “incredibly detrimental” to Snapchat. Reggie said he would forgo suing Evan, Bobby, and Snapchat if they were able to come to an agreement on his equity stake.

  Evan was furious. Now that things were finally taking off, finally working, Reggie comes back and wants a piece? Evan and Bobby promptly hired a major Silicon Valley law firm, Cooley LLP, to represent them. They fired back a strongly worded letter to Reggie, which read, in part:

  Though you have refused in the past to provide actual copies of the ‘897 Provisional Application to our client, a draft of the application reflects that you fraudulently claimed yourself as an inventor on the application. Having posed as one of three inventors of the ‘897 Provisional Application, you now claim to “currently own a third of SnapChat’s IP.” The claim is utterly groundless as a matter of law and fact.…

  The Company rejects your demand in its entirety because you contributed nothing to the Company’s
intellectual property, and you cannot claim any ownership interest in the Company.…

  Your last demand for “equity” came in August of 2011 … that demand was a transparent and desperate attempt to shake down Mr. Spiegel and Mr. Murphy for a share in a company to which you contributed nothing. Your demand of May 8, 2012 is no different, and it is devoid of merit.

  The application Reggie submitted was very broad and attempted to patent the entire idea for Snapchat rather than specific technical features or inventions. A successful patent would have bound Evan, Bobby, Snapchat’s intellectual property, and Reggie together. But the patent was never approved.

  As May turned to June, Evan was still living in his studio on campus, although all his energy was focused on Snapchat. Evan had more tank tops and beer koozies made with the Snapchat logo on them, and Bobby quit Revel Systems to work on Snapchat full time. Evan celebrated his twenty-second birthday at the posh Italian restaurant Il Fornaio in Palo Alto with a few close friends. His dad brought Snapchat-themed cupcakes. For the first time since freshman year, Reggie wasn’t part of the birthday dinner crew.

  Back in March, a venture capitalist at General Catalyst Partners named Niko Bonatsos had heard from mutual friends at Stanford that Evan had exciting traction with Snapchat. Bonatsos met up with Evan and listened as he described how he wanted to make communication between friends much faster and more natural, and how he wanted Snapchat to be the fastest camera app available. But by the time he met Bonatsos for the first time, Evan was already close to completing the deal with Jeremy Liew and Lightspeed. Bonatsos persisted, and he stayed close to Evan over the coming weeks. Spiegel showed Bonatsos Snapchat’s analytics: the majority of the users were women, and 20 percent of the users were opening the app more than fifty times a day. Bonatsos had never seen that level of engagement. And he figured if teenage girls were using the app in droves, the boys would soon follow.