And so, Emily White, Evan, and the rest of the team headed to Las Vegas for Electric Daisy Carnival (EDC), an electronic dance music festival, to oversee Snapchat’s first foray into content with Our Story.
Any one of the 140,000 at the Las Vegas Motor Speedway for EDC could add to Our Story. Snapchat set up a geographic “fence” around the festival grounds so that only people inside had the option to add to the story. Users would take Snapchats the way they normally would, and then choose whether to add the content to their individual story or to the communal Our Story.
Users who added the friend “EDC Live” could watch the event unfold via Snapchat. Unlike clicking through a photo album or searching a hashtag, all of the content was submitted by people physically at the event, and it was curated for users in a tight narrative by Snapchat employees. Over 100,000 people watched the first Our Story from the Electric Daisy Carnival. The format was unlike any other coverage of a live event, especially a music festival. All of the coverage came from first-person accounts on smartphones, so it had a very real, raw aesthetic; but the story was curated to show only the best videos, from the best angles, and often with backstage or other special access. This combination offered users the best of both worlds. Snapchat had once again caught lightning in a bottle.
Users would need to be told what they were watching, though. Snapchat didn’t use much text on the screen, so it wouldn’t just show a little text box denoting where a story was happening. No, this would be like a TV broadcast on your phone, complete with overlays giving you added context like location.
After snapping a photo or video, users could swipe right on their phones to add geofilters, small graphic stickers that display users’ locations. Geofilters could pop up for events, like Coachella, to show Our Story viewers what they were watching. But soon Snapchat released permanent ones. The initial geofilters started in neighborhoods in New York and Los Angeles, as well as unique spots like SoulCycle and Disneyland. The latter two weren’t paid advertisements, but they quickly let everyone see what geofilters could grow into as a business.
Over the next six months, Snapchat designers added geofilters for neighborhoods, cities, college campuses, coffee shops—there was even one at Facebook’s campus in Menlo Park: a Ghostface Chillah logo pointing and laughing. Snapchat then opened geofilters up to anyone who wanted to make one. Users submitted designs for their schools, neighborhoods, favorite hangouts, and Snapchat vetted them and added them to the appropriate location. The unique visual stickers stuck out much more than a simple text location on an Instagram photo, and let users brag to their friends about the exotic places they were traveling to—or bemoan the opposite. Geofilters built upon and expanded Snapchat Stories’s feeling of ambient awareness of where your friends were. Previously you would squint to recognize the skyline or some other detail grounding where your friend was. Now you could identify their location with an alluring headline.
As geofilters caught on, Snapchat’s Our Story picked up steam as well. The two built off one another’s momentum; users watched Our Story, became educated about geofilters, and used them more in their own snaps and stories. Snapchat then invested more resources in creating more Our Story programming. Our Story expanded to daily college campus and city stories, which you could only watch if you were at those locations, and global stories covering sports games, concerts, and other events. Snapchat renamed it to Live Stories, as all the content had been shot within the previous twenty-four hours, giving it an almost-live feeling. Snapchat figured out a way to take an age-old question—What is happening around me?—and reinvent the medium in a gripping, addictive way.
The college stories became a twenty-four-hour billboard on campus, showing everything funny, interesting, and dramatic happening on certain college campuses. Snapchat communicated with students through geofilters, encouraging them to post to the campus story and telling them when the stories would stop running as classes ended for holidays. Students would post each other stranded outside their dorms during a late-night fire drill or goofing off in the library while studying for midterm exams. Getting featured on the Live Story meant fifteen minutes—err, seconds—of campus fame.
And of course, college students used Live Stories plenty for flirting. At the University of Wisconsin, a twenty-two-year-old senior named Abby posted a video of herself in the library—complete with a “Memorial Library” geofilter—saying, “Guy wearing the Vikings jersey on the U-Dub Snap Story, I am seriously in love with you. Find me!” The guy in the Vikings jersey responded, and “Mystery Girl” and “Vikings Fan” started communicating through the campus-wide Snapchat story. Their classmates started posting videos all over campus cheering them on, hoping they would meet, and chiming in on the drama. Snapchat created a geofilter, “Help Vikings Fan Find Mystery Girl” to cover the campus phenomenon. Finally, happy ending, the pair met up at a campus bar, the Kollege Klub or, the “KK.”
City stories featured young college graduates and summer interns adjusting to life in the big city, typically in New York and Los Angeles. All the stories tried to follow a narrative arc. They might begin with someone grabbing coffee or running early in the morning, progressing through office hijinks, and ending with a sunset or evening drinks and shenanigans. Most stories were only a few minutes long, but they were packed with original content, as each individual Snapchat was ten seconds or shorter.
These daily stories were only available to other people in that same city, but Snapchat also published city stories about specific places like Reykjavik, Iceland, and Nairobi, Kenya. These one-off stories let anyone in the world watch and vicariously travel to that city for a day through Snapchat. They also displayed just how far and wide Snapchat had spread and let young people around the world peer into each other’s lives. Students could still Snapchat each other during free periods at Crossroads—but now they could also take a minute and see what a Wednesday looked like in Riyadh, Saudi Arabia.
To ring in the New Year at the start of 2015, Snapchat did a global Live Story that let users contribute from cities around the world like Dubai, New York, and St. Petersburg, Russia. As usual, anyone with Snapchat could watch the story. But the company also broadcast the story on video screens in Times Square, so revelers could watch it (and, presumably, download Snapchat) while waiting for the ball to drop.
Live Stories was an incredibly rich way of telling a story: the very best first-person, on-the-ground accounts, curated into an entertaining narrative. And users loved it—millions started regularly tuning in to watch. Most impressive about Live Stories is that Snapchat itself created it. Twitter users created the hashtag, and users on both YouTube and Twitter had a major impact on the platform’s aesthetics. But Snapchat and its content team created Live and the medium’s vibe.
Chloe Drimal, the Yale graduate who Evan hired after reading her column about Snapchat, was tasked with heading the Live Stories team. Drimal and Evan quickly became close colleagues and even friends, frequently walking around Venice together discussing the future of Live Stories, and the company more broadly. Evan rarely interacted with the content team as a whole, preferring to spend time with Drimal and Nick Bell and then letting them run their departments. Occasionally, Evan would share parts of his high-level vision with the entire department.
Drimal assembled a small team whose members had a deep background in film production and narrative storytelling, including stints in movie studios, book publishing houses, and liberal arts colleges’ English and film studies departments. Snapchat engineers built the content team a custom backend to manage submissions for Live Stories. Content analysts flagged interesting content first, then came back and rearranged the flagged photos and videos and edited them down to the ones they wanted to use in a Live Story.
Drimal encouraged content analysts to approach Live Stories like a piece of fiction, with a linear chronology and no jarring jumps—if the story needed to get across a college campus or city, Snapchat should show footage of a user walking ther
e or getting on the subway. Analysts typically aimed to add “chapters” of three to four new Snapchats every couple of hours to move the story along at a digestible pace. So if the story covered an awards show like the Emmys, it would start with celebrities getting dressed up and preparing for the big night, then walking the red carpet and mingling, then a few chapters covering the actual show, then A-listers celebrating at the afterparties. If users sent in a snap with no filters over it, the analysts could add a filter over it to give more context; some were simply to show the location, others were custom made for the concert or holiday, and still others were updated to show real-time information like sports scores and election results.
Analysts favored content that was “Snapchatty.” Posts that utilized Snapchat’s features, like drawing, captions, and geofilters, were favored. Photos and videos that were descriptive and moved the story along or showed a unique aspect would more likely be accepted. Nothing offensive or negative would be allowed; nor would any posts with nudity, drug usage, or smoking (even cigarettes). These behaviors were against the young, healthy, and positive image Snapchat wanted to portray. Drinking would be allowed on stories if it was in a responsible way and the person didn’t look underage.
As Live Stories grew, the company broadcast increasingly diverse subject matter, from a Mecca story to covering gay pride parades and celebrations after the Supreme Court legalized gay marriage. The sheer quantity of content, and the department, grew too as Snapchat users ate up all the Live Stories that Snapchat could produce. The early hires working under Chloe put in long work weeks, but she quickly needed to bring on a bigger team to keep up with demand.
The team made processes more regimented and started planning out event coverage further in advance. The team was broken down into subgroups depending on the type of events they would cover: sports, life and culture, and entertainment. Designers were assigned to the content team to build specific geofilters and creative assets for Live Stories. Once a month, the team would sit down and plot out the upcoming content calendar: the who, what, when, where, why, and how of covering these stories, from the Oscars to the NBA Finals.
Like an international news channel, Snapchat had to have content up 24/7, and they covered stories all over the globe. This meant that the content team in Venice had to work some strange hours. Employees would come in early on weekends to work on a story and find a group midway through coffees and Snapchats, having started their shift at 2 AM.
Chloe and her early team set the tone for the department, working long hours and exuding passion about the stories but goofing around and still enjoying themselves. Because Snapchat had a series of buildings throughout Venice rather than one contiguous campus, the content team was a ten-minute walk down the Venice boardwalk from the main Snapchat offices—including the cafeteria with amazing food. There was an odd melting pot of cultures happening on the boardwalk and in the alleyways of Venice, as Snapchat security guards, homeless people, software engineers, surfers and locals smoking weed, content analysts, and tourists taking pictures walked among each other.
The content team’s buildings were technically zoned as live-work lofts, so Snapchat put a bed in the corner of each building to comply with the codes. The buildings were filled with content analysts typing away at rows of desks covered with Apple desktop monitors. But if anyone asked, there was a bed in the corner, a closet full of clothes, and some pictures on the wall so it looked like someone’s home as well. Some of the neighbors weren’t too pleased with the thinly veiled operation, and the LA Department of Building and Safety inspected Snapchat’s offices after receiving multiple complaints.
New hires started off working on the Live college campus stories, then moved up to the local team, curating city stories. If they did well on local, they would become content analyst leads and would be in charge of covering big stories like the Grammys or the Super Bowl. Chloe recruited students from nearby colleges like UCLA to offer their perspective on college campus stories, and remote workers overseas helped Snapchat translate Live Stories.
As Snapchat became more and more of a household name, content team members started going to events like the Video Music Awards and Grammys to record content for Live Stories. In addition to user-submitted snaps, analysts back in Venice would look at what Snapchat team members were submitting from the red carpet, backstage, and afterparties.
Snapchat had plenty of eyeballs. But the one thing the company still hadn’t figured out yet was how to make money.
CHAPTER TWENTY-TWO
“WE NEED TO MAKE MONEY”
OCTOBER 2014
VENICE, CA
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 resources on product development, building out Stories, Live, and geofilters.
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 toward 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 Lynton, 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 mini scenes and emotions) to share with friends.
In August 2014, Mitch Lasky sent Michael Lynton a note quoting a hedge fund manager about Asian messaging companies as the two Snapchat board members debated possible monetization strategies for Snapchat:
It’s using “online” (in Asia primarily mobile) to access goods and services “offline”—good example in US 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 taxis, you name it. My partner Matt1 calls it “the mobile phone as the remote control for life.”
It’s an order of magnitude bigger opportunity than advertising and part of the reason I [Mitch Lasky] was so excited about Snapchat’s payment experiments.2 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 US. In China, people do everything inside one app, WeChat, so operating systems like iOS and Android have much less power. If Snapchat could become a dominant online-to-offline player, it could have much of the platform power that Apple and Google enjoy.
As attractive as this online-to-offline strategy looked in theory, Evan and Bobby weren’t convinced that Snapchat users (primarily in North America and Europe) would behave that similarly to Asian messaging companies’ users. Part of the reason Snapchat was able to succeed in the first place is that Western users explicitly don’t want to use one app for everything. As they shelved the online-to-offline possibility, Evan and Bobby turned their eyes toward advertising on Snapchat.
Evan and Bobby thought of Snapchat as two businesses: communication and entertainment. Messages and Stories played off each other and drove user engagement, with messaging pulling users in via push notifications and stories providing engaging content that users sought out in moments of boredom. Evan and Bobby decided to monetize the
two pillars of the app differently.
Communication comprised all messages between friends—photo, video, text, calling, and video chat. For now, they would test the waters with monetizing communication by letting users pay ninety-nine cents to replay a Snapchat message from a friend. Snapchat Stories and Live Stories made up entertainment and sat in a feed similar to Facebook’s and Twitter’s—albeit one in which everything disappeared in twenty-four hours—which seemed much more suited for advertising. Evan tasked Emily White and Mike Randall with leading Snapchat’s charge into advertising. They had to educate advertisers about Snapchat and entice them to invest time, money, and effort into the platform, all without disrupting the user experience on the app.
Despite the wild changes in media formats over the past century, the amount of money spent on advertising has generally remained constant. Although the past hundred years have seen consumers move from the radio to TV to the internet to smartphone apps, the advertising industry has consistently made up about 1.3 percent of US GDP. In the advertising business, the only way to make money is to steal someone else’s share of the pie.
In the first quarter of 2016, a Morgan Stanley analyst estimated that for every new dollar spent on online advertising, 85 cents would go to either Google or Facebook. To compete with those tech giants, Snapchat would have to get into targeted direct marketing, which relied on pay-for-performance ads like cost-per-install ads for apps or cost-per-click ads. But Evan found this kind of targeted advertising “creepy,” and besides, Snapchat didn’t have nearly enough data on its users and their actions to compete with Facebook and Google. While Facebook and Google built their empires by stealing advertising share from print media, Snapchat would build its fortune by stealing from television. If Snapchat could successfully woo TV advertisers, the company would not have to compete with Facebook and Google for ad dollars.
How to Turn Down a Billion Dollars Page 17