NO.1 / SNAP The social media company has pulled off a great comeback—and is ushering in the future of computing.
I WAS TOLD EVAN SPIEGEL WAS REALLY SICK. THE 29-YEAR-OLD CEO OF SNAP, SNAPCHAT’S PARENT COMPANY, WAS BATTLING A COLD OF MYTHICAL PROPORTIONS. HIS VOICE, I WAS TOLD, WOULD BARELY REGISTER ABOVE A WHISPER. ¶ WE’D BE MEETING ON THE TOP FLOOR OF THE MAIN BUILDING OF SNAP’S SANTA MONICA, CALIFORNIA, HEADQUARTERS, THE ENTIRETY OF WHICH IS ACTUALLY SPIEGEL’S OFFICE—A QUIET, ALMOST CATHEDRALLIKE SPACE WITH WOOD-PANELED WALLS, VAULTED CEILINGS, AND LIBERAL AMOUNTS OF NATURAL LIGHT THAT STANDS IN CONTRAST WITH THE LOW-PARTITION-CUBICLE STYLING OF THE TWO FLOORS BELOW. This description will almost
certainly be triggering for those who long ago concluded that they know who Spiegel is: the cocky L.A. rich kid turned imperial CEO— who famously turned down a $3 billion buyout offer from Facebook CEO Mark Zuckerberg in 2013 only to see Facebook co-opt his innovations—perched in his private aerie.
But the man who greets me on a sunny Thursday morning in late December is nothing like this caricature. Nor does he appear to be infirm. Throughout our conversation, his voice is strong, he’s smiling and quick to laugh, and his hair? Not the slightest bit of bed head. He’s grateful, thoughtful, self-critical, and, perhaps most of all, joyful.
Spiegel’s public image—like Snap’s—has been defined in many ways by his decision to spurn Zuckerberg. I ask if he can imagine what would have happened to Snapchat if he had sold it to Facebook?
“I mean . . . people come up and thank me. Like, random people. ‘Hey, thanks for not selling to Facebook,’ ” Spiegel says. “That’s bizarre, right? That’s super bizarre. But I think the world has changed a lot in the last seven or eight years.” The steady drumbeat of Facebook privacy scandals has tipped off more people to Snap’s prescience.
Snap’s ephemeral messaging and one-to-one communication protects user privacy. The company controls what content is published for public consumption, and long ago set up a team of fact checkers to ensure that material shared by users is true. Its augmented reality features lower users’ inhibitions, letting them be themselves and just have fun. Snap, in its core design and function, solved many of the problems we now associate with social media.
But being right all along is not why Snap merits the top spot in this year’s list of the World’s Most Innovative Companies. Spiegel has also pulled off a remarkable comeback from 2018, when Snap itself was said to be ailing. Snapchat lost 5 million daily users over the course of that year. Between its March 2017 IPO and the final weeks of 2018, 17 executives departed. Facebook’s unabashed adoption of Snap’s features—executives have acknowledged the similarity between Instagram Stories and Snapchat Stories, for example, but stated that Stories is a format that it had built upon and not proprietary technology—was taking a toll. An app redesign flopped. Heading into Christmas, Snap’s stock dipped as low as $4.82, 84% off its onetime high of $29.44. Forbes argued, “Why Snapchat’s Trainwreck Stock Will Never Have a Facebook Rebound,” while business pundit Scott Galloway declared the company “roadkill” and predicted that Snap would get acquired before 2020, probably by Amazon.
Unbeknownst to most observers, though, Spiegel had been aware of the issues plaguing the company and had put critical fixes in motion. He worked on his leadership skills and altered Snap’s executive team and management structure to make it more effective at executing on innovations. Snap recoded
its Android app so it could run better on the 85% of phones in the world that aren’t the iphone, and simplified its tools for ad buying, helping it boost revenue year over year by 65% and add 31 million daily users to the platform in 2019. As investors caught on, Snap’s stock price rose almost 250% last year. Although the company is still losing money, Snapchat is poised for international growth. “I’m now rooting for Snap,” Galloway wrote in January after admitting he’d been wrong. “Snap is on the verge of writing its own ‘Cinderella story,’ ” wrote Moffettnathanson analyst Michael Nathanson last summer.
Snap is now ushering in the next wave of computing. While tech giants hope to make augmented reality mainstream within a decade, Snap has already made the software commonplace. On average, more than 75% of Snapchat’s 218 million daily users play with its AR “lenses” every day. That’s more than 163 million people putting silly digital effects like biker beards and puppy ears on their faces. Last year, the company expanded its AR purview even further, turning its attention to augmenting the world around users rather than just their faces, with lenses that can transform buildings into giant pizzas and products into shoppable pages.
Snap has also constructed a formidable premium content business on its Discover platform, which functions like a mini, mobile-optimized Netflix, with five-minutelong shows that users can subscribe to and binge on. There are now more than 450 channels of content worldwide, and in the fourth quarter of 2019, more than 50 shows had a monthly audience of over 10 million people. The first season of one of its teenoriented scripted shows, Endless Summer, produced by the company behind The Real
World and Keeping Up With the Kardashians, racked up 28 million viewers.
“I don’t have to feel trapped by the way everyone else [operates],” says Spiegel. He could build Snap to function in the way that worked best for what he wanted to accomplish. “We can try new things.”
Spiegel, I realize, isn’t sick. He’s Santa Monica sick. He’s drink-the-right-concoction-ofcold-pressed-juices sick. He’s pre-thirties sick.
So, you know, invincible.