A forensics firm recently reported that Snapchat photos don’t actually disappear. Questions about Snapchat’s ownership are not disappearing either. The presumed co-founders turned down Facebook’s $3 billion offer while tangled in legal depositions defending their claim on the company. Business Insider reported the shocking admission by Evan Spiegel, Snapchat’s 23-year-old CEO, that Reggie Brown came up with the idea for Snapchat. Reggie Brown doesn’t work at Snapchat and says he was cut out unfairly. In the meantime, the distraction is keeping Snapchat from rightfully selling the business.
We recently decried the solitary webmaster myth where inventors don’t get the credit they deserve while others cash in on the idea, assuming credit for themselves. It calls to mind the movie Social Network, where Zuckerberg offered a similar apologia: “You know, you really don’t need a forensics team to get to the bottom of this. If you guys were the inventors of Facebook, you’d have invented Facebook.” While Spiegal refutes that Brown deserves anything, Snapchat will likely be forced to compromise, partitioning their future fortunes before company audits are recognized as accurate.
Greed has returned to Silicone Valley
Like most twenty-something Stanford University graduates, money was never much of an issue for current Snapchat owners Evan Spiegal or Bobby Murphy. At this juncture in their business path, these guys are all about power. Snapchat is much bigger than their 30 employees. Having raised $60 million from investors last June, Snapchat was already an $800 million company with 20 million photos being shared per day through their service. According to The Wall Street Journal, Tencent and other investors approached Snapchat just a few months later with a $200 million infusion for Snapchat, which would value the company at roughly $4 billion today. Jennifer Van Grove (@All_Trends_IT) cleverly summarized the Facebook snub: “Snapchat, true to its form, discarded the deal just as it does the 350 million messages it handles every day.” Spiegal and Murphy’s unwillingness to share power or take a large payout demonstrates a growing shrewdness buttressed by idealism.
When will Snapchat sell out?
Snapchat perfectly embodies the Peter Pan generation, young adults who can afford to say no to money because of silver spoons wedged in their mouths. This generation is also characterized by a believe that their own genius is singularly responsible for their success. Many have never needed help outside family and social circles, and when they do get help they are careful to maintain control over their own destinies. They can afford to take gambles, and they have demonstrated their go-it-alone approach. Snapchat’s current owners believe they deserve a big league promotion on their own. They’re not selling out, but current legal problems and a shift in popularity of their platform could prove they missed an opportunity to share the wealth while partnering with an established firm willing to make them billionaires.
@joshuagans thinks Snapchat missed the boat:
Ultimately, while it is easy to pull apart these arguments, the actual real history of entrepreneurial firms tells us that most of them succeed by cooperating with established firms …. As a person responsible for much of that research (see here, here,here and here to name but a few), let me tell you that the struggle in getting acquired is getting a big payout from stronger incumbents; something Snapchat, like Groupon before them, seem to have overcome. To be sure, there are companies like Google and Dropbox (who each turned down a small amount), that end up doing quite well. But they are the exceptions rather than the rule. Snapchat may prove me wrong but I have to say, kids, you should have taken the money.