How to Turn Down a Billion Dollars

by Billy Gallagher

  Reggie struggled with the marketing, mocking up press releases for Cosmopolitan, announcing “First Timed-Picture Messaging Game Is Here: Picaboo.” In another draft, Reggie positioned Picaboo purely as a sexting tool, writing, “Picaboo lets you and your boyfriend send photos for peeks and not keeps!”

  In July, Picaboo was finally ready, and Evan began to move past the limited sexting use case, positioning Picaboo as a general picture-sharing app for friends. Apple reviewed Picaboo and approved it, allowing anyone to download the app from the App Store. Evan sent it to a Stanford group for students working on startups, telling them, “Our team just launched Picaboo on the AppStore and we’d love for all of you to check it out! Picaboo.me/dl the first epehemeral picture messaging app for iPhone:).”

  Evan, Reggie, and Bobby went out to dinner to celebrate the launch and Bobby’s birthday. After dinner, they tore into a cake Evan’s dad had brought, complete with Picaboo-yellow frosting and Ghostface Chillah resting on top. A few days later, Evan, Bobby, Reggie, and their friend Joey from freshman year in Donner went to see the popular DJ Avicii perform in Hollywood. Evan had made bright yellow Picaboo tank tops with the Ghostface Chillah logo on them, and they all wore them to the show.

  Evan used the analytics tool Flurry to track Picaboo’s users and their activity, gaining information on where they were located, how often they opened the app, and how long they used it for. He hoped they could hit at least 30 percent retention with Picaboo—that is, have roughly one-third of people on the app come back and use it again a week later. If they could clear this hurdle, it would show they were onto something useful with Picaboo—that they were solving a need for users and were close to product-market fit.

  The guys were getting some decent feedback on Picaboo from friends who were downloading it and testing it out, but Evan knew he needed to make it more immediately appealing to his target market. Reggie’s marketing and PR efforts weren’t gaining much traction, so Evan stepped in. Picaboo needed to quickly capture people’s attention when they landed on the App Store page, drawing them in to at least read about the app, and hopefully download it. A mutual friend put him in touch with Elizabeth Turner, an aspiring model who was living in Los Angeles for the summer. Turner and her sister Sarah agreed to model for Picaboo, which Evan described as a class project, for free.

  The two sisters drove over to Evan’s dad’s house and did a photo shoot there, on the Santa Monica Pier, and on the beach. Evan and Bobby snapped pictures of Elizabeth, in a white bikini, and Sarah, in a pink bikini, smiling, splashing water at each other, and jumping on each other’s backs in the ocean. Evan incorporated photos from the shoot to the screenshots of the Picaboo app for the App Store and website.

  After the photo shoot, Evan emailed Bro Bible, a popular website among college fraternity guys, hoping the editor would cover Picaboo. In an email titled “Ridiculous iPhone app,” Evan told the editor he had been reading Bro Bible for a while and that he was a “certified bro—our fraternity got kicked off last quarter.” He then pitched Picaboo, explaining succinctly that “it’s the fastest way to share photos that disappear.” He briefly explained how to use the app, then mentioned his new marketing secret weapon—the Turner sisters. “The girl who modeled in our iTunes screenshots is from Duke and very good-looking,” he wrote, including a link to download the app. The editor did not respond.

  At the end of July, Reggie flew home to South Carolina to spend time with family and work remotely on the project. Ever paranoid that someone would steal their brilliant idea, Evan had become convinced that they had to file a patent to protect Picaboo.

  “Hope you had a safe flight dude,” Evan texted Reggie. “People know we don’t have a patent so we gotta jump on that shit haha let me know if we can do anything to help.”

  Reggie replied, “In the car on the way to the beach working on the patent app, will call tonight and let you know progress.”

  “Awesome,” Evan responded. “We’ve been hustling Picaboo to the max. This thing is a rocketship. Our 7 day retention is 60% right now (target is 30%) and we’re growing.”1

  While Reggie worked on the patent in South Carolina, Evan and Bobby figured out a way to get rid of the animation that occurred whenever you opened the iPhone camera app. The friendly animation mimicked an old-school camera opening its gray lens. It only took a second or two, but this was too long for Evan. Eliminating this step made the camera for the Picaboo app load much more quickly than the standard iPhone camera app could. If the Picaboo camera loaded faster than the standard camera, some people might start using Picaboo as their default camera. Users might take all photos with Picaboo by default, then send them to friends and save (by taking a screenshot) the ones they wanted to save.

  Evan’s view of what Picaboo could be expanded beyond sexting as he realized how valuable and useful a general ephemeral app could be. Bro Bible chose not to cover Picaboo, but Evan persisted, emailing smaller outlets. He knew from Picaboo’s strong retention that they had an interesting product—something far more interesting than just a sexting tool. With better PR and awareness, Picaboo could get a vitally important core base of early users. Eventually, they could hit a tipping point where Picaboo started spreading organically via word of mouth.

  Evan reached out to a blogger he liked, Nicole James, who ran her own blog called That White Bitch. Evan started the pitch in a similar fashion to his Bro Bible attempt, explaining again how he, Reggie, and Bobby were “certified bros” whose frat had just been kicked off campus. This time, he adjusted his pitch slightly, calling Picaboo “a game for sending disappearing pictures with your friends.” Evan urged James to download Picaboo, claiming, “If you get one of your girlfriends on it we promise you’ll be obsessed.”

  “So it’s like, the best way to sext, basically. Cuz you can’t save the images?” James sent back.

  “Some people use it for that … but it’s also the best way to quickly share an ephemeral moment with a friend … it makes the images you send special. the most exclusive photos in the world haha,” Evan replied.

  “I like it,” she said.

  “Blog target #1 acquired,” Evan wrote to Bobby and Reggie, forwarding his email chain with James.

  A few days later, Nicole James posted on her blog:

  My internet friend Evan [Spiegel] created this app called Picaboo whereby you can send a photo to anyone else who has the app.… There is NO WAY for the person to save the photo. Imagine all the n00dz you’d get cuz people would feel so safe about it!!!!…

  For Evan’s sake, as he’s probs reading this, I should mention he is not my sexting partner—he sends me photos of like, the beach and tacos and other stuff people do in California, while I send him photos of Times Square and taxis.… You know, New York shit. Now we are photo friends! It’s neat.

  Back in South Carolina, Reggie sent Picaboo’s documentation in to the US Patent Office and excitedly texted Evan, “#patentpendingbro djsjsjshhajsndkdjs fuck yes fuck yes you and Bobby need to celebrate this shiz tonight.” Evan responded, “no chance we’re celebrating without you bro!”

  CHAPTER SIX

  THE FIGHT

  AUGUST 2011

  THE STARTUP HAU5

  Evan and Bobby, both in the Startup Hau5, and Reggie, still home in South Carolina, hopped on a conference call to update each other on their progress.

  Evan paced in his room, cellphone to his ear, while Bobby sat outside listening on his phone, as Reggie quickly started reading from the patent application:

  Timed, Non-Permanent Picture Messages for Smart Phone Devices

  We (Murphy, Brown, Spiegel) have invented a new method of transferring picture messages via smart phone device technology. Specifically, our software allows users to specify the amount of time for which they wish to send their picture messages, at the end of which the message will delete, leaving no trace of either the message or the image on the user’s smart-phone device.

  Recently in the media, we have seen the ple
thora of ways in which the permanence of normal picture messaging has become a tool by which recipients of picture messages …

  Evan was livid. Murphy … Brown … Spiegel? Hadn’t he told Reggie to list Bobby as the sole inventor? Bobby had written every damn line of code! He invented it! And why the fuck is Reggie ahead of me? In what world is Brown ahead of Spiegel? Reggie hadn’t built a single piece of the fucking thing!

  Evan cut Reggie off and started tearing into him. Reggie shouted back and the argument escalated. Three years of unaired grievances came spilling out over the phone line, as issues that had been brewing for years exploded to the surface. Evan demanded to know what Reggie had contributed that warranted Brown being placed ahead of Spiegel.

  Reggie started listing his contributions to Picaboo, from the original idea to the marketing materials to the damn logo.

  Evan interjected, furiously arguing that he had designed the logo, drawing it all in InDesign.

  “I directed your talents,” Reggie said.

  Evan hung up.

  Bobby stayed on and quietly listened to Reggie venting. Calming him down, Bobby asked Reggie how much equity he felt he deserved in Picaboo. Reggie acknowledged, as he had earlier in the summer, that he knew he didn’t bring as much to the table as Evan and Bobby, so maybe he didn’t deserve as much as them. Still, he felt he deserved 30 percent of the project. After all, it was his idea.

  “That’s not gonna happen,” Bobby replied.

  Later that night, Evan texted Reggie, “Hey man I honestly feel insulted so I wanted to make sure—I didn’t want to overreact. I definitely want to continue the conversation but it’s hard when I feel so attacked.”

  “I want to make sure you feel like you are given credit for the idea of disappearing messages because it sounds like that means a lot to you,” Evan continued. Reggie didn’t respond.

  Four days later, Evan emailed Reggie, his tone terse and cold:

  Hi Reggie,

  I still haven’t received a copy of the provisional patent application that was filed. Can you please send me everything that you submitted to the patent office?

  Thanks,

  Evan

  Evan’s note reads more like that of an exasperated supervisor than an email between close friends. Reggie fired back, seemingly frustrated: “Like I told you before Evan, I plan on sending you everything that I submitted to the patent office once THEY return it to me. This is a government office and most of the time these things take a few weeks to be processed.… I know it is difficult for you, but wait.”

  But Evan had no intention of waiting.

  Evan and Bobby changed the passwords and locked Reggie out.

  Picaboo was theirs.

  CHAPTER SEVEN

  SNAPCHAT

  SEPTEMBER 2011

  STANFORD, CA

  In 1839, an American photography pioneer named Robert Cornelius1 took a photograph of himself; because the process at the time—using an iodine-sensitized silvered plate and mercury vapor—was so slow, Cornelius was able to uncover the lens, sit in the shot for a couple minutes to get the photo, and then recover the lens. On the back of the photo, Cornelius scrawled “the first light Picture ever taken.” It is believed to be the first American photograph taken as a self-portrait.

  In 1914, thirteen-year-old Anastasia Nikolaevna, the grand duchess of Russia, attached a photograph of herself to a letter she sent to a friend. “I took this picture of myself looking at the mirror,” she wrote. “It was very hard as my hands were trembling.”

  In 1943, Edwin Land was on vacation with his family in New Mexico when his three-year-old daughter Jennifer asked why she couldn’t immediately see the picture he had just taken of her. Within an hour, Land had a crystal-clear image in his mind for a camera and film that could produce these instant photographs. Land’s Polaroid camera was released in 1948, and by the 1960s half the households in the United States had one. Land went on to run Polaroid for over forty years and held 535 patents.

  Over the following decades, people took pictures of themselves and their friends using high-end Leicas and disposable Kodaks. After returning from vacation, my family would drop off film rolls and disposable cameras and dutifully wait for the pictures to be developed. There was a bit of wonder in this, as we relived a vacation the day we went through all the photos. But there were inevitably a few accidental pictures with a finger over the lens.

  In the early 2000s, as we moved from AOL Instant Messenger (AIM) and dialup internet to broadband and Myspace, many young people started posting pictures of themselves online, whether on social media sites like Myspace and Facebook, founded in 2003 and 2004, respectively, or photo-specific sites like Flickr (started in 2004). Around the time we were all on Myspace, people began taking self-portraits, or “selfies,” by pointing digital cameras into mirrors.

  In 2007, I joined my high school classmates on Facebook as we dumped hundreds of photos into albums to share with friends on the site. Even when we first had flip phones, the cameras were so bad and memory was so low that people would go out to parties with both a flip phone and a separate digital camera. The next day they would connect their camera to their computer and upload a bunch of pictures to a Facebook album.

  In 2010, Instagram launched, riding the wave of the iPhone’s overwhelming success, as suddenly millions of people were walking around with an internet-connected camera phone in their pockets. The cameras still weren’t ideal—a major part of Instagram’s appeal was that the filters made low-quality photos look great—but they were good enough to ditch the separate digital camera in most cases. People shared photos as a way of sharing themselves—where they’ve been, who they are friends with, who they are.

  All of these social networks developed their own cultures and aesthetics as we used each one in different ways, determined by the early primary use-case and the stage in our lives during which we joined them.

  By the time Reggie had his epiphany, the tech world was embracing front-facing cameras. On October 14, 2011, Apple released the iPhone 4S, its second phone with a front-facing camera (making the iPhone 4, also with a front-facing camera, more affordable). Apple’s front-facing cameras were mostly for its video chat feature, FaceTime, but were starting to be used for photographs as well.

  Technology and art were converging as the iPhone created amateur photographers of everyone. Evan wanted to build Snapchat as an art and technology company, modeled after two of his heroes, Edwin Land and Steve Jobs. Jobs had also considered Land a personal hero and someone he modeled his career after.

  There is an obvious connection between the three visionaries. Land created the first truly portable, instant camera in Polaroid, enabling people to snap a photo then almost instantly view it. Jobs created the iPhone, which put a high-quality digital camera into hundreds of millions of people’s hands. Evan created Snapchat, which let people quickly trade pictures back and forth as a means of conversing, using Jobs’s iPhone. But the connection goes a level deeper, to the way the men think.

  In the 1980s, then-Apple CEO John Sculley and Steve Jobs went to see Dr. Land at his lab on the Charles River in Cambridge, Massachusetts. In a 2010 interview, Sculley recalled the visit:

  Dr. Land and Steve were both looking at the center of the table the whole time they were talking. Dr. Land was saying: “I could see what the Polaroid camera should be. It was just as real to me as if it was sitting in front of me before I had ever built one.”

  And Steve said: “Yeah, that’s exactly the way I saw the Macintosh.” He said if I asked someone who had only used a personal calculator what a Macintosh should be like they couldn’t have told me. There was no way to do consumer research on it so I had to go and create it and then show it to people and say now what do you think?

  Both of them had this ability to not invent products, but discover products. Both of them said these products have always existed—it’s just that no one has ever seen them before. We were the ones who discovered them.

  Lik
e Land and Jobs, Evan was more of a discoverer than an inventor. He explored the world around him in college and pulled Snapchat out of it. He also didn’t believe users could tell him what they wanted—he simply had to discover what was next and show it to them.

  * * *

  Now just a two-man operation, Picaboo still had the user growth problems it had as a three-man job. Although it had less than a hundred users, most of whom were Evan and Bobby’s friends, the people who did use the app were using it all day, every day. Bobby and Evan agreed to keep working on the app and get it into more people’s hands in the fall. As Evan moved back into Stanford housing to start his senior year, Bobby searched for coding jobs in San Francisco so he could afford rent.

  One day, they received a cease-and-desist letter from a photo-book company called Picaboo. They needed a new name; something fun and playful like Picaboo, but that better conveyed what the app did. Combining the idea of snapping photos to send to friends and chatting with them, they landed on Snapchat. On September 26, 2011, Evan and Bobby launched Snapchat, née Picaboo, in the App Store; they now celebrate September 26 as the official founding date of Snapchat.

  Bobby moved into a studio in Nob Hill in San Francisco and started coding for an iPad point-of-sale company called Revel Systems. He worked on backend engineering for the small startup, which only had a couple dozen employees at that point. Frequently, the head of engineering or the CEO would walk past Bobby and see him working on Snapchat code at his desk and have to chastise him to get back to Revel work.

  Reggie moved into a house on campus and picked out the creative writing and English courses he would take senior year, bummed about the falling out with Evan and frustrated with his lack of direction as his friends started receiving job offers and charting their courses for postgrad life. Reggie thought Picaboo was a cool idea but ultimately a dead-end student project.