How to Turn Down a Billion Dollars

by Billy Gallagher

  Snapchat board member and Sony Entertainment CEO Michael Lynton introduced Nick Bell and Josh Stone to other executives at Sony, who promptly signed on to be one of the first advertisers on the platform. Lynton also introduced them to players in the music industry, but they ran into more trouble there.

  Vevo, a music video service formed from a joint venture between Sony Music Entertainment and Universal Music Group, dropped out of Snapchat Discover talks when they couldn’t agree upon a revenue share. In a note to Nick Bell, Vevo CEO Rio Caraeff said Snapchat’s proposed revenue share would be “by far the worst economic deal we have.”

  In late October, BuzzFeed dropped out of Discover after it couldn’t agree with Snapchat on how much creative control Snapchat would have over BuzzFeed’s content. But the Discover train kept rolling down the tracks, and in December 2014 publishers started pushing out content on a daily basis despite the fact that Discover hadn’t even been formally announced to the public. The publishers produced daily editions exclusively for Snapchat employees to test in the month leading up to the launch. Evan was very involved, watching Discover and giving publishers individual feedback.

  It was one of the most complex projects Snapchat had ever undertaken. Engineers had to build products for users and publishers. Nick Bell’s media team had to negotiate dozens of deals with potential partners, manage who was let on the platform, deal with companies dropping out, and ensure content was high quality. Emily White, Mike Randall, and the sales team had to convince advertisers to pony up big bucks for a new, unproven product. A new original content team had to come on board and figure out what style and format would work best for a completely new platform. It had been delayed for months, but finally, in 2015, it was ready. On January 27, 2015, Discover launched, with editions from CNN, Comedy Central, Cosmopolitan, Daily Mail, ESPN, Food Network, National Geographic, People, Vice, Yahoo News, and Warner Music Group.

  Discover felt like a relic of the days before the nonstop news cycle. With static editions and a limited number of channels, it felt like watching TV or using an early 1990s internet portal like Yahoo. Users did not immediately go crazy for Discover, but the user base was so significant that even a small percentage meant publishers were seeing millions of views per day. Publishers could reach a young demographic that was highly engaged, and the content was inexpensive to produce, as the spots were very short.

  For Comedy Central, Snapchat quickly became its second most-watched platform, trailing only TV and easily surpassing YouTube, the Comedy Central website, and other social platforms. Comedy Central used its Discover channel to test out comics and shows that they wouldn’t normally debut on TV. The network could make a six-episode Snapchat series for a few thousand dollars to showcase a comedian or new talent who couldn’t command a budget commitment of millions of dollars to greenlight a new TV show. Comedy Central launched Quicky with Nicky on its Discover channel to test out and promote Not Safe with Nicky Glazer before the TV show premiered. Michelle Wolf starred in one of Comedy Central’s original Snapchat shows and went on to a recurring role on The Daily Show.

  MTV brought back its 2000s reality TV program Cribs, which featured the mansions of celebrities before going off the air in 2011. Its new season was shot vertically specifically for Snapchat Discover. Content producers quickly built out entire teams just for their Snapchat channel. They trained camera operators and producers to think and film vertically so segments could be optimized for Discover.

  Unlike Facebook or Twitter, all the channels in Discover stand on equal ground, so whether you are a very established brand like CNN or ESPN or an upstart like Vice, you had an equal shot with viewers. Every young media company on the planet, from Pop Sugar to Refinery29 to Tastemade, started aggressively pitching Snapchat for a spot on Discover. The company that had once been ridiculed by the media as a mere sexting app was now the newest, most important media platform that everyone was dying to be a part of.

  While Discover is fascinating, it’s also interesting to consider what Snapchat chose not to build. In creating Discover, Snapchat built a mini internet within its walls. The app now had messaging, a social network feed, and a broadcast feed of professional publishers’ content. It also had user identity with people’s phone numbers, usernames, and friend graphs, and it even had a payments platform in Snapcash (though adoption of Snapcash was slow to nonexistent). These were the building blocks for an app platform, if Snapchat wanted it.

  Snapchat could have created a robust API (short for Application Programming Interface, a fancy Silicon Valley term for a clearly defined method for software to interact) and let developers build whatever applications they dreamed up on top of Snapchat. Facebook’s identity is woven throughout the internet with its login API—this is the little blue Facebook button that lets you log in to a bunch of other apps using your Facebook information. Apple and Google make boatloads of cash per year on the 30 percent tax they charge paid apps in their app stores. Developers would think of myriad apps on top of Snapchat that the company never even thought of, and the best ones would win out, making Snapchat a better experience for users, causing them to spend even more time in the app, making Snapchat more money … and thus, the virtuous cycle spins.

  But Evan didn’t want this. He didn’t want a FarmVille built on top of Snapchat. He wanted to control 100 percent of the experience for Snapchat users, end to end. Open development (letting developers build on top of your platform) versus closed (controlling the entire experience for your users) has been a software debate for decades. Like his idol Jobs with the Macintosh, Evan fell firmly on the closed end of the spectrum. So he built Snapchat closed, which opened the door for the Snapchat Stars.

  CHAPTER TWENTY-FIVE

  MAJOR

  JANUARY 2016

  VENICE, CA

  “They don’t want me hangin’ out with the CEO of Snapchat! That refused three hundred billion! The CEO! Mogul talk! Stay tuned,”

  DJ Khaled shouted into the camera during a January 2016 visit to Snapchat’s Venice headquarters. Incorrectly stating that Evan had turned down an offer for Snapchat worth more than the GDP of Denmark, Khaled turned the selfie video to show Evan standing next to him laughing. Khaled captioned the video “The CEO Evan Spiegel major !!!!!!!!!!!!!!” and added a custom geofilter at the bottom featuring Khaled holding a microphone above an adoring crowd with the caption “Fan Luv.”

  Depending on your age and Snapchat usage, you’re probably either thinking, “We finally mentioned DJ Khaled’s Snapchat!” or “What the hell did I just read?” Let’s step back for a minute.

  Khaled Khaled—that’s DJ Khaled’s real name—is a forty-year-old DJ and producer from Miami; he was a minor figure in the music world best known for his 2010 platinum record, All I Do Is Win. In 2015, on a break from touring, a friend told Khaled to give Snapchat a try. He started filming every minute of his day, talking to his lion sculpture, holding his plants and flowers and telling them he loved them, and, most of all, offering followers over-the-top advice about “winning.”

  His positive vibes had people repeating his catch phrases, from “Major Key” to “We the Best” to “Bless Up.” He would talk about how he stocked his bed and tour bus with lots and lots of pillows, which were very important to him, and about defying haters, who he simply called “they,” as he would explain how “they don’t want you to eat breakfast, so I’ma make sure I eat breakfast.” We’ve grown so used to seeing celebrities’ lives be manicured into inauthenticity via reality TV and social media that Khaled’s quirkiness, earnest inspirational messages, and comparatively low production quality gave his Snapchat a huge appeal.

  The turning point for Khaled came when he took his Jet Ski out on Biscayne Bay, just south of Miami. “The key is to make it,” he kept saying as he got lost trying to get home in the dark. He kept taking Snapchat videos with the flash on, telling his followers about how he couldn’t find his way home. He took a selfie video commenting, “The key is not to drive your Jet
Ski in the dark.” The story was hilarious, goofy, and weird; Khaled’s Snapchat prowess spread through word of mouth and he quickly amassed six million followers on Snapchat.

  Very few people understand Snapchat fully, and even fewer are good at it in a way that’s broadly popular. That made DJ Khaled a hot commodity. In 2016 alone, he signed a deal with Cîroc vodka for his Snapchat stories, agreed to host a weekly radio show on Apple Music’s Beats 1 station, and made an Apple Music commercial with Ray Liotta. Khaled released his ninth studio album, dubbed Major Key, in July 2016, and his tenth, Grateful, in June 2017; each album featured collaborations with the biggest names in music, from Jay-Z to Rihanna to Justin Bieber.

  It’s very hard to find people to follow on Snapchat. Facebook, Twitter, and Instagram are happy to serve up suggestions on which friends and friends of friends and even celebrities and parody accounts you should follow based on who you already follow. After all, the more people you follow and friend, the more potential content there is for you to see, and the more advertisements you can potentially see. But Evan is focused on keeping Snapchat as the antithesis of Facebook and Twitter. Aside from a few celebrities that you love so much you looked up their handle, Snapchat is designed to be a place to hang out with your real friends rather than your thousands of online friends or followers.

  Of course, celebrities still flocked to Snapchat once it became the new hot thing. Kylie Jenner boasts 10 million followers on the app. And the company slightly embraced celebrities, creating its own version of a verified “blue check mark” that other social media apps use, adding an emoji next to celebrities like Justin Bieber, whose Snapchat username is “rickthesizzler.” Naturally, DJ Khaled’s Snapchat-official emoji is the key. Still, though, search and discovery was difficult enough that celebrities didn’t dominate the platform; most celebs had taken until 2016 to join, maybe some earlier in 2015, long after another group had gained major followings: Snapchat celebrities. Unofficial Snapchat stars who entertained their fans by turning their Snapchat story into a daily TV show.

  Shaun McBride, a twenty-seven-year-old Mormon from Utah, used to travel all the time for his old job as a sales rep for a skateboard and snowboard apparel company. While traveling, he would text his six sisters—ranging in age from thirteen to twenty-two—photos of where he was and what he was up to. They told him to download Snapchat instead, so he tried it out and started sending them snaps.

  The drawing feature brought out McBride’s creative side, and his sisters showed their friends his funny doodles. Their friends started adding McBride, who snapped as “Shonduras,” and his following grew. McBride gained a large following so early that Snapchat hadn’t released Stories yet, so he had to spend forty-five minutes clicking every follower’s name to send them every Snapchat drawing he made.

  Around the same time Shonduras was sending out drawings to all his followers, an art teacher in Boston named Michael Platco was sick of hearing his students talk constantly about this weird app called Snapchat. So he downloaded it to see what the fuss was all about and found that the only person in his contacts list with a Snapchat account was his thirteen-year-old cousin. So he started sending her super highly detailed drawings of himself as Dr. Who and Harry Potter and other famous characters. Eventually, at the urging of his wife, he started putting his drawings on Tumblr, a popular blogging platform. A writer at BuzzFeed stumbled across the Tumblr and wrote about it, calling Platco “The Van Gogh of Snapchat” in January 2014. His Snapchat followers went from twelve total to ten thousand almost overnight.1

  Growth beyond media articles was hard to come by for both Platco and Shonduras. There was no retweet or share function, nor was there a suggested follow/friend section. So every additional follower came from word of mouth. Platco and Shonduras found each other during this nascent period and shared their best practices and collaborated. The duo had a boxing match via their combined Snapchat stories, where Platco would throw a haymaker on his MPlatco account and tell his followers to watch McBride’s Shonduras account to see if he landed the hit. They drove traffic back and forth to each other’s accounts, leading to a huge increase in followers for both of them. These “shoutouts” and collaborations are standard procedure for most Snapchat stars these days, but they were pioneered by the platform’s two original creative minds.

  To further grow his account, MPlatco bought ten thousand stickers with his Snapchat handle on them and offered to ship them for free to any of his followers who messaged him their address on Snapchat. The stickers featured his username, a Snapchat ghost, and the message, “If found, please Snap to MPlatco.” He would get Snapchats regularly from people who found a sticker on a light pole or in a bathroom. He would also gain thousands of new followers.

  Soon after their collaboration, Disney reached out to MPlatco and Shonduras and flew them down to Orlando to launch the Disney Snapchat account. Soon, both had quit their jobs to Snapchat full time. MPlatco now averages around 120,000 views per story. He’s worked with basically every film and television studio you can think of. He’s been paid as much as $70,000 for a day’s work. This level of compensation seems outrageous for Snapchat; the content only takes a few minutes to produce, and it disappears within twenty-four hours of being posted. There’s very little pre- or post-production work to be done and almost no editing. But it is precisely this unedited aesthetic that makes Snapchat ads feel less like advertisements and more like other Snapchat content. Stars like MPlatco and Shonduras can give brands a way to actually capture teenagers’ attention. And that is extremely valuable.

  Few people have built as large a following on Snapchat as Julieanna Goddard, a twenty-six-year-old entrepreneur who snaps under the handle YesJulz. The self-proclaimed “director of vibes,” YesJulz has hundreds of thousands of followers across Instagram, Twitter, and Facebook. Originally from Tampa, Florida, YesJulz was a nightclub promoter in Miami before she started her own agency in 2014 that combined her social media and nightclub prowess. She started using Snapchat Stories as soon as it came out, and her small but dedicated following took a huge leap in 2014 when Ryan Seacrest named her one of the seven best people to follow on Snapchat.

  YesJulz snaps seemingly every minute of her life with an energetic mix of honesty and passion, as she jets between cities and continents, meetings and parties. She is constantly turning the camera around and talking to her followers in selfie mode, whether she’s lying in bed after a big night, or alongside celebrities at the NBA All-Star Game or the Grammys. She has over 300,000 followers on Snapchat, and some analysts estimate she makes between $25,000 to $1 million per campaign, which range from shoutouts on her stories to using sponsored products to promoting events for clients like Puma, Vevo, and Red Bull.

  Not far away from YesJulz, in Miami, plastic surgeon Michael Salzhauer has made a name for himself as Dr. Miami on Snapchat and Instagram (he actually snaps under “therealdrmiami”). Dr. Miami started out on Instagram after a patient came in for a consultation and suggested he post photos of his work rather than of his food and family. After gaining a significant following by posting before-and-after photos of his plastic surgery work on Instagram, Dr. Miami’s fifteen-year-old daughter suggested he try Snapchat in February 2015. He had previously heard it was a sexting app and didn’t really understand how it worked, but one of his younger employees taught him how to use it.

  Dr. Miami was used to asking patients if they would be comfortable being photographed for Instagram—now he just had to ask about Snapchat. His first patient story earned eighteen hundred views; the next one jumped up to twenty-five hundred. By the end of the first month, thirty thousand people were tuning in to see Dr. Miami explain his procedures, prep patients, and even operate on them. By the summer of 2015, over one hundred thousand people were watching his stories, and fans were coming to his office asking to take pictures with him; many also brought him breast-and butt-themed cakes they had baked.

  In 2016, Dr. Miami’s stories averaged well over one million views
per day. He already had a pretty good business going, but he’s now booked out years in advance, even after raising prices 20 percent due to demand. He estimates his social media posts have driven about $7–8 million in business, and he could make even more if only he had more hours in a day.

  Dr. Miami believes this cult phenomenon is due to Snapchat’s intimacy. Unlike a reality show, anyone watching can directly message him. He now has two employees whose full-time jobs are to record his Snapchat stories and respond to Snapchat messages, which range from requests for consultations and surgery to medical questions to song requests for the music he plays in his office. He also believes his stories do a social good, as they let patients see into the operating room and observe how surgeons actually operate.

  While Dr. Miami is snapping his surgeries and making people feel more beautiful physically, aspiring actress Mackenzie Stith is snapping away to make people feel more comfortable internally. A Los Angeles–based Vine star, Stith posts snaps of her day mixed in with her recurring jokes and sketches to seven thousand plus followers. She also talks openly and frequently about her anxiety and panic attacks.

  Like Dr. Miami, Stith leaves her messages open on Snapchat and talks every day with followers—typically around twenty per day—about their experiences with anxiety and how they can get help. Stith believes people don’t talk about anxiety enough and felt early on like she was the only person on Earth who got panic attacks, so she finds her time on Snapchat deeply meaningful. She gets letters all the time from followers thanking her for helping them with their anxiety.

  One Snapchat star found the platform years after attempting stories on his own. In 2007, entrepreneur Justin Kan launched Justin.tv, a 24/7 show of his life, broadcast from a webcam on his head. He thought it was a cool, crazy idea that he could maybe turn into a business one day through advertising or sponsorships. He eventually shut down the show, but kept developing the video streaming platform, which eventually became Twitch, a place to watch people play video games; Kan and his partners sold Twitch to Amazon for $970 million in August 2014.