5 months in, Snapchat had only 127 users. Here's how Evan Spiegel found product market fit w/ Jeremy Liew (Partner at Lightspeed and Seed Investor in Snapchat)

00:02:20 · Pablo SrugoPlay from here

It's hard to remember what the world was like back in 2010, 2011. Just some facts to throw at you, I mean, today there's 1.5 billion iPhone users. That's how popular the iPhone is and obviously there's more Android users than that. There are billions and billions of mobile phone users in the world. The iPhone started in 2007. The App Store didn't launch till 2008. By 2011, which is when Snapchat gets created, there's only 150 million total iPhones that have been sold. The market is about 10% what it is today and this is really the age of mobile. If you look at the period from 2008 to 2012, that is when all of the $10 billion plus mobile first companies were created. Uber, Lyft, Postmates, Spotify, Venmo, WhatsApp, they all were created during that time but they were still in their infancy in 2011. Think about WhatsApp, which is probably the best comparable to Snapchat because it's another one of these messaging applications. WhatsApp at 10 million users in 2010, by 2011 it had 50 million users. To give you a comparable, in 2011 when WhatsApp had 50 million users, Blackberry, BBM, if you remember Blackberry Messenger, which was the hottest thing back then, had 60 million users. Blackberry Messenger in 2011 is more popular than WhatsApp. This is the world that Evan's living in. We're talking about people who had flip phones for most of their lives. Even at this point in 2011, only a third of teens have a smartphone and about two-thirds of college students have smartphones. Even in college where they're at, there's a third of their friends that don't have one. I mean, that's unimaginable today, but this is the world they were living in. It's in this context that this idea of a disappearing image comes to Reggie. This is a huge reason why things played out as you'll see the way that they did. There is this tailwind. There is this undercurrent, this tailwind that to be clear, they did not identify. This I think is very -- and I go on these tangents because I think at the end of the day, we're not just telling stories for the sake of it. We're telling stories so we can understand what it takes to get product market fit and hopefully build a massive company. You can see very clearly neither Evan nor Reggie nor the other co-founder, the technical co-founder that comes in later, Bobby, they don't have a thesis about mobile.

00:04:26 · Pablo SrugoPlay from here

They haven't really thought through strategically what's happening now that the App Store is out, now that these mobile apps are coming out. They end up landing on it and they end up benefiting from this tailwind. This is super common. I'm not taking anything away from Evan. I'm saying that actually this is the way things typically work out. Now Evan, he's a designer. He's a product designer type. He actually can't code. The first thing he does, going back to when Reggie pops into his room and says, hey, disappearing images, as he starts thinking through this idea and really buys into it, he gets his friend Bobby Murphy who's a couple years older, is 23 years old, he just graduated. At this point to be clear, Evan and Reggie they're sophomores. They're in their second year. Evan's friend, Bobby, he has just graduated. He has a full-time job now. The reason that he goes to Bobby is because actually Evan and Bobby had previously worked together on another startup. This is another thing that I find so interesting about this story is that in a way, Evan did everything wrong. It worked out tremendously well, but we talk about, you don't want to start a startup with "would it be cool if." You also don't want to start a startup by forcing it. The last thing you want as a founder is to be like, "I just want to start a startup. I just want to be a founder" and you're just chasing ideas. I did that at Gymtrack and I can tell you it's so likely that you come up with an idea that sounds good on paper but doesn't work in reality. The best way to actually uncover great ideas is to just get interested in spaces and solve problems almost for the sake of it and you end up uncovering more interesting problems most of the time that way. This was not the case. Evan and and Bobby had worked together on previous startup ideas before because they so desperately wanted to be founders and one of these was Future Freshmen. The idea with Future Freshmen was informed by what Evan and Bobby had lived through. I mean, they were students at the time. They were 20 years old. They've only really been students their whole life. They haven't had a job yet. Their whole idea of the world is framed by that. One of the problems that they encounter was, hey look, when you're applying to university, when you're looking for universities to apply to, it's a mess.

00:06:31 · Pablo SrugoPlay from here

You have to click through all these websites. You have to go through all these places to just understand what the programs are where you might be a fit, where you might not be a fit. They built out Future Freshmen , which was this website, this portal, let's say, that you could go into. You could figure out which college you should go to, which university you should go to. They wanted to sell it actually to schools. They wanted to sell it to advisors at high schools and these sort of things. They worked on it for over a year. They actually funny enough got their pledges from their fraternity to work on it obviously for free. I mean, Evan talks about this a lot. It just didn't work for a variety of reasons, but I think one of the main reasons is they really weren't building for themselves. They really didn't understand the problems at all that well. They were informed by their own opinions, but the reality is he even said he had his younger sister and Bobby's younger brother, neither of them used it because the honest truth is most high school students they just don't care that much. Even if they use the platform, they're certainly not going to pay for it. Now you got to go sell to schools. These guys have no idea how to sell to schools. They don't actually understand and neither do they do the research to figure out what the problem looks like for the counselors, for the advisors that are in the high schools. This project totally doesn't work, but they obviously enjoyed working together. This is the first person that Evan goes to to work on Snapchat. Bobby ends up playing a critical role because turns out that Reggie, even though he had like the first idea, I mean the idea of disappearing pictures, he beyond that really didn't play much of a role. I mean, initially there were three co-founders, right, Reggie, Evan and , and Bobby. But even in the very early days, Evan and Bobby start really doing kind of all the work. Reggie ends up kind of like leaving the company or getting kicked out of the company depending on who you ask. I mean, there's a whole lawsuit about this that we won't get into here. But the bottom line is that the key people at the beginning were really Bobby and Evan.

00:08:29 · Pablo SrugoPlay from here

I mean, Evan spent most of his time on vision and design and Bobby was a key person on product and tech and ultimately built a team that really scaled and pioneered a lot of the computer vision, the lenses, the AR stuff that ended up making Snapchat what it is today. They get to working and their first idea is actually not to build an app but to build a website. Why is that? Today it seems so weird. Back then in 2011, that's where you went first. The age of mobile was really just coming up. If you recall, this is about the time where actually Facebook was making the transition from web to mobile. This is where they start off. They build this web app thing. They call it Peekaboo, by the way. It wasn't called Snapchat back then. It was called Peekaboo. That was the first name. They work on it through summer 2011 while they're on summer break. They launch it and it just falls flat, totally flat. They get zero downloads on day one. They keep pushing and pushing. It's funny. Evan talks about he goes to the mall. He actually goes to the mall to convince people to join this platform. They do at some point end up launching a mobile app, but even still by August, September we're talking five months in, five, six months in after the original idea happens, they have only 127 users. It's certainly not flying off the shelves by any means. And this is a consumer app. I mean, you need tens of thousands, hundreds of thousands of users before this gets interesting at all. Evan with his tail between his legs so to speak, has to go back to school. He wanted to drop out. He wanted to be a founder but the thing just wasn't hitting. Now in the meantime, and to their credit, what they are doing is they're making it as simple to use as possible. This is something that I thought was a huge reason why it ultimately took off, which is when you opened up the app, it was instantly on camera. If you remember back in these days, 2010, 2011, when you opened up the camera on your actual iPhone, you went to the camera app, it had this weird animation. It was the camera lens opening up. That added about a second. And they actually hacked the software to be able to get rid of that animation so that loading up Snapchat's camera was faster than loading up the iPhone camera. They're doing all these little design tweaks, product tweaks to make the product easier and easier to use.

00:10:36 · Pablo SrugoPlay from here

The reality is that for the average college student, there just isn't enough here. It's this cool idea and people knew Evan, so they tried it out, but they've got BBM, they've got WhatsApp, they've got texting. They've got all these other ways to communicate with their friends and of course they've got Instagram and they've got Facebook, so they've got all these other social media apps. There's just no hair on fire reason to start using Snapchat, which is why Snapchat ended up taking off with an entirely different set of users. It wasn't 20 year olds. They were effectively too old. It was actually high school students and it's pretty insane the way that this works out. It turns out that Evan's mom tells her niece, so this is Evan's cousin who's a high school student, about the app, and her niece in Orange County starts using it with her friends during school. Evan didn't know any of this. Actually he's looking at his dashboards and at some point in September, October-ish of 2011 starts to see these spikes between 8 AM and 3 PM and this is his cousin, it turns out, with her friends using it in high school. Then the big question, the obvious question is why did it take off there? We've talked about another concept before, which is find the weak spot. When you're putting out something new into market, you've got to find the angle, the spot where competition is extremely weak. Talk about David and Goliath. You are very much David versus the Goliaths. At that point, the Goliaths are BBM, they're WhatsApp, they're Instagram, they're Facebook for sure. They're much bigger than Snapchat was. In the places where those apps are already used, already popular, it's really hard to penetrate. What's going on? What's going on is that when Evan's cousin is in school, first of all, phones are not allowed. Like I said before, only a third of teens had smartphones. Most people don't have smartphones and phones of course are not allowed in class. iPads, though, those were allowed but the iPads are provided by the school and popular apps like Facebook are blocked out. WhatsApp, to be clear, you need a phone number associated. That doesn't work either. They actually have no good means to communicate with each other and that is where Snapchat fills a clear void. That's how it comes in because the hardest thing is to get you to download something and to just start using it.

00:12:43 · Pablo SrugoPlay from here

Once they get used to Snapchat, now we're in a totally different world because now what they start to realize is, wow, this app is so much better to communicate. These are people that have not been used to texting. They haven't been used to any other world because this world didn't exist yet. All of a sudden, they have this really rich communication platform through images plus text. Remember that was another feature they added in, which wasn't just the idea of disappearing pictures. It was a picture with some text that you could add. This is how these teens start talking to each other, and of course they take it outside of the class as well. There are a few other things that really matter too. Evan talks in the early days about how he has this thesis in Jeremy Liew. You'll hear about him talking about it later about how everything on Facebook, everything on Instagram is by default there forever. That doesn't really make sense. I mean most conversations are ephemeral. As soon as you have a conversation with someone in real life, it goes away. It's not recorded and it would be weird if it was recorded. He talks about that being an underlying reason why Snapchat took off. I think at the end of the day, if you think about a teen, they're not that forward looking. I think at the end of the day what Snapchat became is a really compelling way at first to talk during class, which is a thing that teens have been doing in classes forever. You write a little note on paper, you pass it on. That was never going to stop, and this was just a much better way of doing that. Of course, the fact that it disappeared also meant guess what? You can't get caught. The teacher can't actually grab the piece of paper and read in front of everybody by the time the teacher notices, the picture's gone. Now when these high school students go back home and they do have a phone they can use or an iPad, guess what? The parents also can't see what they're talking to their friends about. This is a no-brainer better way of communicating with your friends. Once you've gotten used to it and you've tried it out, there's just no reason to stop and there's no reason to go to anything else. There's all the reason to tell your friends about it. This is what starts to take it off.