A Product Market Fit Show | Startup Podcast for Founders
00:14:44 · Pablo Srugo
It turns out that none of the marketing mechanics that Evan tried, including, like I said, the hand-to-hand combat of going to malls, but every single thing that he did didn't work. The only thing that worked was ultimately finding a weak spot, which he stumbled upon, but it doesn't really matter. That's what ended up happening and then word of mouth. Once that happened, things just took off. The numbers are staggering. In August, he has 127 users. By December of that year, he has 2000 users, January 20,000 users, and by April of 2012 he's up to 100,000 daily active users. This is the power of finding a market that is very underserved and having an experience that's natively viral, not in the way that Zoom or Hotmail is viral where you send it to somebody who doesn't have it and they're exposed to it. This is where the power of network effects really play out because of course once you're exposed to it, you're so likely to tell your best friends about it because you want them to have it so you can talk to them on iPads or iPhones or Android phones and in a way that nobody else can see the images, and then they tell their friends and then they tell their friends. This is what drove growth. The other thing that's important to remember is even texting back then, texting images was quite slow. It took a lot of time to upload and it was very expensive. It was another piece that also made Snapchat so compelling. Evan on the OMR podcast actually mentioned specifically how disappearing photos wasn't actually the reason why it took off.
00:16:07 · Evan Spiegel, Pablo Srugo
[00:16:07] S2: Is that people weren't really using it to send photos that disappeared; they didn't care that much about that part. What they were really focused on was talking with pictures because it became a much more expressive way to show your friends what you were doing or how you feel. Text messaging can be very boring. It's hard to understand sometimes but when you send a photo, you can show your emotion in a split second. I think people really enjoyed talking visually. We renamed the app Snapchat and that was in 2011, and I guess the rest is history. [00:16:35] S1: Clearly at this point Snapchat is starting to have some success. From talking to Jeremy, what the data showed was that it was all organic. It was really the right product at the right time and it went viral through word of mouth. Jeremy explains how you could clearly see that in the data.
00:16:51 · Jeremy Liew
[00:16:51] S0: There is a good amount of luck involved in social software. It's not just about the right product and the right features; it's about resonate with the right users at the right time to create a culture that wants to propagate itself. When that happens, when the lightning strikes, it really can propagate. That was one of the things that we saw is we looked at the growth over time and those are only a few months of data, but what you could see is that it was highly geographic. It was growing in LA. There was a little segment in Georgia that had just started to grow, but it was growing at the same rate. What that told you is that this was genuine word of mouth. People were telling people nearby who were then using it with each other. You continue to see that over time, not just in those first few months, but somehow it picked up a little following in Sweden and it started to grow in Scandinavia. It hadn't picked up in the UK yet. Eventually Saudi Arabia became a really big local growth opportunity. Because all this growth was happening through genuine word of mouth, these geographic hotspots were evidence that this is real, not manufactured virality, not invitation driven virality, virality driven by people like sharing it with the people that were right by them, right close by, going to school with them, their friends.
00:18:14 · Pablo Srugo
[00:18:14] S1: With all the success, I mean people send sending more and more images and Evan is not making any revenue, and so literally the server costs started to go up to a point where can't afford it. I mean, he put in $10,000 into this business, Bobby had put in a little bit of money and his dad was funding it as well, but his dad was like, "I'm not going to keep money into a business that earns no revenue so people can just send pictures to each other." Evan starts to think about fundraising. He talks to Sequoia, he goes after Chris Sacca, he meets many different VCs, all of them pass. Some of them won't even meet with him. As this is happening though, Barry Eggers, who is a partner at Lightspeed, sees his daughter using Snapchat and he tells Jeremy Liew about it and that's how Jeremy Liew and Lightspeed ended up getting involved. I asked Jeremy to share the entire story with us.
00:19:04 · Jeremy Liew, Pablo Srugo
[00:19:04] S0: My partner Barry Eggers, the reason that we got into Snapchat or we heard about Snapchat is because Barry is an engaged dad. He noticed that his daughter who was in high school at the time had changed the way that she was taking selfies. Historically she took selfies trying to look pretty. He noticed that she had started taking selfies, making weird faces or with only half of her face in the frame, just very different from the look pretty with a pretty background. He asked her, "What's going on? Why are you making these weird faces when you take photos?" She said, "Oh dad, it's this new app called Snapchat. Everybody's using it at school. There's three apps that everybody has on their phone at school, Instagram, Angry Birds, because this was 2011, and Snapchat." At the time he was like, "Huh, interesting. Instagram is pretty big, Angry Birds is pretty big, but hadn't heard the Snapchat thing." He mentioned it to me and put it on my radar. That's how we first heard about the company. [00:20:05] S1: How did you go from there to actually meeting Evan?
00:20:07 · Jeremy Liew
[00:20:07] S0: The thing is Snap is social software and so you're really fully experience using the product unless you're using it with other people and ideally people who have been natively using it. To download the product without that context, at the time, it was primarily used by high school students and I didn't know any high school students. I downloaded it, I looked at it and I was like, "Eh, they really get it." I didn't really take a lot of action on it, but again, credit to Barry, he was pretty – he's like, "Hey, did you find out more about the Snapchat thing? I think it really could be pretty interesting. My daughter and all her friends, they're using it all the time. They're talking about it." I'm like, "Okay, I'll check it out." Obviously the first thing you do is you go to the website and the website at the time was just a single page with the logo and an info@snapchat.com email address. I emailed it and I never heard anything back. Later on he was like, "Hey Jeremy." He was like, "Oh yeah, I'm working on that. I'm going to find out more about it." it's like, well, okay, what do I do? Okay, let me look it up on LinkedIn. It turns out that Snapchat had one employee, CEO and founder and sophomore at Stanford, Evan Spiegel. I was like, "Great, okay." I messaged him through LinkedIn and I never heard anything back. I was like, "Okay, well you know, let me think about what I can do." I did a whois lookup. I saw that the URL was registered to info@topoyagroup. It's like, great. I emailed that and I never heard anything back. I was like, "Oh my gosh! This is becoming a challenge. How am I going to figure out how to get in touch with this guy?" I basically started spamming every variation, evan@snapchat.com, e_spiegel@toyopagroup.com, spiegel_evan@snap, every variation of just shooting emails out into the void and I never heard anything back. Barry was constantly like, "Hey, did you get in touch with that guy? I really think it could be interesting. I'm like, "I'm on it." Finally I was like, I don't know what to do, but I noticed that Evan was a student at Stanford and I'd graduated from Stanford from the business school. Back then you could DM anyone on Facebook if you were within the same network and so I DMed him and I got a message back in two minutes.