Sexting, lawsuits, multi-billion dollar valuations – a warts-and-all primer on the planet's hottest social app.
What is Snapchat? It's the social app that's currently seeing more than 350m photos shared every day. The startup with no revenues that's received nearly $94m of funding so far, and is reportedly valued at $3.5bn.
It's the service that may be pulling millions of teenagers away from Facebook, but is also giving parents headaches over sexting and cyberbullying. It's making VC firms giddy with excitement, but is being sued by one of its own co-founders.
Snapchat is one of the hottest mobile apps in the world, but also one of the most controversial. Here's a 10-point primer on its past, present and future.
1. Snapchat wasn't its founders' first product
Snapchat's co-founders Evan Spiegel and Bobby Murphy started working together at Stanford University, initially on a website for students called Future Freshman, among other projects. "We would experiment and fail. We must have attempted nearly 34 projects," Spiegel told the Palisadian Post in August.
The one that clicked was an iPhone app called Picaboo, which launched in late summer 2011, after a friend grumbled about regretting sending a photo from his smartphone. Picaboo aimed to solve that problem with self-destructing snaps, Mission Impossible style.
When sending a photo to a contact, the sender could decide how many seconds it would be viewable for before self-deleting. Even then, people were drawing conclusions about what Picaboo would be used for: "Now we're not suggesting you use it for sending NSFW (not safe for work) photos," suggested tech blog Shiny Shiny in September 2011.
"In fact we don't want to tarnish Picaboo, it could be a completely innocent and cute way to send photos to your friends and family. BUT if you just have to get your kit off and take pictures, this is probably the safest way to do it."
Picaboo, subsequently rebranded as Snapchat, expanded to Android, and added video, as well as the ability to scribble messages on photos before sending them. By 2012, it was ready to become a craze.
"One of the greatest benefits of the service, especially in the early days, was that it was 10 times faster than an MMS (multimedia messaging service) message. So a lot of people just liked it because the interface was so simple. It sent the photos so quickly," Spiegel told Associated Press this month.
"It was a lot faster than opening up a text message, going and taking a picture or choosing it from the gallery, uploading it – which took a really, really long time – and then sending it to your friend."
2. Snapchat has grown like the clappers
Throughout its history, Snapchat's founders have preferred not to provide regular updates on how many people are using the app, opting instead for the metric of how many photos are being shared a day. That figure grew from 20m in October 2012 to 60m in February 2013, before rocketing to 150m in April, 200m in June, and 350m in September.
Actual users? The most quoted figure has been 5m daily active users, but that's from the spring of 2013 so it's quite likely higher now. In October, the Pew research centre claimed that 9% of American mobile phone owners were using Snapchat, which would suggest 26m users in the US alone. Among 18 to 29-year-olds, the percentage rose to 26%.
In August, analytics firm Onavo claimed that Snapchat was being used by 20.8% of iPhones in the US, making it the eighth most popular app on Apple's smartphone in that country, creeping up on Twitter's 27% share. But, globally, another relevant stat is the fact that since September, Snapchat has been matching Facebook for the number of photos shared a day – 350m.
3. Investors love it as much as teenagers do
Snapchat hasn't made any money yet: it doesn't sell ads, charge people to download and/or use its app, or sell extras as in-app purchases. But money has been flowing into the company from another source: venture capital firms.
Snapchat raised $485k of seed funding from VC firm Lightspeed Venture Partners in May 2012, after one of its partners discovered that the three most popular apps among his daughter's high-school class were Angry Birds, Instagram and Snapchat. "That’s interesting company. Of those, the one we’d never heard of was Snapchat," Lightspeed's Jeremy Liewtold TechCrunch in May 2013.
That was followed by a $13.5m round of Series A funding in February 2013 led by another prestigious VC firm, Benchmark Capital, with its partner Mitch Lasky telling the New York Times that "I started hearing Snapchat in the same context as Twitter, Instagram and Facebook. That got me curious".
Just four months later, Snapchat raised an even bigger round, $80m,reportedly including $20m in a "secondary offering" that likely helped Spiegel and Murphy cash out some of their equity in the company. This round was led by another firm, Institutional Venture Partners, and by this point, Snapchat's valuation was $800m.
In personal blog posts, some of these investors have rhapsodised about Snapchat. "At Benchmark we search for entrepreneurs who want to change the world, and Evan and Bobby certainly have that ambition,"wrote Lasky in February. "We believe that Snapchat can become one of the most important mobile companies in the world."
See also IVP's Dennis Phelps providing Ten Reasons Why IVP Invested in Snapchat: "The growth and engagement metrics are off the charts. Seldom have we seen a consumer application with this type of user momentum and excitement. Think Twitter ... think Instagram … think Pinterest … and Snapchat is just getting started," he wrote. "The type of connection that a Snapchat message brings to people is unique."
More giddy blog posts may lie ahead: All Things Digital claimed in October that Snapchat is in talks about yet another funding roundvaluing the company at a startling $3.6bn, with a lead investor potentially being "a strategic party from Asia" – later fingered as internet firm Tencent.
Not everyone is so excited by the spiralling valuation of a company that has yet to prove it can make money. Witness Roy Murdock's Am I Going Insane? Snapchat is Intrinsically Worthless blog post for an opposing point of view:
"$4bn for an easily replaceable service that is little more than Microsoft Paint duct taped to a disposable camera? A service that voluntarily throws away its own data in the golden age of data hoarding? A service devoid of the nature of competition that is the driving force behind every other profitable company in the world? A service that is intrinsically worthless?"
4. Snapchat is being sued by one of its co-founders
Well, Reggie Brown says he's a co-founder, although the outcome of his lawsuit against Snapchat will rest upon how important a role he's deemed to have played in the early days of the company.
Brown was at Stanford with Spiegel and Murphy, and in a lawsuit filed in February 2013, claimed to have come up with the idea for "a mobile device application allowing users to send pictures to others that then quickly disappear from the recipient's mobile device".
The lawsuit claimed that "this is a case of partners betraying a fellow partner", and alleged that Spiegel and Murphy had reneged on an agreement to split the ownership of Snapchat three ways:
"Despite the fact that Plaintiff devised the idea for Snapchat and fully performed all his obligations in the joint venture/partnership, the individual defendants then improperly excluded Plaintiff from all participation, profit and interest in the joint venture/partnership, just one month after the Application was publicly launched in July 2011."
A later filing expanded the lawsuit to Snapchat's investors, and cited Google chats and emails in an attempt to show that Brown was a co-founder, as well as a text message from Spiegel's father to Brown's mother referring to the three students working on their startup together.
We've been here before, most infamously with the Winklevoss brothers' lawsuit against Facebook claiming that CEO Mark Zuckerberg had stolen the idea from them. In 2011, they ended the lawsuit and settled for a mixture of cash and Facebook shares.
Whether Brown gets his day in court or reaches a settlement with Snapchat remains to be seen, but for now the lawsuit is a cloud hovering over the company.
5. Snapchat controversies include sexting, bullying and privacy
Snapchat has been associated with sexting right from its earliest days, despite the company's protests. That's partly down to journalists who didn't really understand Snapchat fastening onto the sauciest angle when covering it. But only partly.
There's been plenty of discussion about just how private Snapchat is, whether that's apps like Snapchat Hack, which circumvents Snapchat's protection and allows people to share images, or the discovery that on Android "deleted" photos are merely hidden on the device, and can be retrieved with the right forensic software.
Consequences? In December 2012, a Tumblr blog called Snapchat Sluts published photos of topless women, although it claimed the images were all submitted willingly. A Facebook page called Snapchat Leaked, which claimed to be posting saved Snapchat images without permission, was shut down in May, meanwhile.
Claims that the FBI is warning parents about paedophiles using Snapchat aren't backed up by any mention of the app on the agency's website, but separate worries about cyberbullies using the app are very real – for example this Mirror story about a girl bullied through the app, and her mother's concern about the way the messages often disappeared before her daugher could show them to her.
Snapchat isn't the only social networking service to be facing these kinds of concerns – Ask.fm is also in the spotlight for cyberbullying, for example. On one hand, Snapchat is trying to take a responsible approach, such as publishing a Guide for Parents in PDF form.
On the other hand, the company appears touchy about being pressed on such subjects. Witness the disclosure at the end of the Palisadian Post interview cited earlier: "Spiegel agreed to be interviewed by the Palisadian Post under the guideline that no controversial questions would be asked. He also would not let this reporter audiotape the interview".
6. Actually, sexting isn't Snapchat's appeal for teenagers
This is a key point: some people are sexting using Snapchat, and some of those people are teenagers. But the main appeal (and thus the importance) of Snapchat is about ephemeral messaging, and the desire to leave less digital tracks, with teenagers having watched the social over-sharing of the generation that came before them.
"When I asked teenagers about Snapchat late last summer, I heard again and again that they liked it because the ephemeral nature of the content allowed them to be themselves – to share a weird or ugly or banal picture that they would have been uncomfortable posting on other well-known social networks for fear of getting dissed," wrote Mitch Lasky in his blog post.
Fellow investor Bill Gurley of Benchmark Capital backed him up on that point during an appearance at TechCrunch's Disrupt conference in Berlin in October:
"For kids, the internet is increasingly becoming a place that you can’t share, that you can’t have fun, that you can’t socialize in the way you want to. I think that’s really the essence of Snapchat. It’s a platform where they can communicate and have fun without any anxiety about the permanence. You hear about kids not getting jobs because of what’s on their Facebook page."
Snapchat isn't the only beneficiary: messaging apps like WhatsApp are huge among teenagers for similar reasons. Facebook's stock price wobbled in October after its chief financial officer David Ebersman told analysts that "we did see a decrease in daily users specifically among younger teens" in its last quarter.
Ephemerality is the key to that, not sexting, and Snapchat has made an effort to hammer that point home, publishing an essay by researcher Nathan Jurgenson on its blog in July 2013 that spelled its philosophy out:
"What if we rethought the whole idea of the assumed permanence of social media? What if social media, in all its varieties, was differently oriented to time by promoting temporariness by design? What would the various social media sites look like if ephemerality was the default and permanence, at most, an option?" he wrote.
"It’s easy to underestimate the significance of injecting more ephemerality into social media. But to make social media more temporary fundamentally alters our relationships to online visibility, to data privacy, content ownership, the 'right to forget'. It alters the functioning of social stigma, shame, and identity itself."
Spiegel has given his own views too, in the Associated Press interview: "Somewhere along the way when we were building social media products we forgot the reason we like to communicate with our friends is because it's fun," he said.
"People started conceiving of their friends as networking tools, like 'friend me so you can be friends with someone else' or 'the more people you know, the more networked you are'. But we see real value in having a fun conversation with your friends."
7. Snapchat has fended off Facebook already
If teens are using Snapchat more and Facebook less, you'll understand why the social network might want to buy or kill it. And it's already tried to do both. The Wall Street Journal claimed in October that Facebook boss Mark Zuckerberg "tried to approach the startup to discuss an acquisition above $1bn" but was "rebuffed by Spiegel".
Kill it? That would be the Facebook Poke app, which launched in December 2012 as an unashamed clone of Snapchat: a way to send messages, photos and videos and decide how long friends could see them for. Spiegel was unimpressed at the time, releasing a statement – "Welcome, Facebook. Seriously." – that self-consciously mirrored Apple's famous welcome of IBM to the personal computer market in 1981.
Poke hasn't been a big success: on iPhone, for example, Snapchat is still the sixth most popular free app in the US app store, but Facebook Poke isn't even in the top 200. The competition may be switching to the Facebook Messenger app though, which has improved its photo-sharing features over time.
8. Snapchat is evolving ...
As an app, Snapchat isn't standing still. In fact, it's getting into longer narratives through a feature called Snapchat Stories, which launched in October as a "fun and ephemeral" way to "share your day with friends – or everyone".
How? By linking photos and videos together into "stories" where each snap lasts for 24 hours. "Your Story never ends and it’s always changing. The end of your Story today is the beginning of your Story tomorrow. And each Snap in your Story includes a list of everyone who views it," explained the company as it launched the feature across iOS and Android.
The company has also set its sights on even younger users, launching something called SnapKidz in June 2013: a way to use the Snapchat iOS app to create photos and videos, but not to share them with others.
Snapchat is also thinking about new devices, launching a Snapchat Micro app for Samsung's Galaxy Gear smart watch in September, capable of shooting pics and videos with the device's camera, then sharing them. "Our team is constantly looking at ways to reduce the time between our experience of a moment and our ability to share it," said Spiegel at the time.
9. ... including figuring out how to make money
Whatever you think of the sky-high valuations of Snapchat, its need to start proving it can make money from those 350m snaps shared every day is clear. According to Spiegel, the desire has been there from the start.
"We didn’t think we were ever going to raise venture capital so we were planning very early on to generate a revenue plan," he told TechCrunch in May 2012, although a few months later he was espousing a familiar startup line: "In the grand scheme of priorities, reaching scale is more important."
Two obvious ways of making money present themselves: in-app purchases and advertising. For much of 2013, Snapchat appeared to be veering towards the former.
"In-app transactions will come first. We think we can build really cool stuff people want to pay for. The app is now a part of everyone’s day-to-day lives. That means that they will – I at least would – pay for a more unique experience," he added in June 2013.
"Going forward there are lots of different revenue models. One we talk about is in-app transactions (selling extra content or features within the Snapchat app) because we don't have to build a sales team to make cool things that people want to pay for," Spiegel told Associated Press this month.
So-called "native" advertising – ads that look like other content on the service – may play a role too, just as it's starting to do on Instagram. Brands including Taco Bell are already using Snapchat to communicate with customers, without paying to do so.
Not everyone is convinced that this will work. Roy Murdock's blog post, again: "You’ve developed an application that people want, and if you try to change it through any type of monetisation scheme you’ll end up with an application that people don’t want," he wrote, addressing Snapchat's CEO.
"Basically, Snapchat is not going to resort to native advertising (see Facebook) until it has no other choice. Everyone hates it and Snapchat knows it will drive people away from the service and build resentment towards the brand ... The moment they start to annoy their users with subscriptions or obtrusive ads, users can easily switch to another service or simply stop using Snapchat."
10. The competition is gathering
Users switching to another service is the big threat hovering over Snapchat for the year to come, and it revolves around the sense that a buzzy social app is only ever one or two missteps away from a rapid user drain to its rivals.
There's WhatsApp and Kik on the messaging side, along with a(possibly) renascent BBM – not to mention Line, KakaoTalk and WeChat, which have big ambitions to expand beyond their home markets in Asia.
There's Facebook Messenger, the possibility of Twitter doing more with direct messaging, and a constant flood of new social apps jostling for the attention of teenagers in particular, from Frontback and Context through to Bieber-backed selfies-sharing app Shots of Me.
In 2014, Snapchat faces the challenge of keeping its cool factor with improved features, raising more money to cover its costs while it searches for stable revenue streams, and continue to deal with the inevitable controversies that come the way of any social startup with a heavily-teenage user base.
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