Snapchat is one of the most widely used social media platforms in the world.
The site has 360 million active monthly users, as of January 2020, with three billion “snaps” (photos and videos) generated every day.
Here’s a deep dive into the company’s history and why Snapchat, as a company at least, shows no sign of disappearing.
Snapchat was founded in 2011 by Evan Spiegel, Reggie Brown, and Bobby Murphy, all students at Stanford University.
Reportedly, Brown came up with the idea of a social media app that enabled users to post photos and videos that disappeared from the site after a few moments.
Brown reportedly approached Spiegel with the idea, and both agreed on the notion of a social media platform modeled on disappearing content was a good idea. The duo then approached Bobby Murphy to write the code used to build the app.
In July, 2011, the co-founders released “Picaboo”, the precursor to Snapchat. Right afterward, Spiegel and Murphy forced Brown out of the company, and relaunched the company as Snapchat in September, 2011.
Both Stanford University students were only in their junior year in college at the time. As for Brown, he settled with the two co-founders for $157 million in September, 2014. He was also officially credited as being a co-founder of Snapchat.
With a clean slate and an intriguing business model, Spiegel (now the company’s chief executive officer) and Murphy went to work building the fledgling company.
Making the Case
In the company’s first-ever blog post, Spiegel made his case for Snapchat, as a new way to share information that you wanted to see disappear.
And after hearing hilarious stories about emergency detagging of Facebook photos before job interviews and photoshopping blemishes out of candid shots before they hit the Internet (because your world would crumble if anyone found out you had a pimple on the 38th day of 9th grade), there had to be a better solution.
Snapchat isn’t about capturing the traditional Kodak moment. It’s about communicating with the full range of human emotion — not just what appears to be pretty or perfect. Like when I think I’m good at imitating the face of a star-nosed mole, or if I want to show my friend the girl I have a crush on (it would be awkward if that got around), and when I’m away at college and miss my Mom…er…my friends.
We’re building a photo app that doesn’t conform to unrealistic notions of beauty or perfection but rather creates a space to be funny, honest or whatever else you might feel like at the moment you take and share a Snap.
In a 2013 interview with The Telegraph, Spiegel honed in on the real reason Snapchat was such a hit with younger social media users – they didn’t want their social media history coming back to haunt them.
“Snapchat changed that perception of deleting something as bad,” he said. “Online, typically you delete something if it’s bad or if it’s really embarrassing."
“What Snapchat said was if we try to model conversations as they occur they’re largely ephemeral. We may try to write down and save the really special moments, but by and large, we just try to let everything go. We remember it but we don’t try to save it.”
Building the Perfect Beast
One year into its existence, Snapchat upped the ante – and the user count – by introducing video to the app, which had just started selling in the Google Play store. The videos were only 10 seconds long, but the rollout was successful enough to push so-called “snaps” to 50 million per day.
In 2013, Snapchat followed up with two new features – “Stories” and “Chat”. The story feature enabled Snapchat users to post a series of snaps that would remain active and viewable for 24 hours.
Its Chat function helped move Snapchat higher up on the social media pyramid. Introduced in May, 2014, Chat allowed users to talk to one another in the chat window via a live video chat. Snapchat also introduced “Our Story,” another story function that enabled Snapchat users all over the world to post photos and videos from ballgames, concerts, political rallies and other public events.
Later that year, Snapchat introduced Geofilters, which allowed site users to customize their content and post their location at the time of the post.
2014 was a busy year, as in December Snapchat rolled out Snapcash, a money transaction feature which enables site consumers to send and receive cash from other users, and have it deposited straightaway into their bank account. Also in December, 2014, Snapchat extended its reach into the financial realm with Community Geofilters. Now, Snapchat consumers were able to generate their own Geofilters or simply buy branded filters for their own use.
By 2015, Snapchat was reaching 75 million users on a monthly basis. Advertisements were now pervasive on the site, giving the company a huge source of revenue (by 2018, 99% of Snap, Inc’s total revenue came from advertising, according to the company’s internal financials.) Video continued to be one of the company’s most widely-used tools by consumers, with six billion videos daily, only three years after video was introduced on the site.
Soon, the company would officially create a parent company, called Snap, Inc. and began preparing for a $25 billion initial public offering, which would kick off in 2017.
Snapchat has its share of growth headaches, as well.
In 2013, Snapchat was hacked by an anonymous group, revealing the personal information of 4.6 million users. The company apologized for the hack and repaired the breach and hasn’t had a major security incident in the ensuing seven years.
The following year, Snapchat settled with the U.S. Federal Trade Commission, which had accused the company of exaggerating the process it used to protect user privacy, noting that it couldn’t “guarantee” that user messages “will be deleted in a specific timeframe. Snapchat wasn’t officially charged by the FTC but the company will be monitored over the next 20 years.
Snapchat founder Spiegel found himself in hot water after a 2015 lawsuit from company staffer Anthony Pompliano, who cited comments made by Spiegel that the company was only interested in expanding into “rich” countries and stay away from poorer countries like India.
Snapchat's stock shares fell by 1% in the aftermath of the lawsuit, but the company suffered no lasting damage, with the company saying that the notion of Snapchat limiting itself to higher income countries as “ridiculous.”
Snapchat Stock Price at a Glance
Snapchat’s (SNAP) - Get Snap Inc. Class A Report share price stands at $14 per share as of the end of February, with a consensus one-year target estimate of $20 per share. The company’s market cap is $20 billion.
Analysts expect Snapchat to soon reach its “break-even” point in profits, most likely by 2022. A group of 34 technology analysts estimates the company will earn a profit of $48 million in 2022, after years of losses.
With a strong management team, relatively low debt, and a passionate (and youthful) user base, Snapchat is in a great position for growth going forward.
That’s an impressive scenario for a company that has yet to reach its 10-year mark in business.