Antonio Garcia-Martinez is a former Facebook product manager and author of “Chaos Monkey: Obscene Fortune and Random Failure in Silicon Valley.”
Two major milestone achievements exist for any successful Internet company: Your name becomes a verb (go ahead and Google that), and some prominent journalist deigns to set your story down in a book.
Snap (the company formerly known as Snapchat) can now lay claim to both. Former TechCrunch writer Billy Gallagher’s sweeping book “How to Turn Down a Billion Dollars: The Snapchat Story” traces the saga of the multibillion-dollar company whose product nobody older than millennial age seemingly understands or uses (myself included).
As with most start-up histories, this one is largely a biography of the company’s founder, and Gallagher indulges in small bits of hero worship. Snap founder Evan Spiegel is introduced as a man blessed by divine providence who, with an upbringing and constitution uniquely suited to the zeitgeist, stared into the hearts and minds of American teenagers and concocted the billion-dollar product they never knew they needed.
Fortunately for the reader and Silicon Valley history, Gallagher knows this species of techie too well to construct too high a pedestal. By way of a side-by-side comparison, he briefly recounts the cautionary tale of Clinkle, a mobile payment app, and its founder, Lucas Duplan. Like Spiegel, another wunderkind Stanford grad from about the same era, Duplan raised tens of millions of dollars for the venture, which promptly went up in flames because of mismanagement, a toxic company culture and more than a little fraudulent salesmanship. Same Stanford golden boy, very different result.
Nor does the book skimp on the sordid details of Snapchat’s founding, including the company’s movie-perfect co-founder Reggie Brown. An English major without the glib drive of Spiegel or the technical chops of Snapchat’s other founder, Bobby Murphy, Brown’s big claim to Snapchat history is that, well, he came up with the idea. In a pot haze one day, he concocts the notion of a texting app to be used for drunken party selfies and sexts (an association that would dog the company for years) whose sent photos would automatically be deleted. Dropping his joint, he runs out to tell his frat brother Spiegel, with whom he’d collaborated on an earlier, short-lived start-up idea. Spiegel, always the hustler in this story, soon drums up a technical co-founder, and the trio moves to the Spiegel family home, in the upscale Pacific Palisades neighborhood of Los Angeles, to work on Picaboo, as the app was then called.
And the rest is history. Well, not really, because this is a story about a start-up.
What followed was the slow-then-fast descent into intra-company hostility that every start-up founder will recognize. Spiegel was the design and ideas guy, Murphy the techie who made that vision a reality, and Brown . . . well, what was there for Brown to do? Turns out, not much, other than the bureaucratic scut work the company’s two driving forces were unwilling to handle.
One evening, while everyone was tipsy after a celebratory dinner marking a product release, a heated argument broke out over that perennial founder casus belli: Who’s pulling their weight, and how much equity are they getting paid for it? Brown, Spiegel angrily claimed, just wasn’t holding up his end.
The trio reconciled the next day, and Brown (somewhat ill-advisedly) left the Spiegel family home turned office to visit his own family. Another disagreement broke out via email, and Spiegel and Murphy changed the passwords on all the company’s systems, locking Brown out forever.
Eighteen months later, when Snapchat was valued at $1 billion, this new darling of Silicon Valley had an embarrassing lawsuit on its hands brought by the jilted Brown. Relying on deposition transcripts, Gallagher shows Spiegel and Murphy trying and failing to prevaricate their way out of the sticky situation until they are cajoled into admitting that Brown played a role in Snapchat’s founding. As with Zuckerberg and the Winklevoss twins at Facebook (the parallels between the two companies pile up like beer cans at a frat house), Snapchat settled to expunge the lawsuit from the otherwise golden media cycle surrounding the company. Brown made off with something around $160 million in cash and a public avowal from the company about his early-stage involvement, and then promptly disappeared into tech obscurity.
These stories about the birthing pains of what became Snapchat are where the book shines. Gallagher is clearly in his element describing the entrepreneurial ferment of a place like Stanford (which he attended), the early bickering and fecklessness of young start-up newbies trying to create a company, and how so many bad decisions (and a few very good ones) play out in the haphazard market for smartphone apps.
One of the most interesting subthreads running through the Snapchat story is Facebook. I might be biased: I was an early member of Facebook’s advertising team, helped build the first versions of its ads-targeting tools and wrote a memoir titled “Chaos Monkeys” about Facebook’s rush to monetize.
From my experience as his employee, Zuckerberg is that flavor of alpha male who contemplates the landscape of tech companies and founders and (mostly) fears no one. Everyone can either be co-opted with his mountain of cash, undermined technically by his corps of engineers, or outhustled by his army of salespeople and dealmakers. Cocksure, driven by demons, incapable of being bought out, and armed with both the vision of a new world and the resources to realize it, Zuckerberg needed only to fear those who were just like him.
Which is exactly the sort of person Spiegel ended up being.
Gallagher recounts in detail how Zuckerberg contacted Spiegel in Novmeber 2012 to chat about their mutual fortunes. Snapchat’s infrastructure was starting to buckle under massive user growth, and Zuckerberg had just acquired Instagram for $1 billion. In Zuckerberg’s mind, the scent of potential acquisitions perfumed the air.
Here the story reveals the dark, mafia boss side, never too far beneath the surface, of tech tycoons like Zuckerberg. The Facebook CEO pitched Spiegel on a potential acquisition, with assurances of Snapchat’s future independence. When Spiegel demurred, Zuckerberg pulled out his phone to demo an app Facebook was about to launch. Titled Poke (after the early Facebook feature), it was a complete and shameless copy of Snapchat. Zuckerberg was making the “offer you can’t refuse,” and the implication was clear: Either sell to me, or be crushed by me.
As Zuckerberg had himself famously responded to a billion-dollar offer from Yahoo in Facebook’s early days, Spiegel issued a blunt and cocky “no,” and the meeting was over. Thus far, Snapchat has not only survived but triumphed, and Facebook’s shameless attempts at copying (including another clone called Slingshot) have all miserably failed.
Gallagher closes his breathless account with chapters describing a maturing Snapchat’s attempts to make money. These are less absorbing, perhaps not surprising given the topic. Even a former advertising guy like me found himself skimming some of the detailed intrigues around this tweak to the Snapchat product or that resulting advertising deal.
That said, unlike many Silicon Valley books, “How to Turn Down a Billion Dollars” is much more than mere human drama and tabloid gossip with some tech packaging on it. The book is packed with personal detail and fly-on-the-wall (or, in many cases, digital) quotes from meetings, texts and emails, sweeping the reader along in what seems like almost an omniscient narration of the action. Having been through the roller-coaster start-up ride myself, I can say that to properly experience it you must live it, but Gallagher takes you as close as you can get without coding a mobile app and raising venture funding yourself.
Anyone — from the curious observer who clamors for a ringside seat to the start-up circus to the coder or MBA student hoping to take the plunge — would be well served by plowing through Gallagher’s surprisingly candid book. “How to Turn Down a Billion Dollars” will probably remain the long-lasting, definitive history of the early years of a company whose unique feature is how briefly its media and messages last.
By Billy Gallagher
287 pp. $26.99