Starting as a private video-sharing app, by 2015 Snap had morphed into a trendsetter that’s forced nearly every social media company to follow, including its launch of disappearing Stories. Co-founder and CEO Evan Spiegel had recognized a shift in why young people were taking photos: they weren’t being stored as memories, but to share ideas and messages. In short they’d become a means to connect.
“They’re actually being used to talk,” Spiegel told Signal360’s John Battelle that year on the Signal Stage. “Now the dominant use case for photos and videos on the internet is communication…That’s really the fundamental change that’s driven our business and we’ve expanded from that core product over the last four years,”
Spiegel will join Battelle again this time to talk about the next big shifts he sees for Snap live on the Signal Stage on July 12 in Cincinnati. And you can register here for the event.
You can also hear more from this conversation and read the lightly edited transcript below.
TRANSCRIPT
John Battelle
So you get to be our final round the bend, heading home, speaker. As you’ve said earlier, you’re the only guy between them and a cocktail.
Let’s start actually, with a little poll, I did this with Pinterest. I’m curious, raise your hand if you are a Snapchat user.
That felt like about a third, maybe a little more. Right? So that still means there’s two thirds of the folks out here who are completely in the dark. So maybe you can enlighten us. How do you use Snapchat?
Evan Spiegel
Absolutely. Well, thank you for having me, will try to keep it short.
The basic concept behind Snapchat has to do with the way that photography has changed in the last couple of years, given the rise of smartphones. If we look at kind of photography, historically, it’s really been about saving memories. That’s really what the first generation of social media was about. You would go to your friend’s birthday party, and you would take a lot of photographs, you’d come home, you plug in your camera, you’d upload 100 photos, and all of your friends would talk about the photos online. This idea was that you could build an identity or a profile online, and that your identity was the result of the accumulation of the memories effectively that you had. So all of your experiences in one place online.
What we’ve seen with advent of the mobile phone is that now that you have a camera directly connected to the internet, photos can be used to talk, which is kind of a new thing, and really what I think engendered a lot of confusion in the in the beginning of the service, because parents would come to us and say, “Why is my child taking 40 ugly photos a day, and 50 photos of the dog?”
Parents would say, “I would never take an ugly photograph, I would never have an ugly photo myself. I do my makeup. We take photos as a family once a year, twice a year, maybe the Christmas card. So this is insane, that young people are taking 100 photos a day and that they look terrible.”
We had to explain that this is a little bit different. Because those photos aren’t really being used as memories, they’re actually being used to talk. Now the dominant use case for photos and videos on the internet is communication. So the majority of photos being sent, videos being sent back and forth are being used to communicate. That’s really the fundamental change that’s driven our business and we’ve expanded from that core product over the last four years. We can talk a little bit about that. The core concept here is just that photos are different now. Because photos are for communicating and not just saving memories.
Do you notice structures of language in the photos is are there? Is there slang? Is there idiom? Or is there idiomatic kind of you see pockets of different kinds of people using it different ways.
So we we don’t see the photos.
Do guys believe that?
I think people use it a wide variety ways. We can see that more in stories.
I think when we get to your business model. The fact that you don’t see the photos is a very interesting fact we’ve been so steeped in data over the past 10 hours. It’s interesting the approach that you’ve taken on the business model before we get there. Do you want to show that short video that you brought?
We can’t I don’t know if it’s any good. We can see.
Why don’t we roll it it’s only about 45 seconds which I guess like 10 times longer than the average Snap.
[Video rolls]
You managed to get a few local references in there.
It’s like thank God they used your ads.
We’re gonna get to those ads but before we do, one of the original ideas of Signal P&G was to bring the innovation from outside this area in. So I want to hear a little bit about about your story. Where did the idea come from?
In the beginning of building the service and sort of the first version, which was actually called Picaboo, which is a terrible name, because no one knew how to spell it. But that’s where the ghost comes from boo like a ghost. In the first version, the goal was reall, can you send a photo that disappears? Can you send a video that disappears? And it turns out, you can’t, because you can always take a screenshot.
That led us to a bunch of questions, which was, if you can take a screenshot, does that invalidate the entire concept? What we found, and maybe this is a good way to talk about it, is that the ephemeral nature of Snapchat is really a tool. I think it’s been talked about as sort of like a cultural shift or something like that. But it’s really not the case.
I think ephemerality as a tool makes conversation more fun and familiar, it’s the way we’ve had conversations forever. Screenshotting, or saving something that somebody says, it’s just kind of like taking a note or writing it down. I think that familiarity in conversation really formed the basis of the service and has led us to create other products that just feel familiar.
Our stories product, for example, all we did was put your photos and videos in chronological order, because we’ve always told stories beginning middle end, and we found that every other social media product was putting everything in reverse in a feed, which just, didn’t really make a lot of sense.
Snapchat is four years old. So you’re a young company. You have an appropriately low valuation of only about $20 billion. And you’ve grown extremely fast. Right? How many employees do you have?
500.
500 in four years? I’ve been there. It’s hard. But even more amazing, is the number of people that use it. So what are those numbers that you can reveal?
I guess our official most recent thing, is nearly 100 million daily, active Snapchatters in developed markets.
So almost 100 million daily, every day. In terms of the overall users of the service? Do you have a number for that?
We don’t disclose.
I’ve heard that before today. I had to ask, however. Maybe that allows me to get into the business model that everyone here and obviously, many of them have already started to work with you. But can you tell us about the actual ad product and where that came about. You located that product inside of what you call Stories?
Yeah, absolutely. So I think the most important thing to understand about our business is that it’s really three little businesses in one. We have the camera in the middle, when you open the application, to the left we have a communications business, and to the right we have a content business. We’re going to monetize those businesses in different ways over time.
We started with advertising in our content business. That began with Stories, beginning, middle, end is the sort of the concept. People are now watching three billion video videos a day on our service. So there’s a huge volume of video being consumed on our service. What we found that made Stories in particular really different and really helpful for advertising is that Stories are a compilation of clips. Typically, on the internet, you only have one clip. So you go to a video service, and there’s just one clip. And so in order to monetize that clip, you have to put a video in front of it, which we know irritates people, pre-roll or whatever.
That was the first version of monetizing clips on the internet. And a second version of monetizing clips on the internet is this feed base unit, wherewe’ve found that people just scroll past them.
Then we started working on Stories, which is a collection of videos. Maybe there’s 50 little videos strung together. That means the consumer enters and starts watching a video, immediately starts getting great content and then sees an ad later on in that stream of video. I don’t think that’s a breakthrough, obviously, because products, like linear television, have done that for a really long time. But it’s sort of the first time that’s really been done on the phone, for example. It’s meant that we have very high completion rates for our videos, we have video advertising that people actually watch.
The second part of that really has to do with format. So Snapchat’s different because you create content in the same place that it’s distributed. Most services are either really focused on distribution, or really focused on creating content. But at Snapchat, we do both and that means we can drive new formats. So we were some of the first folks to do full screen full frame vertical video. I know that because in the very early days, we had to rewrite the Android camera stack in order to get full frame vertical video, which was really frustrating when we had three of us.
Now Google does that with YouTube, and they finally got around to it, but you had to write it first.
You said it.
I did.
But what we found in the early days, when people were just trying our advertising products, they’re like, “We don’t really want to cut video for phones. It’s kind of a second screen. What if you just used our horizontal video?”
And we’d be like, “Okay, we’ll run the horizontal and maybe we can recut it or something vertically for you.” Some of the first people to really start cutting video vertically, were the movie trailer folks, because they’re comfortable cutting video all day long.
We found that we got nine, ten X completion rates on full frame vertical video, compared to the little horizontal, like postage stamp sizes video that you normally see on your phone. When we saw that it was, okay, obviously.
I think we’re able to take those results and take them to people who really want to advertise on mobile and say, “Look, for at least our generation this screen is the first screen, it’s kind of the only screen at this point, and you should be making content or, at the very least repurposing your existing content so that it actually just fills the screen.”
Have you noticed any effective habits or behaviors of brands on Snapchat, that they do very well, because they do….what?
For us the focus has been on creating great content and telling a great story. So obviously there’s a great P&G example, which was Tide advertising in a Father’s Day Story.
So we do these really cool things called Live Stories where we collect videos from thousands and thousands of people at different events or different cities. It’s millions of people in different cities, and pieced together a linear sort of storyline. For example, if you go to an NBA game, 20 percent of people at that NBA game are contributing to our live coverage of that game.
You really get lots of different perspectives from different events. We did one of these for Father’s Day. You have people all over the world celebrating Father’s Day. And P&G had created really clever Tide advertising that you know, slotted in to the Story. The thing that really blew us away was there was an 8 percent increase in purchase intent, which is unusual.
Credit to P&G for making great ads. But that was an example of in-context advertising, that was really great creative, told a funny story and got the brand message across. We were so surprised that we really started thinking about like the role of brand advertising, especially for millennials, because there just aren’t very many places that millennials can be exposed to, or learn about a new brand. So for us, that was a very informative experience.
I can almost hear the gears going in the room about, “Oh, you know, it’s a bowl of fresh powder, I get to ski here.” Maybe I’m wrong. But I get the sense that people are leaning in and they want to work with this more. However, these folks are also very analytics driven, very high ROI driven. And your ads don’t really have a traditional measurement or quantifiable dashboard for the advertiser to see exactly who clicked on what and for how long and you’re not integrated with a data logics, JavaScript pixel that tracks them to point a purchase. Are you ever going to be?
So we do a lot of sophisticated measurement and we’re always increasing those offerings over time. I think the big difference that we try to make is really like targeting and tracking. That kind of relates even how we think about our products. On our service, we can identify that someone had a conversation with someone else, but we don’t store that content. I think that that’s a really important part of not misleading our consumers. And I think clearly, there’s now a market demand for products that are more respectful of privacy. And the funny thing about privacy is once you give it up, you can’t get it back, right. So we’ve really tried to take kind of a slow and methodical approach to how we do targeting and how we do measurement in a way that respects our consumers. We do offer measurement products, and we’ll be offering more over time, but in a way that’s new. We’ve had to go to vendors and say, “Hey, we need to build something new together, because it just doesn’t work to compromise the privacy of our community.”
One of the things that I imagine you must be going through, do you ever at night when no one’s around just gonna go, “Woah.” That happened in four years, in the span of a college education, and actually, right after you got out of college, if I’m not mistaken, you and your team have created a company that is being valued in the tens of billions of dollars. Does that ever freak you out?
Always. I think we’re really fortunate to have an absolutely terrific team, it’s obviously grown really fast. But to have the opportunity to work with such outstanding people is probably the best thing in the world. It’s awesome.
What was it like to have a company like Facebook copy you? They literally made a Snapchat killer, and then what was it like to have to watch it not work?
Scary and then fun.
Sounds just about right. We have time for just a couple of questions before we’re done for the day. So please, here is your opportunity to ask a question or two of Evan. Any questions? Be brave, it’s the end of the day? Got one here.
Audience member
Are people like me using Snapchat?
The question is are older people using Snapchat?
So 75 percent of our audience is above the age of 18.
There are 100 million millennials just in the United States. And you have 100 million daily users. So does that mean? Let’s put it this way. I don’t use Snapchat except to answer the occasional Snap from my daughter, which is like once a month. Do you expect that to change? Or are you just going to wait for everyone to kind of get older?
I think what tends to happen, especially with new technology products, is that they’re adopted by a younger audience, because the younger audience has more time. I think generally, they’re more open to learning about new things. But obviously we’ve seen many times that these products expand their demographics. That’s already happened for us and continues to.
One last question over here.
Audience member
What is the culture that you’re trying to build?
The question is, what is the culture that you’re trying to build in your company?
We actually really care at our company about strong leadership. That’s something that we’ve really invested in. Some folks will build a team and then put a leader in. We scour the earth for really strong leadership, and then build the team. Sometimes that means it takes a little longer to build a teamr. But leadership is critical in an organization, we celebrate really strong leadership.
I think the other thing that’s made a big difference for us is really trying to hire people with serious conviction in their ideas. So we do this weird thing where we really expect people to have conviction in their ideas and fight for them. But at the same time, we encourage people to change their minds. I think the important thing is that we try to do that before we release products. But inside our company, it’s really important to have that back and forth where people feel really strongly about things but also change their minds, ideally before we release the product.
I’m sorry to have to cut it off, but we are running a little late and I really appreciate you coming here and being with us at Signal. Thank you.
