This was the second book on my list after 10% Entrepreneur, and I think I am on unintentional spree of reading venture capital books.
Snapchat was "the" app during my time in last year of high school to university. When I was making the end of year video in Year 11(around 2015) I even dedicated one section to Snap selfies:
I'm not sure what people at that age use these days (it's been around 3 years or so since I converted to Instagram). But since I have been there done that with Snapchat, I decided to read up on how it became one of the giant tech companies in 21st century.
Firstly, this book reminded me of how competitive the tech start up industry is. Just on top of my head I can already name so many other apps - just from my personal timeline, it was from Facebook to Twitter, Instagram, Snapchat, Youtube, Vine, and now TikTok.
Also, it didn't come across my mind that Facebook has been "copying" ideas from so many other companies. (Look at this artlce from Forbes: https://www.forbes.com/sites/rachelsandler/2020/08/05/as-facebook-launches-tiktok-clone-a-look-back-at-6-other-rival-products-it-copied/?sh=4c99393d5c5a).
Even the other day I realised Instagram changed the format of second tab to look like TikTok. To be honest, I never downloaded TikTok so I don't 100% know what TikTok looks like, but I heard a lot and I think I saw someone using it on the train.
So with this giant, monopolistic companies dominating the industry, it is even harder from startups to enter into the market.
As a bystander, who isn't #teamfacebook or #teamsnap, I think what makes Snapchat stand out from the crowd is that the company has Evan Spiegel. Like the book title, "How to Turn Down a Billion Dollars" Snapchat is not acquired by other big giants like some other tech companies. They did it all by themselves. This is the true form of why successful businesses are backed by great leaders who truly believe in their companies and products.
When I think of great leaders it always come down to Elon Musk (because #teamtesla, but just like Musk, Spiegel also showed his determination to prove the value of his company. it was also interesting to see how Spiegel didn't necessarily have the technical skills (like how to code/program) yet he was able to build an empire, with the help of his nice wholesome friend Bobby. That just comes to show that good leaders bring on best employees to build the best team, instead of themselves necessarily having the best skills in all areas. Evan brought his leadership skills and his vision to create his unicorn company.
Although, I should still mention that Spiegel came from a wealthy upbringing and from an Ivy league school, not everyone can or is willing to do what he did.
As for the book itself, the beginning was a bit slow and descriptive, which I found a bit dull, but as I read more that actually helped me to empathise with the characters a little more.
And here are the quotes that were worth noting down for me:
It’s important to reiterate again that the valuations are not the same as public companies’ market caps. Venture capitalists invest in startups to hold their equity for years until the company goes public, or gets acquired. The current valuation doesn’t matter in the long run to investors. What matters is how the company grows and what percentage of the company the venture capitalists own. (p. 33)
Lucas raised convertible debt, which is common for early stage startup funding. Early stage funding is typically either equity-stock in the company-or convertible debt. This debt then converts into equity in the startup’s next round of funding, usually a series A. (p. 34)
One of my biggest mistakes as an entrepreneur involved a term sheet. This particular term sheets was our first. And when we talked to the venture capitalists, and we talked to our lawyers, they took refuge in the notion of Standard. When I asked question because I didn’t understand something, I was reassured that the term was standard, and therefore agreeable. I forgot that the idea of STANDARD is a construct. It simply does not exist. (p. 72)
Sun Tzu, The Art of War - “Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win.” (p. 82)
In a single year they had gone from unknown app with a couple thousand users to over one million daily active users; they had rejected acquisitions offer from Mark Zuckerberg himself and then beat his Snapchat clone head-to-head. (p. 87)
“Snapchat is now an $860million company in the eyes of venture capitalists- a staggering valuation after less than two years of operations and not a cent of revenue’ wrote Forbe’s Colao. (p. 96)
Strike price: the price employees must pay to exercise their stock options and buy the underlying common stock in Snapchat. p.115
Evan began the world at large, then narrowed to the tech world, then his main competitor, then Snapchat, considering this entire stack now and in the future. He understood where his adversary, Facebook, was weak and where it was strong, at least product-wise. He understood his users and what they liked inside and outside of Snapchat. (p. 121)
Most impressive about Live Stories is that Snapchat itself created it. Twitter users created the hashtag, and users on both YouTube and Twitter had a major impact on the platform’s aesthetics. But Snapchat and its content team created Live and the medium’s vibe. (p.159)
Snapchat could have created a robust API (Application Programming Interface, a fancy Silicon Valley term for a clearly defined method for software to interact) and let developers build whatever applications they dreamed up on top of Snapchat. Facebook’s identity is woven throughout the internet with its login API -this is the little blue Facebook button that lets you log in to a bunch of other apps using your Facebook information. Apple and Google make boatloads of cash per year on the 30 percent tax they charge paid apps in their app stores. (p. 185)
Open development (letting developers build on top of your platform) versus closed (controlling the entire experience for users) has been a software debate for decades. Like his idol Jobs with the Macintosh, Evan fell firmly on the closed end of the spectrum. So he built Snapchat closed, which opened the door for the Snapchat Stars. (p. 186)
“It turned out that the best way to get young Snapchatters to watch an ad was to have one of their own make it” (p.187)
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