Kicking off the second Code conference in Rancho Palos Verdes, Calif., Snapchat’s young co-founder and CEO Evan Spiegel joined Re/code bosses Walt Mossberg and Kara Swisher for an onstage conversation about some issues that won’t go away anytime soon.
The brisk back-and-forth touched on an array of tech-focused topics, including Snapchat’s three-part business, getting into content, age and audience, leadership role models, the inevitable IPO, the bubble, workplace diversity and those embarrassing emails.
This interview has been edited and condensed for clarity.
Kara Swisher: There’s no argument that this is probably the most exciting entrepreneur this year, someone who is creating a platform. The only people my sons have ever wanted to meet are Steve Jobs and Evan Spiegel, and they just fell over themselves meeting him. They use Snapchat all the time and love it. It’s a really fascinating phenomenon, and he’s here to talk about it.
Evan Spiegel: Thank you.
Swisher: We’re thrilled to have you here. I’m sorry for that attack by my children, but you’re a rock star to them.
Watch the whole interview here:
Camera, Capture and Content
Swisher: Let’s talk about what a media company is now, today. A lot of things you’re doing around hiring a lot in the area, doing stories, doing all kinds of things. Talk about what you’re up to on your platform, around media.
Spiegel: Obviously, content is really important to our business, and it’s really one part of, sort of, the three businesses that comprise Snapchat. So if we take a step back and look at what Snapchat is, it all starts with the camera. We have this really great, basically, capture product, and we’ve worked really hard to evolve that. So it started with just a photo, just a snap, it evolved into video, we made this really simple mechanism where you can just press and hold on the screen and it will start recording a video. Now there are all sorts of editing tools, too. So you can add text, make it crazy colors, add filters based on where you are.
We worked really hard to evolve the camera. And then to the left of the camera screen, the app is kind of three screens. There is a communications business. So that has chat and video calling; and obviously, Snaps, being able to send pictures and videos back and forth.
And kind of a recent edition, something we really focused a lot on the last year, to your point, is our content business. And that’s to the right of the camera, and that’s really comprised of stories, live stories, and most recently our Discover service. So we’ve worked really hard, with Discover in particular, to introduce an editorial perspective to what was otherwise the people’s perspectives. We added that editorial balance.
Swisher: Why? What are you aiming for? You hired this new CNN reporter, and you put together stories yourself. Are you trying to create a new kind of media company, or are you going to create a new service, buy content companies? Any of those things?
Spiegel: Hiring folks like Peter, or even experimenting with making our own content, is really about competency. We ran into this challenge where we built this Stories product, which allowed you to tell your personal story, and then we built a Live Stories product, which means that if you’re at a big event and you’re taking a Snap and you’re about to add it to your story, we give you an option to add it to a story that’s shared by everybody at the event. And that means you get 10,000 perspectives of an event, instead of just 10, from television cameras or something like that.
But what happened as that product evolved, we realized while we were getting thousands of different perspectives from different people, we weren’t getting the editorial perspective, what was newsworthy, to balance that out. So we’ve really invested recently — really trying to understand and get a little better at what it means to be journalists, what it means to build a platform for journalists, and that’s really where we are. We’re super early — six months, maybe — into Discover, and we’re still at a place where we’re trying to understand how we can be a great platform for publishers.
The message evolves
Walt Mossberg: There are a lot of places in the world, particularly Asia, where things have started out as messaging services and really have become platforms for hundreds of different things you can do. You’ve begun to do that a little bit with the three things you mentioned, and the latest one in particular. Do you see that — for this generation, and for this time — it’s time for a messaging service to evolve that way, and are you that messaging service?
Spiegel: I think the thing that you’re hinting on is that messaging is really the highest-frequency behavior on a phone; makes a lot of sense. But I think a lot of companies have really worked on saying, “Okay, I have all these people visiting my service multiple times a day to talk to their friends, what other things can they do while they’re maybe waiting for their friend to respond?” And that’s definitely part of what makes our business more interesting. It means we can show people content that they might enjoy while they’re waiting for their friend to respond.
We’ve also tried to make it a part of the messaging process, where if you’re sending something as a message, maybe you also want to send it to all your friends, or you want to broadcast it to all your friends. So, yeah, we’ve really tried to say, this frequency of behavior is new, it surpasses all other behaviors on phones, so it means we can try to experiment with new things.
Mossberg: But you also have Snapcash, and you have these other things. If you look at something like WeChat in China, or Line or any of these things, they just keep on adding these things. Are you expecting to keep adding extensions beyond and built off messaging?
Spiegel: I think focus and simplicity are really important to us, so I don’t know yet, because I think we’d only want to expand into different products and services that we feel we can do really well. I think you can probably see, we don’t necessarily care about being the first, but we want to be the first to get it right. So we really try to take time, rather than just diving into a ton of different services. While we could drive a lot of distribution to lots of different application services, we want to make sure we’re thoughtful and deliberate with how we do that.
Swisher: The Discover feature that you’re offering to publishers — you were doing a lot of things to be publisher-friendly, all kinds of other companies. Facebook is trying to do that; Google, presumably, is trying to do that. What are you doing there? Because you’re creating your own stories … also do you imagine competing with the publishers or helping the publishers? What are you, to them?
Spiegel: You know, my team might hate me for saying this, but we probably don’t come anywhere close to any of our partners, because we’re just not that good at it yet. But when we started out building Discover, we went around and talked to a bunch of people who create media — publishers, editors and writers — and we talked about what worked for them and what didn’t.
But the challenge was that that was insanely time-consuming, and so we realized that if we wanted to make a lot of rapid progress, in order to walk in a publisher’s shoes we needed to try and do it ourselves. So rather than traveling to New York to talk to a lot of these really big publishers, I can go across the street and say, “Hey, what’s not working?” and we can try and get better, faster.
Swisher: Do you imagine doing more publisher deals like that? Are you trying to help them, or do you feel that they’re your constituents or not?
Spiegel: Certainly we’re trying to help them, we built a product for them. And obviously for our customers. So in that sense, yeah, we’re definitely trying to help.
Mossberg: There’s a blizzard of metrics that social sites and messaging sites put out there. You haven’t said a lot about your metrics, how you measure frequency of which people use Snapchat, the loyalty, the stickiness of it. Can you talk a little bit about that?
Spiegel:Yeah, this is definitely a challenge for our industry in general. Because metrics like monthly active user and daily active user haven’t been standardized, so it can be really hard to compare different businesses and the way that they’re measuring metrics like that. But even more important than the standardization is that they fail to capture the depth of engagement for a user that’s active.
For example, for us, as we’re approaching 100 million daily active users in developed markets, the thing that’s most exciting and most interesting is that 65 percent of those daily active users are creating content every day. So that’s an indicator of engagement. I guess the CEO of Vodafone said recently that 75 percent of the upload traffic in the United Kingdom is Snapchat. So that gives you some sense of the investment that Snapchatters are making in our …
Mossberg: Do you have any way to help with context to compare? I’m not asking you to tear down anyone else, I want to make that clear — but just for context, what percent of, I don’t know, Facebook users or Twitter users actually create content, as far as you know?
Spiegel:I have no idea, sorry.
Mossberg: You have no idea.
Swisher: It’s 100 million daily active users that you have now?
Spiegel: Approaching 100 million in developed markets.
Swisher: Meaning the United States and places like that. But you don’t want to use the monthly active users. Why do you think daily active users is what you want to use?
Spiegel: Internally, we use hourly active, because people use their phones all the time.
Mossberg: So, monthly, you think, is much less meaningful?
Spiegel:I think, especially with the prevalence of mobile phones and how frequently we all use our phones, that’s certainly how we view it in our business.
Swisher: Let’s talk about the product, how it’s evolving. As you said, it started off as a camera product and it moved to other things. Do you think it’s easy to use, do you think you’ve reached a level of simplicity? It’s certainly easier to use than a lot of other services, but how do you look at what you what to do and what kind of audiences you want to attract? Because you want to grow these daily active users or hourly ones.
Spiegel: I think it’s our imperative to always make it easier, and so we’re always trying to take things away. Fewer screens, fewer buttons, things like that — that’s why, at its core, it’s really three screens. But I think one of the things that we’ve had to deal with was that the service fundamentally is new. And it doesn’t really borrow from the desktop paradigms, and there’s a bit of a learning curve. But that’s kind of what makes it fun.
Letting go of press-and-hold
Swisher: Are there things around it that you want to change?
Spiegel: There are so many things I want to change.
Mossberg: Can you give us an example?
Spiegel: One of the contentious issues that we’ve been thinking through in our business is this press-and-hold mechanic. In order to view a video on our service, you have to literally put your finger on the screen the whole time. And obviously for us, this has been a huge sign of engagement — you have to really be holding your phone and holding your thumb on it. But I think it’s holding us back from longer pieces of content, longer videos being viewed on our service, because it’s just kind of annoying to hold your finger there that long. And I guess, sort of the back story of that, too, is the only reason you have to hold your finger is because when we first built this service, there was no way to detect screenshot, there was no screenshot API built into the iPhone, and so we had a tricky way of doing it that involved holding your finger on the screen. Now, obviously, there’s a screenshot API, and there’s a question internally about: “Okay, can I stop holding the screen all the time?”
Swisher: So can you? Are you going to do that?
Spiegel: I guess we try not to ruin surprises, but that may be in the cards.
Swisher: You just said it.
Mossberg: You see them, right? [Indicates audience]
Spiegel: Yeah, sorry.
Mossberg: And they all have Snapchat.
Swisher: Before you do that, livestreaming, Periscope — we’re going to have Dick Costolo and Kayvon Beykpour talk about it. How do you look at that? There are rumors that you’ve been developing a livestreaming product. There are rumors that you’ve been developing everything pretty much, but that one seems to be right in your wheelhouse. Is that something you want to do, or do you feel the copyright issues are too …
Spiegel: For us, that’s something where we’re just watching and learning. Obviously, Dick [Costolo] and his team, they’re paving the way. We’re just going to see what sticks and take it from there, but we’re not working on anything right now.
Swisher: Are you worried about the copyright issues around it?
Spiegel: You know, not really. When we produce live events that we share with our community, we work with the rights holders to produce those.
Mossberg: So your demographic skews quite young, right. Is that good enough for you? You want to serve that demographic, and you keep adding features; they obviously respond really well, because we can see it in the growth you’ve had. But there are a lot of other people out there who have been able to migrate to things that have started out for primarily college students or younger people. Does that interest you at all? And if so, what would you do to attract other demographics?
Spiegel: We’re much more interested in increasing engagement than getting big. So we’ve really focused on a few markets that are really important to us, and right now we’re working on really increasing engagements, making sure the people that are on our service just love it. And that’s really what we watch. I think over time we’ll think about expanding the product, but right now it’s really just a maniacal focus on making great products and deepening the engagement with our service.
Not of the Valley
Swisher: Let’s talk a little bit about where you’re headed next. You’ve obviously raised a lot of money, there’s all kinds of people interested in Snapchat, and you operate away from Silicon Valley. Actually, let’s talk about that first: What is your viewpoint of Silicon Valley, because you are the company of Los Angeles, you’re separate, you’re different. I know you have some thoughts about the place, and not being there.
Spiegel: It’s sort of funny, because the business did start there, so I think there’s definitely an awareness of Silicon Valley and how transformational, obviously, it’s been. We love LA, our office is on the beach, and that’s pretty nice. Frankly, for us, it’s nice to get a little space from everything going on there, so we can really focus on our business.
Swisher: Do you have thoughts about what’s going on up there? Do you think it’s too frenzied? Do you like it or not like it?
Spiegel: It’s absolutely incredible. It’s sometimes overwhelming for me to visit there, there’s a lot of stuff going on, and it’s really exciting, but we really enjoy the LA lifestyle.
Mossberg: Can we talk about the broader landscape? This phenomenal last 10 years of upsurge in services and apps and the whole area of social engagement, which you’re in. You really got passionate about that engagement thing. So being social and being engaged are two really important things. How do you look at the whole landscape of what’s out there? You have giant Facebook, which wants people to be more engaged, and they also want to grow and trade different things, including content. You have Twitter doing some of its own things, and then you have a bunch of other things. How do you look at the whole landscape? I’m not asking you to run down every competitor …
Spiegel: When we look at social media, we really look at it on a continuum, and the continuum is from accumulation to instant expression. Let’s just trip down memory lane: Seven, 10 years ago, you take a bunch of photos with your camera at a party, and you run home, and maybe the next day you plug in your camera, and you upload your photos to the Internet, and friends can look at them. That’s really the accumulation model business. And the fascinating thing about our business is that mobile phones have unlocked the ability to instantly express ourselves. And we think that the products, obviously, that we’re working on, that the industry is working on, falls somewhere on this continuum. So Snaps, the core product, was really about instant expression; Stories shifted us a little bit further to accumulation, and of course you can always save a Snap sent on our service. And that puts us in the middle of this accumulation-to-instant-expression continuum, with the default always being instant expression.
Mossberg: Where would you put Twitter and Facebook on that spectrum?
Spiegel: I think Facebook has always biased itself toward accumulation, and Twitter is maybe somewhere more in the middle.
Mossberg: They were pretty instant a few hours ago, when the news about our deal [with Vox Media] came out.
That’s … entertainment
Swisher: When you talk about accumulation — which sounds like some disease — is that the way of the future? Talk more broadly, because how do you look at a Facebook, because some people, again, with my kids, they’re not on Facebook, they’re on Snapchat. And I’m not sure why they’re not — maybe they’re not old enough, or maybe they haven’t gotten there. But they’re not accumulating, they’re using it in a wholly different way, and it feels like an anti-Facebook. Again, I don’t want to set you … but they were interested in buying you, you declined, apparently … how do you look at the difference between you and Facebook?
Spiegel: I think we can take this back to 18 months ago. We had barely launched Stories — I mean, nobody was using it. And since then, we’ve launched Chat, and we’ve launched live video and Discover, etc., so it’s a tough question to ask, because our business has changed really rapidly in the past 18 months. But again, I think that it’s not really oppositional, it’s more philosophical, and it really has to do with where we build products on the continuum. We want to have the capacity to build products all along that continuum, because we think that that’s important, and that’s the choice people make when they express themselves.
Mossberg: Kara just said that her kids don’t use Facebook, they use Snapchat. Is the typical case like Kara’s kids, or are there a lot of people who also use Facebook, also use Twitter, also use something else, but they love Snapchat, also?
Spiegel: Well, the nice thing is that all these products are free.
Swisher: Yes, for now, for today. But when you look at this idea of what you are — we’re talking about “ephemeral” — what would you call yourself then, if you’re talking about it? Because what do we call these companies as they evolve, we’ve called you “Snapchat, the Los Angeles ephemeral-messaging service.” It’s really impossible to call you that now. What would you call yourself?
Spiegel:I think that we call it entertainment.
Spiegel: Entertainment, yeah. It’s fun.
Swisher: Okay, but this is people entertaining each other through various means?
Mossberg: Yeah, I think some could be just the Snaps themselves.
Spiegel: Yeah, it’s just entertaining to take a picture and add your little caption. It’s fun.
When, not if
Swisher: You’ve had some really interesting things to say about the bubble and about evaluations and about the market — I could go over them. But how do you look at this market right now? What’s happening?
Spiegel: I think it’s the result of easy-money policy, effectively. When you have near-zero interest rates or negative rates in some countries, and governments have printed a lot of money, I think that people are making riskier investments. And I think there will be a correction. It’s a question of when. We don’t know when, but it’s something that we definitely factor into our plans as we think about the growth of our business.
Swisher: When do you think that?
Spiegel: If I knew for sure, I would make a lot of money, but it’s probably better to skip that.
Swisher: All right.
The diversity question
Mossberg: Let me ask you about another controversial but super-important issue, which has to do with diversity and gender in tech. This year, here at the conference, we’re going to be asking this of all our speakers. So we’re not singling anyone out. But we’d love to hear what your diversity situation is at Snapchat, and what you think it ought to be, and what you think about the whole industry and why we are where we are.
Spiegel: Diversity, for us, is really closely tied to competency. We have such a diverse group of people using our products and services every day, that in order for us to make absolutely great products and services for that community, we need a really, really diverse group of people. And it’s really that simple. So for us, we just have an awareness that if we want to make the best products, we need to have diverse people.
Mossberg: Can you describe your diverse group of people? I mean, what are some of the percentages, if you have them?
Spiegel: Again, this is sort of the challenge, and I should have exact percentages for you but we just don’t think about diversity in terms of numbers that way. And I think that one of the perks of being a really small company is, from the beginning, we got to think about diversity, so we didn’t end up with a situation where, 10 years down the line, “Oh my gosh, I need to fix my numbers.” Because it’s not really cool to think of people as numbers. We think about people and diverse skill sets. We’re 300 people now; we were 30 people a year and a half ago. We’ve been really mindful that, as we grow, we need to hire diverse folks, and so I’m sure we’ll have specific numbers to share at some point, but it’s been a part of our growth.
Mossberg: The other part of my question is, why do you think there’s been this problem in tech, generally — particularly in the management levels of tech? Is there something special about tech that makes this a particular challenge?
Spiegel: I think diversity is a challenge everywhere.
Mossberg: Right, but in tech.
Spiegel:I think I’m saying that diversity is a challenge everywhere, including tech. And that’s kind of that.
Mossberg: So there’s nothing different or special about the problem in tech? The whole society has the problem?
Spiegel: There are so many things that feed into diversity and inequality that unpacking them on the stage is probably not the best use of time, but I think, I really …
Mossberg: It would be a good use of time, I think.
Spiegel: It’s really important work, but no, I think that diversity is a challenge for everyone, we need to say that it’s a challenge for everyone. I don’t think that tech has a special thing that makes it harder, I think it just takes hard work to build a diverse group of people to build great products.
Music … and a new kind of club
Swisher: Let’s talk a little bit about you. Actually, before that, we’ll get to … music. Are you going to be offering a music product?
Spiegel: Again, we don’t make it a habit of ruining surprises, but I can talk a little bit about music, because it’s something we love. I guess people who work in our office can tell you that I blast music a lot. When we look at the music industry today, a lot of the conversation about music is really about business model and distribution. The transition from a transaction-based model to a subscription-based model, cloud versus download, those are really what I’m hearing about the industry. And we always try to apply the product perspective: What really do people want from music? What’s a great album? What makes a great album? So we’re really approaching music from … is there some music product that’s better than a track listing? There’s got to be, and I think that’s something that we’d be interested in working on. But it’s just not as simple for us as a distribution plan.
Swisher: So, a subscription service? When you say that there’s something better, give me a better conceptual idea.
Spiegel: I guess my point is that everyone thinks of online music today as a track listing. Really a list of text, that’s music today.
Mossberg: Sometimes there’s little pictures.
Spiegel: Tiny, tiny pictures. Like a postage stamp. And we’re sort of saying, can there be a richer music experience? Probably. I think a lot of people are working on making it better, but we want to focus on actually what is the experience of listening to music beyond how I get it. Which is, I think, a different problem.
Mossberg: And does that play into your whole desire for more engagement?
Spiegel: You know, it’s funny you say that, because music is actually the second-highest-frequency behavior on mobile phones — listening to music. So that would make a lot of sense.
Mossberg: I mean, you’re running your whole product on basically a music player. A thing that happens to be a music player, and many other things, but one of the things is a music player.
Swisher: And when you call what you’re doing “entertainment,” it sounds like you’re building a club, you know what I mean? You have music, you have people chit-chatting, a little dating going on. Do you think of it that way? Snapchat’s a club? Or what is it? A club I would not be invited into.
Mossberg: And are there bouncers?
Spiegel: You have to be over 13. We don’t think about it as a club, we think about it as a community, really, of people. And we’re there to serve that community, that’s our job.
Swisher: Where is mobile going to develop? You’ve been on the mobile phone; it’s where your entire business is. Where do you imagine it going? When you’re thinking, “My product is going to develop, just the way that Facebook got into trouble on the website, and they had to move quickly over to mobile,” what is something that keeps you up at night? When you’re thinking of your product, is it VR, is it glasses, is it this watch? (Nods to Mossberg’s Apple Watch.) Not this — he’s got one, but I don’t.
Mossberg: Well, I mean, is there a practical way to do it on something like this watch?
Spiegel: We thought a lot about making Snapchat for the watch, and sort of … why would you want to look at a tiny picture instead of looking at the bigger picture on your phone? So we waited on developing something, because I think it’s going to have to be a totally unique experience, it’s not something that exists in our service yet. And we didn’t want to just port over some core element of Snapchat to the watch.
Mossberg: I think that’s a really smart statement, if you don’t mind me saying.
Swisher: So when you’re doing that, where do you go? Where do you think is going to be the platform for Snapchat, or is it just the phone?
Spiegel: I think the focus right now for us is just evolving those three businesses, right? So, cameras — are there more ways to capture things and express yourself? Are there new ways to communicate? It’s sort of wild to me that the phone still rings, there’s some of these concepts that we’ve pulled over from the way we’ve used phones for a long time.
Swisher: Your issue with ringing is what?
Spiegel: It’s kind of annoying.
Swisher: It was like that before too, just so we’re clear.
Mossberg: So instead of ringing, what would it do? Give you a shock to the brain or what? How would you alert me? Now, this thing (Apple Watch) does a different thing, it taps you. Some people like it, some people probably don’t like it. Is Snapchat going to start …
Spiegel: We haven’t totally sorted that out yet, and we want to nail it.
Mossberg: Is lightning going to come out of the phone when there’s …
Spiegel: That would be cool.
Mossberg: If you use that, I get a piece of that lightning idea.
Spiegel: Yeah, I think that there’s a lot of examples, and for us, I guess the last piece, the content piece, the live storage part is just at the very, very, very beginning. I’m, like, obsessed with it. So that is an area for us that’s just ripe with innovation. For us it’s a couple years into the business — three core components of the business, let’s methodically evolve those components. We’re not really a “what’s the new hot thing” kind of company.
Mossberg: But, I think I heard you say — and please tell me if I’m wrong, plenty of people do — I think I heard you say that if you can develop something that is rich and unique on here, you’ll probably do that.
Edwin Land. And Mom.
Swisher: So let’s talk about you again. I know you love to talk about you, but when we had lunch for the first time, [Spiegel] screamed at me for about at least 20 minutes, about something that I was actually wrong about, about privacy — it’s a big issue for you. And then we started talking about bigger ideas. One of the things that I think is difficult with you is to understand how you look at yourself as a manager, as you’re growing into a CEO. Every one of these CEOs, whether it’s Jobs or Zuckerberg, or whoever, has a different journey. You’re — how old are you now?
Swisher: 24, okay. How do you look at yourself? Are you a sole proprietor, are you someone that likes a team? Are you a Jobsian or a Gatesian?
Spiegel: Just some guy.
Swisher: Some guy.
Spiegel: Probably just some guy.
Mossberg: I don’t mean are you as famous as them or as rich as them. I mean philosophically, in the way that you go about your job.
Spiegel: You mentioned “manager.” I’m not a great manager, I try to be a great leader. And for me that’s been going through a process of, not how to be a great CEO but how to be a great Evan, and that’s really been the challenge. Because when I was younger, I grew up with the idea of who a CEO is and …
Swisher: Which was?
Spiegel: Wear a suit and something like that. But a lot of traditional ideas of what an executive is, and I had to go through a process where I’ve been trying to figure out what makes me a better asset for our team. And I think the key thing there, in all that, is just trying to grow as quickly as possible. Again, I probably can’t say this enough, but we’re in a business that is growing really, really quickly, and at the same time evolving and changing really, really quickly. And so, for me, the mandate is to just grow as fast as humanly possible, to accommodate the changing environment, and then find absolutely astounding people that are on board to go where we want to go, and really give them the autonomy to build businesses.
Swisher: What kind of leader are you? How would you characterize, if you weren’t describing yourself and you were being honest with yourself? I’m a fascist, for example. I’m a benevolent fascist, but a fascist nonetheless.
Spiegel: I think our team would say that I’m very decisive but I change my mind a lot. Which is sort of a unique combination. But it really means that we care about making decisions really, really quickly, but we care about the flexibility to change our mind, and we want to make sure that is the key component of our business. So someone on our team would be like, “Give him six hours.”
Swisher: And you’ll change your mind.
Mossberg: Well, you know, the first time Tim Cook came here, he said that that’s what people didn’t understand about Jobs, is that he would make these big decisions, and it would seem like the end of the argument, and then he would come in the next morning and flip on it.
Swisher: Who do you admire? Do you try and pattern yourself after anybody, or not at all?
Spiegel:I really admire Edwin Land — he founded Polaroid — because he had three really special gifts: He was a great scientist, he really cared about science and about experimentation, and would work endless hours experimenting. He cared about art, you know, Polaroid, and kind of worked in terms of art, but also, he was also a great countryman and humanist, and made decisions based on what he believed was the right thing to do for humanity. So I’m trying to read as much as I can about him right now.
Swisher: Okay, anybody else?
Spiegel: My mom. Yeah, there are a ton of folks, in all sorts of industries, really. There’s one, we were working on our customer service, and tech companies are just historically atrocious at customer service, and so we want to get better at it, and we try to talk to people who are in extreme situations that know a lot about something. So, in this case, we talked to some folks who run the customer service at Penske trucking, and when you break down in an ice storm and you’re carrying a bunch of fresh food, you call Penske Trucking’s help center and they help you. And for us, that’s an example of someone in our world, Greg Penske, who is an incredible role model, because the way they run customer service in their business is outstanding. And they were really generous enough to actually talk to us about it.
Swisher: So I’m going to stick on you — what’s misunderstood about you? Because sometimes when we read stories about you — there’s a lot of them — you get this dude thing going on, this LA guy kind of thing, a whiff of arrogance. What’s wrong in what’s been written about you? Here’s your chance to say, “This is what I’m not like.” Or maybe they’re completely right, you are the LA dude.
Spiegel: Everyone is entitled to their own perception of me, and again, I just try really hard to be me, and sometimes that means I’m unfiltered and I use a curse word or something.
Swisher: I admire that in a person.
Swisher: Curse words. But moving on.
Spiegel: But I try to give people myself, because I think making a great product is being in touch with how you feel about things and being able to express that, and sometimes I’m unfiltered. But that’s just me, I guess.
Swisher: Okay, Walt?
Mossberg: Do you imagine that as you keep going with this project — you’re not 24, you’re 34 — and that you’ll have to filter yourself more? Would that be detrimental to your style?
Spiegel: Gosh, I hope I mature a little bit. Who knows, you know? Tomorrow, I’m going to change, and the day after, I’m going to change, but I’m not really sure how I’m going to grow and what I’m going to be like when I’m 34. But I really hope that I can stay in touch with how I really feel about things, and that I’m not afraid to express that.
Exit this way
Mossberg: Does it matter to you that there be an exit for your business? Because everything you said here has really been about building the business and engaging with the customer. I personally love to hear that, but obviously there are lots of tech-oriented businesses that are looking for exits. Does it matter to you?
Spiegel: That really matters. We need to IPO. We have a plan to do that. Obviously, I can’t give you too much color there.
Swisher: How about a little? Plan to IPO by … ?
Spiegel: Again, can’t give you color there.
Swisher: What does an IPO look like for you? You have revenues, what is the …
Spiegel: An IPO looks like a lot of things, but most importantly it looks like another dot in the growth of our business. We don’t view that as the end, it’s just the beginning.
Swisher: But an IPO is your goal. I don’t mean the final goal, but a goal along the way.
Spiegel: I mean we started talking about exits, and an IPO is really important.
Swisher: Do you ever imagine entertaining another acquisition offer? Or maybe you’re entertaining one right now, I have no idea.
Swisher: You want to stay independent.
Spiegel: It’s more fun that way.
Swisher: If there’s anything that you would like to change about what you have done until now — though you’re just 24, so really you should have done nothing — what would it be?
Spiegel: There’s like 10 billion things. One of the things that I’ve been trying to get better at is apologizing faster when I make mistakes. That’s been a big priority of mine.
Apology and privacy
Swisher: Okay, what would you apologize for?
Spiegel: Man, my mom’s probably cringing somewhere. I think definitely in the growth of our business, we’ve made mistakes and we haven’t lived up to the promises that we’ve made to Snapchatters, and every time we do that, we try to apologize and make it right and put the focus on the things that we’re doing to build our business, and make sure we don’t do it again.
Swisher: And the last question, before we get to people in the audience — I did apologize to you about something I said on the air, in privacy — talk very briefly about privacy. It’s a big issue; you have a lot of thoughts on this issue. Where is it going? Ephemeral messaging is attractive to people because it wasn’t there forever, where are we right now on the issue of privacy?
Spiegel: Privacy is very precious, period, for us. What does that mean? Privacy means a lot of things to different people, but I think, at its core, privacy really is about comfort, and when you are with a loved one and you’re like, “Hey, let’s sit down and have a serious conversation. There’s something really important I want to tell you,” and you close the door, and your loved one pulls out a pad of paper and a tape recorder, you sort of lose that intimacy that really helps you build the relationship. So, for us, privacy is very, very precious. Beyond that, it really serves as a comforting thing and a way to build relationships with people.
Swisher: And is there privacy on the Internet? Can there be?
Spiegel: The nature of privacy has really changed, it’s a tough definition. Most folks now are really trying to restore context as a start, which means, if I want to show you something, I really just want to show you something, or if I want to show you and Walt, that I really should be able to just show two people and not everybody on the Internet. I think that’s an ongoing effort.
Swisher: And is that something that you’re going to be pushing more of? As you add these other layers to Snapchat?
Spiegel: We try to do it just in our send-to screen alone: You can pick your mom or you best friend, or everyone on Snapchat, or public, everyone. So we try to definitely give you the ability to add context to your communications, and that’s just one sort of step in making sure that people really appreciate privacy. Because I think our understanding of it has changed.
Mossberg: All right, let’s get some questions from our attendees.
Yeah, hi, enjoying the discussion. Evan, our question for you is around the monetization and business model. Can you talk a little bit about video ads and how you see that playing out versus other ads, and how you’ll maintain some relevancy for the Snapchatters for the video ads?
Spiegel: Video ads are really important to our business. We have a great unit we call 3V — it’s Vertical Video Views. It’s really simple, the vertical actually sounds very obvious, but I think we’re the first folks to cut video vertically, the way that you hold your phone.
Swisher: You don’t have to turn it?
Spiegel: You don’t have to turn it. Very simple, but it actually means that people complete those videos nine times more than the little horizontal videos you see, that are kind of a Post-it stamp on your screen. And of course, there’s full-screen and video. So right now, we’re selling that video product against audience, but also against affiliation, whether that’s a media brand or a live event. Again, early days, a couple months in, but the results so far have been promising.
You talked about trying to develop leadership skills. There was a lot of management turnover earlier this year. Just put some context around that for us — did the right people leave? Are you bringing in the right people? Are those moves that you think you learned valuable lessons from?
Spiegel: I should preface this by saying that every single one of those executives is absolutely terrific, and for us, it really comes down to a question of fit. So coming back to the nature of our business, highly unusual, really rapid growth and also rapidly evolving. And what “fit” means to us — the right person, the right responsibilities, at the right time. And for us, the challenges, when a business is changing so fast, the fit can change as well, and I think there are a few circumstances where we both agreed, “Hey, it just wasn’t the right fit anymore.”
Swisher: Is it because of you, or the changing nature of the business? Mark Zuckerberg had like 90 CFOs, I kept writing stories about him for a while there, until he settled on Sheryl [Sandberg]. Sheryl was the first time they didn’t move a lot.
Spiegel: Yeah, I mean you could absolutely add the team into the definition of “fit.” So, the team changes, and then I think that factors into it as well.
Swisher: Are you looking for a partner, like Sheryl and Mark, or something like that? Do you think you need one to be successful?
Spiegel:I have a great partner named Bobby [Murphy], who started the business with me. So I’m really grateful for him.
Swisher: And the two of you make decisions together?
Spiegel: I think we make decisions independently, too. But again, it’s just really great to have a partner in your business.
Mossberg: Back to the attendees.
You talked about an IPO being important. Is advertising enough, as a revenue generator, to build the kind of business you want Snapchat to be, or do there need to be other sources of revenue, whether it’s subscription or transactional or something else?
Spiegel: We believe that great businesses have multiple sources of revenue, so, as we talked about the three components of our business, the camera, communications and content, we’re in early days monetizing the content part of our business. With advertising, you can imagine that other modes of monetization would lend themselves more naturally to our other products, and so we are developing those, as well.
As Walt mentioned, you have a very, very large audience, but it skews very young. How would you summarize your value proposition for those users over 30? I’m asking for a friend.
Mossberg: I was asking for him, and now he’s asking for me.
Spiegel: I think the most fun way to start using Snapchat is starting with the basics. And I think people can really underestimate how much fun it is to take a photo or video and then draw on it or add a caption. It’s just a fun and really quick way to express yourself, and when you start doing that, you realize that there really aren’t any other media products that allow you to just edit your videos on the fly and send them to friends. And doing that just makes it more fun, obviously, but gives more context to the stories that you’re telling.
The other product that people kind of transition to is the Story product, and we’ve seen it’s a really great way to watch how your kids’ day is going if you’re traveling. A friend of mine even makes little stories, if he’s traveling, makes little stories for his son to watch before bed. There’s a good example where he asked his son, “What do you want to see today?” And he’s like, “A fire truck, and a plane.” And over the course of traveling, his dad will piece together this really cute story that the son can watch before bedtime. I think, in that sense, it helps family members feel close because they can sort of share this moment together.
Swisher: And then they could go onto other things. Watching or consuming.
Right now, you’ve got hundreds, if not thousands, of brands making use of the Stories feature. You completely lack any kind of tools that a mature system like Facebook or Twitter can have, where people can be easily followed, outside of the host, or need to see what’s going on with their engagement, without having to literally count each individual person that’s happening. Is that going to change, and also, related to that, do you anticipate going into any sort of self-serve advertising or doing something beyond just deals with a very small select group of media companies?
Spiegel: To answer both of your questions — and I’ll kind of expand them, philosophically — it’s really important to us that Snapchat is built for people, not for brands. And we believe that people and brands are different, and sometimes it’s even frustrating for us when brands come on our service and try to act like a person, because they’re not people. So we haven’t made it easier for brands to act like people.
Swisher: Has anyone done a good job at that, just curious, that you’ve seen?
Spiegel: I should probably have a great example, but I don’t. I know that there’s a lot of creative things going on. But it’s something that bugs us, because we believe that brands and people are different. Maybe we’ll evolve some tools, but more than likely, we’ll make it easier for brands to be brands, and part of that will obviously be self-serve advertising.
I would like to get your perspective: First-time innovation versus ongoing innovation. Can you share some best practices and differences between those two, and how do you go about building an organization that is also involved in ongoing innovation, especially in competition?
Spiegel: I absolutely adore you for asking that question, because that’s something I try to talk to our team about all the time. Which is this idea that really, our job is to take amazing things that people like, repeatedly, and the “repeatedly” part is really the tough part. We do a lot of things to try and innovate repeatedly, most of it starts with empathy. Listening to how other people feel about their life and things that they’re using and also listening to ourselves when we’re using products, and we’re annoyed by them or whatever. So I think the core really is empathy.
Obviously, hard work is a big part of that too, because we throw out a zillion concepts before we find one that’s half decent. And I think the other thing that we try to do, we try to build from a point of view, we try to build from value, because that allows you to sustain the innovation. If you’re always evolving your product based on the core values upon which you built it — for example, Discover is about the editorial perspective, Stories is focused on chronological order — that’s something that’s really important to us. If you innovate from these core values with how you think this product should behave, they tend to have a longer lifespan.
Diversity (slight return)
I’d like to thank Walt and Kara for making diversity one of the themes for the conference, because I think it’s actually an incredibly important subject.
Swisher: We do, too.
Mossberg: Thank you.
When I think of diversity, I think, obviously, of diversity as it involves women. And I’m sure you’re not the only guy in this room to have said, thought, or emailed the kind of emails that came out. And I’m just wondering what role that thought stream plays in the hiring, promotion and retention in Silicon Valley.
Spiegel: I sent inappropriate emails in my fraternity in college, obviously very embarrassing, and I’m really sorry for anyone that I offended. I think generally speaking, the people who come to work at Snapchat believe in personal growth, right? It’s really something that our company celebrates as part of why Snapchat’s stories are ephemeral, because you will be a different person tomorrow. So I think, optimistically, people in our organization believe that progress is important; people can make progress. In that sense, I think, it has attracted folks that believe that to our business.
Messaging is where most of the engagement is with Snapchat, and advertisers probably want to be where all of the engagement is. 15 billion is a big valuation to grow into — will you put advertising with the messaging portion of Snapchat?
Spiegel: You probably won’t believe this but people are watching a lot more Stories than they are Snaps, every day. And that actually really lends itself to that sort of advertising. We don’t want to put ads in Communication, just because it’s sort of rude — it’s like, “Get out of here, we’re talking.” We won’t do that, but there’s a massive opportunity around our content products.
Swisher: Evan, thank you so much.
Mossberg: Thank you.
This article originally appeared on Recode.net.