STARTUP BOOK REVIEW
How to turn down a billion dollars
In this review I want to provide you with a background as to why I believe this book on Snapchat written by Billy Gallagher is worth a read. If you don’t have the time to read it I’m going to raise some points that I hope will help and inspire you with your venture. In my opinion this book provides insights that show how very close you may be to launching your idea, gaining traction and attracting investment.
Snapchat was conceived by Reggie Brown, Evan Spiegel and Bobby Murphy while they were undergraduates at Stanford University. The concept of disappearing photos was conceived by Reggie Brown who later sued the company and won a pay off of $157 million.
Within the space of 4 years Snapchat went from zero to a $34 billion valuation post IPO. Reggie, Evan and Bobby studied at Stanford University, based in the heart of Silicon Valley surrounded by Apple, Facebook, Twitter, Linkedin etc and students have the benefit of sitting in on lectures from the likes of Peter Thiele and Mark Zuckerberg to name but two.
They had access to bright students. Wealthy students. Students with connections and lecturers who’d experienced success with their own ventures. Venture capitalists surround the university. It’s a great place to succeed and grow. It’s also a high profile place to fail as all that glitters isn’t gold as proven by Crinkle which gained massive seed investment from lecturers, the university principal and Richard Branson but failed spectacularly.
Evan and Bobby created a basic usable product within 6 weeks. This was what is known as the MVP, the minimum viable product. The point of the MVP is to create something that users can use which provides vital feedback to developers enabling them to work on an improved iteration as this process is repeated. I’m going to say that again. They had a product that could be used within 6 weeks. This could be you with your product. You can do this too. We’ll help you - schedule a call. Send us your NDA so that you can discuss your ideas with us in confidence.
You may not have studied at Stanford. You may not have access to the pool of development talent the guys at Snapchat could access down the corridor. That said I’m going to guess that you have conceived a brilliant concept built from your work and life experiences. You may have access to high powered high profile associates who can help you to succeed and maybe you don’t. Either-way you have the money to bootstrap your venture to fund the development of your prototype and the resources to validate it within your market sector.
Evan and Bobby bootstrapped Snapchat until they had a 60% user retention rate and 10,000 active daily users. This was their target traction level that they felt would appeal to investors. They were also pre-revenue. They managed to convince investors of the potential value of their daily active users which gave Snapchat it’s amazing valuation.
- They developed the software themselves. It cost them their time and their effort and their ingenuity. They had a vision and they believed in it even if others didn’t.
- They developed the logo themselves which they still use today. The yellow ghost faced chilla - based on xxx. The yellow background made it standout.
- They wanted to prove traction before raising finance. The initial aim was for 10,000 active users per day.
- They received a cease and desist notice for Picaboo so they changed the name to Snapchat.
- Their seed funding round raised $487,000 with a change to standard terms.
- Mark Zuckerberg tried to squash them by releasing an almost identical product called Poke which failed. It was developed and released in 12 days.
- Facebook tried to buy Snapchat for $3 billion but Evan and Bobby refused.
- The number of photos shared per day rose from 50 million in December 2012 to 200 million in June 2013.
- In its series B funding round the company raised $80 million against an $800 million valuation while Snapchat was still pre-revenue.
- On the day of the IPO Snapchat was valued at $34 billion.
In conclusion this book details how a few guys with an idea that they believed in managed to raise millions of dollars in finance and grow their business into a multi-billion dollar enterprise doing what they wanted to do, the way they wanted to do it.
They didn’t wait for money. They never waited, they just moved forward relentlessly day by day achieving what they had to achieve to get Snapchat off the ground. Money came in the form of investment once they’d proved that users would use Snapchat. They did and they do. Timing was an important factor. When Snapchat was launched smartphones with forward facing cameras were launched too. A happy coincidence or vision?
They have their principles, they have their beliefs which is worth so much more than money alone.
Evan in particular wants to add his piece to life’s jigsaw. From reading the book I believe you can too. ‘How to turn down a billion dollars’ is a great read and will give you confidence and belief to follow your dreams as you’ll know the way.