April two eleven brightly lit classroom inside Stanford University twenty Year Old Evan, Spiegel is feeling confident. Six pics of work have led to this moment tall and gangly with brown, hair and eyes. Spiegel's got the swagger of a cocky upperclassmen, he's about to his final class project, a prototype for a new app. He leaves will fundamentally change the way people communicate as the students in two professors watch Evan struts to the front the class raises. The stakes of this particular presentation is the panel of half dozen venture capitalists from nearby Silicon Valley waiting to hear his pitch. This isn't just a class project for Spiegel. He

auditioning his app or potential investors. He shows off a screenshot of the app a timer with a drop down menu. This is peekaboo, you use the app to take a picture at the bottom, the screen is a blue toolbar that let you select how many seconds you want the photo to be viewable for, after that it disappears forever then you can click the send button on the toolbar and choose which your friends to send it to he pauses and puts his hands together. Not every picture is meant to last forever any questions he smiled. He nailed it now. All he has do is negotiate the investment terms, but he's in a lot of blank stares. The investors are quiet for a moment, then one of them

what's up. Why would anyone want to send a photo that disappears? Another chimes in? Maybe you could make the photos permanent and partner with best Buy Spiegel the v cs: graying temples in business, casual dress, shirts, Spiegel thanks they're too old. To get this, they completely missed the point. Spiegel politely shakes hands with the b c's before return to his as the Esther's file out the teaching assistant Spiegel aside, what the hell did you build a sexting app. The TA is not completely wrong. Speaker hard, partying college junior everyone around him is texting, explicit pictures sexting the new flirting but classmates beginning to realize they don't want those nudes to live online forever. Investors don't get that

the generational disconnect standing in his way, but Spiegel's undeterred, he's convinced, there's a need for his app. If he can just get this app into the hands of his peers, it'll take off. He knows he can hit it big facebook big to build it he's working two of his frat brothers. The friends don't know it yet, but peekaboo is going to become Snapchat and like Facebook, Snapchat will explode, that's what the up started, shooting for to oust Facebook or nearly died trying every business. What starts with an uncertain outcome, personalities, resilience, skill and luck all play a row and every winner uncovers Anunnaki did edge along the way if you've been looking for the edge for you

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Rom wondering I'm David Brown, and this is business more in our new series. We follow Snapchat's rise and fall and rise again as the young upstart tries to replace the giant Incumbent Facebook, but as Facebook, it's wise to the new kid in town. The tech behemoth isn't afraid to play. Dirty snapchat will have to battle Facebook to survive. This

is episode. One vanishing act spring. Two, eleven Kimball Hall Stanford it's a large yellow building with a tree lined entrance one of the newest and nicest dorms on campus twenty year Old Evans, Spiegel is right at home. Within these elite walls, he's got boyish good looks straight white tee an easy smile and close cropped hair. His parents are wealthy. Lawyers in California speak is sitting in his dorm room tapping away at laptop tooling, around online down always friend, Reggie Brown is smoking. A blunt to frat brothers Rosie with blonde hair and a round face. Brown is uh. Preppy. All american Junior studying English he's texting. Girls explicit photos of himself but feels uneasy about them floating out there in the world, possibly for anyone to see future employer

his professors, his family, they're, all just a click away, they got gotta, be a way to text a photo and then have it disappear. Wait he thinks I'm a freaking genius brown leaps out of his seat and dashes the hall his classmate is sitting at his desk. Evan Spiegel looks up as brown bangs open the door. Listen to this, the you can take a picture. Nude in just did your girlfriend, but it disappears. You wouldn't have to worry about getting it posted on Facebook or something Spiegel jumps up. Holy. He pacing the room. The wheels are turning wow. That's a million dollar idea. Spiegel is wrong. It's not a million dollar idea in billion dollar idea, multiple billions for Spiegel.

This is the holy GRAIL he's. A junior at Stanford Product Design Program Stanford is smack dab in the heart of Silicon Valley. It's a pipe into the Bay area is bubbling taxine mega entrepreneurs by two thousand and eleven face book is valued at sixty five billion dollars. Twitter is Val nine point. Twenty five billion more than anything Eagle, wants to be among their ranks, he's confident an ambitious egotistical. Even he grew in the Tony Pacific Palisades just west of LOS Angeles and he's you to getting what he wants. Spiegel's looking for a way into the tech world. For years last summer Spiegel and his friend Bobby Murphy, put together a website called future freshman is design All parents, high schoolers and guidance counselors, manage the college admissions process kind of a knock off of Facebook,

but nobody's using it. Givenchy Spiegel and Murphy scrap the idea, but the idea for disappearing photos. Now this is different. Who knows people will want in so that very night Brown and Spiegel start mailing developers there their turn down a couple of times, but luckily app developers are a dime a dozen at Stanford, then a name pops Spiegel's mind. Wait you wouldn't asking Bobby. We together on the future freshman app. I know he be down Bob yeah. He graduated, but he's not doing anything yet right. Where Spiegel is loud and opinionated, Murphy's calm, quiet and a great developer, he knows how to code to Spiegel and Brown. It makes perfect sense to include in

six years ago, then, nineteen year old, Mark Zuckerberg was also sitting in his Harvard University dorm Room and dreaming of a way to change the social landscape by two thousand and ten Zuckerberg D camps to Palo Alto, California, just up the road from Sanford Zuckerberg, just another young entrepreneur hard at work on his invention, which is made him the social media, King text, New Bundar Facebook has hundred million users by two thousand and ten is sitting on the fastest growing company in the world, thanks in large part to pictures right now. Facebook photos, is the largest photo sharing service in the world. People upload pictures and tag their friends in them which increases traffic to the site. Is people check out the pictures of themselves, but

bird knows his success depends not just on his massive photo library, but on staying relevant as he explains to an interviewer being relevant means taking cues from the younger generation. Whenever I get a chance to talk to high school kids IO, I want to ask them what what type of stuff they're using right because no, I think, I'm kinda young. When you talk to high schoolers you'd, like feel old immediately right immediately, I is so big. It goes to Hollywood. In October, the ten the social network opens across the country. It's the story of how Zuckerberg Bergen his friend Eduardo Savarin start a website together and how that business rips them apart, devolving into ugly lawsuit Zucker comes off as the villain who steals ideas and backstabs his friend. What is this correct? It's called a cease and desist letter that one covers twins are saying that you stole their idea. I find that to be a little more than

mildly annoying. Will they find it to be intellectual property theft, they're saying that we stole the face before giving a? I know what it says did we did? We want all screw around with me now. Look at me. The letter says we could face legal action. No, it says I could face collection. Do they have ground? The grounds are our thing is cool and popular in Harvard connection is lame. Word. Oh, I didn't use any of their code. I promise I didn't use anything. I got you built a nice chair, no money to everyone. Whoever is built a chair. Ok, they came to me with an idea. I had a better one. Why didn't you show me this letter? I didn't think it was a big deal. Zach Bergen, Sabourin, eventually settle out of court. The week twins win a sixty five million dollar settlement from their lawsuit with Zuckerberg, but Zuckerberg still wins after all, he's in charge and he's got mountains of dough. If Spiegel Murphy and Brown saw the movie they'd be looking

a future version of themselves, in fact, that movie will prove object lesson for dozens of brilliant tech teams with giant dreams and a this grasp on intellectual property law. But back at Stanford, Spiegel and Murphy are hard at work. Murphy begins to develop the code. Brown agrees to handle marketing Spiegel takes the lead. Ceo, designing the apps interface in business plan he passes is lock up to Murphy, who coached them into reality. Start building a website where users upload a photo and set the timer that limits how many seconds the recipient can see the photo before it vanishes, but uploading of Photo from your computer onto a website is clunky it Jones on the team that maybe they don't need a website. Everyone take in stores photos on their phones, so they create an app

design for a mobile device. They call it peekaboo it's a play on a childhood game of peekaboo, but spell like pick short for picture. Its logo is a white GO set against a yellow background that summer they moved to Spiegel's father's palatial home in Pacific Palisades, where they keep working on. That app he graduated a year ago, but Spiegel and Brown are returning to Stanford for their senior year in the fall of twenty eleven, so they need to this done over the summer, Brown spends his nights partying. Meanwhile, Spieglein Murphy grow closer, it's July, 13th, two thousand and eleven Regal, Murphy and Brown, or huddled around a computer in Spiegel's dad's living room. Today, the first version of peekaboo is debuting in Apple's app store. The app is free to download it. Falls to a front facing camera, encouraging users to take a selfie once they snap

picture, they can send it to selected contacts by swiping right, the trio go out to dinner, to celebrate the launch they cap off the meal with a cake frosted. The ghost logo, the next They Spiegel uses an analytics platform to track their downloads. He called br on over to his laptop. This can't be Spiegel refresh the page. Nothing thank virtually zero downloads. What the Hell Instagram was downloaded forty, sometimes the day it was released. Why haven't we had bad? I'm sorry, man, I don't know we need to get word out. We got to reach out to journalists to get them to write about the app brown charge of marketing. He should step up volunteer yeah. That would work speaker pauses, but.

Brown doesn't step up fine I'll. Do it Spiegel Target tech bloggers like the millennial guy site, bro Bible. I starts writing. I just built an app with two friends of mine and we think you might really really like it. It's called peekaboo you just take picture, set the timer to ten seconds and headed to friend when they receive your peekaboo. They can view it until the timer runs out and then it's gone forever fun stuff. He doesn't get any bite peekaboo still has only one twenty seven users damn this is pathetic. We got to do something to get noticed. His mind goes right back to where he started. He thinks maybe we should market it more explicitly as a sexting app, he draft suppressed.

He said succinctly: state speaker, appeal, peekaboo lets you and boyfriend send photos for peaks and not for keeps the clock is ticking, can't keep pushing on an idea with no traction forever. Murphy's parents are begging him to get a real job secretly. Spiegel thanks Brown is not doing enough. She, he came up with the idea for the app, but no one is downloading it. It must be because Brown's not doing a good job marketing. It takes his concerns to Murphy Bobby. I think we need to cut Reggie out of the company yeah. I suppose he just apple his wait. Look man. I started future freshman together. This is always been about us, yeah man. Let's keep it sixty and forty. Just like future freshman, I get sixty percent for the initial idea development. You get four the code there,

it's good to me and Reggie Reggie's out man. They don't know it, but Reggie is he dropping on the conversation and he hears every word. He feels betrayed but doesn't confront them not yet, with the app languishing and tensions escalating brown heads home to South Carolina, then on August 16th, two thousand and eleven Brown calls Murphy and Spiegel guys I've been thinking any more credit. I came up with the original idea. I came up with a peekaboo name and I came up with a ghost logo. I want thirty percent of the company. Spiegel is fury S. Brown spent all summer partying. Instead of working with him, you don't deserve anywhere near that, but I directed your talents. I told you what to do

that's the last straw for Spiegel. He hangs up. He and Murphy cut Brown off change the administrative password for the app and stop speaking to him. Brown responds by inundating them with emails, calls and texts going Murphy nor in and continue building their nascent company. Then more bad news arrives peekaboo, who receives a cease and desist letter from a photo book company with the same name Spiegel the need to come up with something new, a name that captures the con depth of communicating with pictures and name that evokes pictures disappearing quickly until Amber 16th, two thousand and eleven peekaboo rebrands as Snapchat and we launches in the app store. This new date also allows users to add captions to their photos.

Spiegel is now CEO: Murphy is Snapchat's chief technology officer, it's been more than a year since they and Brown started working on Snapchat things are take we going to plan starters, they barely have any users or money. Google is learning that overnight. Success can take a long time, so speak turns to Stanford for his senior here, and Murphy takes a coding job. It's not instant startup up Fairytale Spiegel was hoping for, but there about to get a lifeline from an unexpected white's business. Wars is brought to you by Westin hotels and resorts when you're traveling. There are an awful lot of annoying ways you're out of your regular routine, and did they understand this and they a single goal to help you travel well. In fact, they say that it's more than

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Houses exclusively for members of their stock advisor service members get exclusive access to the stock advisor website with daily updates that cut through the noise of the financial market. So what are you waiting for? Go to fool dot com, Slash, Bw, to learn more and to claim an exclusive discount only for lesser It's the fall and a young teen in Orange County California, high school syrup, play unlocks her Ipad and opens up a new app. She just downloaded she snaps selfie and uses her finger to scribble a caption. This class is so boring. She sends the picture your friend who, sitting on the other side of the room or friend, opens taps on the

photo smirks. The image disappears seconds later. This is Snapchat in action. It arrived at the school a few weeks earlier by word of mouth and it didn't with some tech savvy teen know. Spiegel's mom tells her niece about Snapchat. The girl goes fancy school, where every student is given an Ipad to surf the web for research. Facebook is band but the administration doesn't know about Snapchat. Yet hardly anyone does so. The download it to her school Ipad Mini, center friends start using this new app to send each other pictures. These teen Snapchat is the digital equivalent of writing notes during class best of all of their caught. The incriminating evidence disappears. The spread spreads like a virus through the Orange County high school. Meanwhile, chance user numbers finally start to pick up

do near one thousand downloads, a respectable beginning, but Spiegel and Murphy Puzzle over the numbers not sure what's going on, then they noticed something strange number of users, peaks from eight, am to three pm school hours. What their key demographic is Tina wow, that's a much younger audience than Spiegel pitched investors. Last year, Christmas, two thousand and eleven across California teens are tugging their parents through malls in Apple stores, to pick out new iphones for Christmas, whining his parents into buying a phone one teens first move is to download snapchat app. He snaps healthy and writes a caption over it. Only time sacks lol, he swipes riding apps on his friend's name. It sends

his friends at home with her parents when her phone lights up, she taps my phone and down the photo to view it. She sticks out John for a selfie posting next to the Christmas tree. I know right. Just then family dog starts falling in a low hanging bubble. She got your phone and records a video. She quickly types, a caption, lmao, she's right and select several names from our contacts. Send those sh tell their friends from other schools about the cool new app, those and still more friends. The daisy chain is kicking into high gear over winter break. Check. User grows to more than twenty two hundred users, five thousand downloads, ten thousand down By January they hit twenty house in downloads. This is no appearing act. Chad is real and growing

exponentially February. Two twelve Zuckerberg files with the SEC to take Facebook. Public Zuckerberg claims he built, spoke to accomplish a social mission to make the world more open and connected. The ipo will rain down a lot of money, but something tugging at Zuckerberg Berg used to being in charge and driving every major decision of the company when Facebook goes public in May, the company is going to be under the scrutiny of many more investors he's going to have to answer to a lot more people. Zuckerberg also knows that, while he's the top dog now that could easily change people love using Facebook, mostly to share photos, but there's an new kid on the photo sharing block Instagram instead and debuted two years ago and is quickly grown to third

million users on the Iphone alone by two thousand and twelve Instagram is worth some five hundred million its users are now upload more than five million new pictures every day? More importantly, Instagram Mobile first something Facebook is struggle with soccer founded Facebook for desktop, not mobile devices, but he knows mobile is the future and that Instagram is big competition and the best way the deal with competition is to buy it. So in April two thousand and twelve, he makes an offer one billion dollars double Instagram's. Most recent valuation Instagram accepts it's the first time. Facebook is ever acquired a company with so many users, Zuckerberg means business

and it's a move that will mean trouble later on for Snapchat. Just before Facebook goes. Public Zuckerberg translates his letter to investors into a manifesto for employees. He has bound into a red book and has a copy on every employee's desk. The its title is. Facebook was originally created to be a company in he pray for employees to innovate it in with a nerve wracking thread. If we don't create the thing that kills Facebook, someone else will mean Spiegel is tracking the photo sharing business closely. He knows he's sitting on a gold mine. If he can just grow grow grow is users but wild Spiegel watching soccer. Every move, Snapchat isn't even on Zuckerberg's radar when Zuckerberg

finally does notice. Unlike Instagram Spiegel will be unwilling to negotiate terms. Surrender on the next episode snapped that spreads from one Orange County high School to NASH, phenomena and Zuckerberg threatens to Spiegel's young company, from wondering this is business wars. We hope you enjoyed this episode and we invite you to subscribe on Apple podcasts, Google, podcast, Spotify, Stitcher Iheartradio or where. Every you, listen to podcasts. There's a link on the episode notes if you tap or swipe over the cover art you'll, see some offers from our sponsors. Please support our show by supporting them. If you like, you've heard it would be terrific if you give us a five star rating and tell your friends how to subscribe, to there's another way to support us and that's by answering a short survey. One dot com, slash survey,

while you're at it don't forget to tell us what business war stories you'd like to hear. We say something about the conversations in our episode today. We can't know exactly what was said, but this dialogue is based on our best research. I'm your home David Brown, Natalie Rubber, wrote this story. Karen Lowe is our senior producer and editor Emily Frost. Edit, This story, our editor and producer, is Jenny. Lauer, Beckman, sound design by Kyle Randall for Bay Area, sound our exam, the producers, Marshall, created or non Lopez, or wondering.