HIGHLIGHTS: Evan Spiegel - CEO of Snap

0:00Hi everybody, tune in to this short version of the podcast, which we do every Friday. For the long version, tune in on Wednesdays. Hi everybody, I'm Nicolai Tangen, the CEO of the Norwegian Sovereign Fund. And today, I'm really thrilled. I'm here with Evan Spiegel, the co-founder and CEO of Snap, the company behind the very popular Snapchat. Now, it's used by nearly a billion people every day. He was 22 years old, turned down a$3 billion offer from Mark Zuckerberg. and has continued to build the company, which, by the way, in Norway of all places, was one of your first really, really big markets.

0:36So fantastic to have you here. Thanks so much, Nikolai. It's great to be on the show. And yeah, we now reach more than 3 million Norwegians. So very proud to serve the Norwegian people. Now, it started as an idea that most people thought was totally ridiculous, a photo that disappears just after you look at it. So where the heck did that idea come from? Well, Bobby and I had grown up with social media and on social media, everything was saved forever. It was public. It was like a big competition to see how many friends you had or likes you could get on your photos. And so it meant that people were only posting pretty and perfect moments, not, you know, the full set of, uh, full set of emotions or full set of experiences they have that, you know, are really important to, to relationships.

1:18So, uh, I think the most important thing Snapchat did was create a new way of communicating with visual messaging. That was really the foundation of the service. Now, today, it's diversified across a map that lets you see what your friends are up to or augmented reality lenses, of course, content with stories and spotlight. But the core of the service is really visual messaging between friends and family. So where do you go? You're like 22 years old, no money, no app, no nothing. I mean, how do you start? Well, I was in school at the time, and Bobby and I actually lived across the hall from each other.

1:50And so we started working on some projects together, one of which was called Future Freshman, which was a service designed to help people get into college. That was a total failure. Only my mom signed up for our service, despite both of our siblings applying for college at the time. So we got some strong customer feedback in the early days. We ended up shutting down Future Freshman, trying a few other things and ultimately creating Pickaboo, you know, as Snapchat was called at the time, which I presented to my class in junior year. You had a pretty healthy offer to sell the company early on. Now, in Europe, we typically take the money and run.

2:29You thought differently. How come? Well, we really loved what we were doing. We saw a huge long-term opportunity. I mean, now the service reaches nearly a billion people around the world. Back then, it was still very small. And so we believed that we had a vision that was unique and different than traditional social media that was much more focused on close friends and family, on messaging and self-expression. And so we decided to pursue our own vision. And I think the thing that really helped us make the decision was just how much we love what we do. Now, you've been at the forefront of a lot of innovations, right?

3:07Disappearing messages, stories, augmented reality filters, and so on. How do you build a company that comes up with these kind of ideas? Well, I think what's so important is to continue to create a culture where great ideas can come from anywhere, where people put good ideas before hierarchy. One of the challenges with companies as they grow is they become much larger organizations. People become more fixated on promotions or making more money rather than taking risks. And so one of the things that we've done is kept a very, very small design team. It's about nine people. It's a totally flat structure, So there's no fancy titles or anything like that.

3:43And the entire idea is to iterate really quickly to try new things. You know, we look at hundreds of ideas on a weekly basis. And every now and then we have a good idea. But I think, you know, the most important thing is to create a culture that rewards creativity and risk taking rather than, you know, a culture that rewards promotion, for example. Now, the biggest bet now for you seems to be the augmented reality glasses. and I believe you are on Generation 5. Do you think the world is ready for this now? I think the world is so ready. I think that technology has been trying to catch up to where the world is.

4:22I think folks are exhausted by what their computers and their phones demand of them. I mean, people are spending seven or eight hours a day hunched over a screen. They feel like it distracts them from the real world, takes them away from their friends and family. but yet this technology is so useful and so powerful, right? That we don't want to just put our laptops away. We need to fundamentally change what a computer is. And that's really what specs do. They take computing and they actually integrate it in the world around you. They make it something you can share together with your friends. So you and your friends can participate in the same computing experience in the same place at the same time.

4:57That's really, really powerful. And it represents a whole new direction for computing that I think the world has wanted for a long time, but the technology hasn't been ready. Why will AI reduce hierarchy in an organization? I think ultimately AI creates a huge amount of leverage for managers to take on a lot of the managerial work that they used to have to do in the past. So for example, in the past as a manager, you had to spend a lot of time staying very close to what your team members were doing, working to provide very actionable feedback, gathering all that feedback from their peers. Today, I can use our systems at Snap to see everything they're actually doing without them having to report anything.

5:39I can just understand based on the work product they've actually contributed, whether or not they're meeting their goals. I can easily gather peer feedback from their interactions with their peers and feedback from their peers and ultimately turn that into very, very actionable feedback without having to do much managerial work to get that outcome. So I think if you look at a lot of the things like career planning, career conversations, feedback, a lot of the day-to-day work required of management, most of that I think is going to be automated in the not-too-distant future. And that's going to free up managers to lead.

6:13What do you think is going to happen to the number of reports that a manager have? I think it could very meaningfully increase. And I think, you know, that's certainly a benefit that, you know, rather than maybe a more traditional seven to 10 directs or something like that, you could even see that number double, you know, over time as more of that managerial work is automated. How do you make sure that young people stay on the platform when they grow up? I think it really comes down to providing utility around those close friends and friend and family relationships. One of the things that's fascinating, you know, when we get older, our friend groups actually get smaller.

6:53And so Snapchat's really well positioned for that because it's built around this close friends and family dynamic. And so as you go from caring about, you know, staying in touch with maybe hundreds of people when you're in college to staying just close to your, you know, few best friends or your family or, you know, the grandparents. I think Snapchat's a really, really useful tool as we all grow older and ultimately, you know, choose to stay in touch with that small group of close friends that really matter. And what's the tradeoff between keeping it small and authentic versus becoming very big in Instagram and TikTok?

7:26I think there are lots of tradeoffs. I mean, the first thing is that communication services just grow slower than social media because social media is broadcast-based and Snapchat is based on communication. And so that does mean there are some tradeoffs. And we've seen historically in terms of our rate of growth because it's dependent on people communicating with a smaller group of friends rather than blasting out content to thousands of folks or people they may not know. And so I do think that ultimately that trade-offs is balanced with the resilience of building a communication service because the durability of communication services and the importance of that in people's lives is something that's helped us build long-term value.

8:06We'll work on that. Now, you've been CEO since you were 21. It's pretty amazing. And now you are 30, what is it, 34? 35. Wow. How have you changed as a leader? You know, it's so interesting. In the early days, right, I had to wear so many different hats, whether it was, you know, answering customer support emails or, you know, getting the legal work done, the financing. So much of, you know, my growth has been about leading people and the evolution necessary to, you know, primarily focus on making sure we have the right folks in the right roles and that I'm helping them grow and develop. And that being much more important than, you know, any individual task or function we have here at our company.

8:47So I think so much of the job really becomes, you know, about people. And that is certainly the most important thing to me. I think, you know, the one thing that's been really helpful through all this is because we started the company when we were so young, we've been able to really think long term. I mean, I'm sure you're aware, the tenure of public company CEOs is incredibly short today. And it's very hard to do anything of real significance in such a short period of time, if that's four years or seven years, anything that requires real technical development and research and development happens over very, very long periods of time.

9:21And so I think, you know, as I've gotten older, I've been able to better appreciate what a strategic advantage that is to really be able to invest consistently over a long period of time.

9:35oured car