SECRECY, CONTROL AND 'KINDNESS': What the Snapchat IPO tells us about its corporate culture

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snapchat Samantha Lee / Business Insider Snap CEO Evan Spiegel

Thursday night's filing of Snapchat's IPO papers was the largest data dump we've ever received from the company. Suddenly, the world knows a huge amount about a company that, until 24 hours ago, was mostly shrouded in secrecy ( and the occasional internal drama ).

Most of the focus has been on Snap Inc.'s numbers: 158 million daily average users; $404.5 million (£324 million) in revenues, and $522 million (£418 million) in net losses.

But Snap's S-1 filing also tells us a lot about the company's internal culture, and specifically what founders Evan Spiegel and Bobby Murphy believe is important. It is the first official document describing the company's cultural priorities and, via its omissions, what it does not regard as important.

Here is a sampling:

Snapchat has a touchy-feely internal culture based on 'kindness'

"Our team is kind, smart, and creative," the IPO says. But it is a very specific type of "kindness":

"When we say 'kind,' we mean the type of kindness that compels you to let someone know that they have something stuck in their teeth even though it's a little awkward. We care deeply about kindness because we want to create a space that helps to give our team the courage to create. We think our team feels comfortable creating new things because they are surrounded by the kindness of their peers and know they have our support."

"One of the ways we support our team is through our 'Snap-a-Wish' program, which we created to help take care of team members who are facing adverse or unusual circumstances. In the past we have used this program to provide things like last-minute plane tickets for family emergencies or immediate help (and a rental car) when a car was stolen."

Snapchat encourages group therapy sessions for its staff

"Listening to and understanding different points of view is our favorite way to find inspiration and improve the products that we create," the S-1 says:

"One of the ways we reinforce the importance of listening is by practicing it with each other. We have created a bi-weekly 'Council' program for our team that encourages team members to express themselves and listen to others. We believe that this type of sharing teaches and reminds our team to listen and learn from those around them."

Snap has a charity arm with specific aims

"In February 2017, we established the Snap Foundation. After this offering, we and our co-founders have each pledged to donate up to 13,000,000 shares of our Class A common stock to the Snap Foundation over the course of the next 15 to 20 years. We anticipate that the proposed programs of the Snap Foundation will support arts, education, and youth."

That sounds great. Nothing wrong with that. It is good that Snap intends to give back to society more than taxes and wages. But "arts, education, and youth" are the kind of priorities you'd expect to see from two wealthy young people who grew up in the rich beach suburbs of Southern California.

It's not a charity for, let's say, vaccinations in the third world, or women's reproductive rights, or literacy in Asia. So "arts, education, and youth" tell us something about how Spiegel and Murphy see the world, and what they think the world's problems are.

Snapchat has an unusual office setup, and this might be a problem

snapchat house Google Street View The house in Pacific Palisades where Snapchat was born.

Snapchat doesn't have a normal HQ office in Venice Beach, California. It uses a series of dispersed private houses as offices instead, and CEO Spiegel is driven between them in a Range Rover with a private driver . The company seems to realise that this might become a problem in the future. Snap already has 1,859 employees. How many houses will it need?

It is not merely logistical. Some employees may end up feeling isolated, Spiegel and Murphy may not be able to see what they are up to, and it could cost them talent, the IPO says:

"Our offices are dispersed in various cities, and we do not have a designated headquarters office, which may negatively affect employee morale and could seriously harm our business."

"This diffuse structure may prevent us from fostering positive employee morale and encouraging social interaction among our employees and different business units. Moreover, because our office buildings are dispersed throughout the area, we may be unable to adequately oversee employees and business functions. If we cannot compensate for these and other issues caused by this geographically dispersed office structure, we may lose employees, which could seriously harm our business."

No other major tech company is run like this. It is very, very difficult to scale up a company when your staff are separated into small groups over a large area. It's a barrier to communication.

The private house "thing" probably stems from Snapchat's founding. Spiegel and Murphy created the app in summer 2011 at Spiegel's father's house. The house was the scene of the betrayal of Snapchat's third founder , Reggie Brown, who came up with the original concept of self-deleting photos, and also created its original ghost logo.

The company doesn't like the media

"Unfavorable media coverage could seriously harm our business."

"We and our founders receive a high degree of media coverage globally. Unfavorable publicity regarding us, for example, our privacy practices, product changes, product quality, litigation, or regulatory activity, or regarding the actions of our partners or our users, could seriously harm our reputation."

Spiegel and Murphy are both notoriously media shy. Spiegel seems to regard the media as some sort of enemy; Murphy's media profile is almost non-existent. The company has a focus on secrecy that goes beyond even Silicon Valley's usual cult-like obsession with not talking outside the shop.

Spiegel and Murphy want to retain complete control of the company

evan spiegel bobby murphy Jemal Countess / Getty Images

No voting stock is being offered in the IPO. That's unusual:

"We are not aware of any other company that has completed an initial public offering of non-voting stock on a U.S. stock exchange," the IPO says.

That means the price of SNAP will be subject to the whims and errors of its two founders. The IPO admits this may be bad for investors who hold the non-voting shares being sold in this offering:

"Our co-founders may make long-term strategic investment decisions and take risks that may not be successful and may seriously harm our business."

That sounds more dangerous than it probably is.

Mark Zuckerberg made similarly bold statements about not running Facebook in the interests of his investors in his IPO letter - and all of that went out the window pretty quickly once the stock started trading. It is very, very difficult for founders to continue to ignore their tanking stock once trading begins. Reality is likely to set in very quickly for Spiegel and Murphy.

But still, buyer beware!

The company seems to be aware that its product is complicated and difficult to use

Snapchat Snap

Snapchat has the same problem Twitter has, but worse: Its hardcore users (young people) absolutely love it but the more casual users it will need to continue its growth seem to find the user interface baffling. The app opens with the camera on, and the various buttons and navigation tools do not give great clues as to where your contact lists, messages and Stories are. Even moderately experienced users can find themselves repeatedly swiping into the wrong screens.

This admission comes in the form of a series of diagrams describing how the app works. It takes Snap 10 of them to fully explicate its functions. This didn't happen in the Facebook IPO.

Snapchat is hinting that it will pivot into hardware

"Snap Inc is a camera company."

Those are the first words in the document and the rest of the S-1 repeatedly refers to the camera as if Snap was in the hardware business and not the business of making mobile apps that utilise other people's hardware. of course, Snap has already marketed Snap Spectacles, a sort of cooler, simpler version of Google Glass. The IPO refers to Spectacles as "our first hardware product" - which implies that there will be more down the line.

This pivot, if it happens, will not be easy. Snap gets almost all its revenue from advertising inside its app - a business that is as old as the first in-app revenue that began running after the launch of the iPhone in 2007. Making hardware and making apps are two wildly different skill sets. Apple is the only company that does them both well. Spiegel has signalled before that he regards Steve Jobs as a sort of god - there is a photo of Jobs in his office . This is either hubris or vision. Time will tell.

Snapchat cares about daily users, not monthly users

The standard metric for measuring the success of an app is how many monthly average users it has, MAUs. But the Snap IPO doesn't discuss MAUs at all. It has 158 million daily average users (DAUs). This is potentially a very brave move - Snap is trying to shift the debate about how popular it is away from the monthly metric to the daily metric in order to prove how essential it is to the lives of its users. After all, how good can an app be if you only use it once a month?

The problem with that is that Snap's DAU growth is already slowing down. It is very hard to show long term accelerating DAU growth. if the growth curve gets any flatter, watch for Snap to start also reporting MAUs the way Facebook and Twitter do.

Notably, Twitter began moving the goalposts of its own metrics when its growth tailed off.

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