Here's Written Proof That Snapchat's CEO Is A Formidable Executive Who Is Poised To Change The World

Flickr/TechCrunchEvan Spiegel, Snapchat CEO and co-founder

Leaked emails have revealed fresh details about Snapchat, and its 24-year-old CEO Evan Spiegel.

While some of the emails are embarrassing - try opening your inbox to the world and see what happens - for the most part, the emails show that Spiegel is a formidable, intelligent executive building an addictive service that has the potential to be the next gigantic consumer technology company.

On the one hand, this should not be surprising. Snapchat, which allows people to share photos and messages that disappear after a short period of time, has already rejected a $3 billion offer from Mark Zuckerberg at Facebook. It is reportedly raising money at a $10 billion valuation.

Billion-dollar offers don't get thrown at dummies. Goofballs, for the most part, don't build $10 billion companies in just three years.

And yet, Spiegel has often been portrayed as just that - a goofball. This portrayal is largely due to the fact that old emails and messages of Spiegel have become public record. Spiegel's messages to his frat brothers were sent to Valleywag and he looks like a vile, sexist pig. But, this was 2009, and he was in a frat and he was its social chair. Spiegel was also sued for cutting out the third cofounder of Snapchat. As a part of that lawsuit, we see emails where Spiegel talks about his "certified bros" that cofounded Snapchat.

But the latest batch of leaked emails tell a different story. They show a maturing executive wrestling with very difficult decisions, impressing people that are twice his age.

Sony Entertainment CEO Michael Lynton had his inbox exposed to the world as part of Sony being hacked. Lynton is a board member on Snapchat. He occasionally emailed about Spiegel and Snapchat's business from his Sony account. After reading through some of those emails, it's hard not to be impressed by Spiegel, and his company. 

For instance, there is this long email from Spiegel responding to five questions from Snapchat board member Mitch Lasky. In the email, we see Spiegel's thoughts on raising money, as well as his thoughts on the state of the economy.

Lasky forwarded it to Lynton. Lynton says of this email, "I couldn't have written this at 23. Very impressive."

1) I 100% understand your perspective on the raise. That said, I would prefer to keep the valuation of the co at $800mm going into a potentially turbulent time in the market. We have 13 months runway, and with a minimally successful monetization scheme we will be able to comfortably extend that. I don't think that monetizing the business will affect our ability to raise at high valuations -- Facebook was bringing in money in the very early days and didn't have any problem attracting high valuations. If anything, we need to monetize the business in order to create leverage for future financings as needed. In the next two weeks I want to focus on the monetization product rather than a potential financing. It's almost there and it's really awesome. If we have a business that is sustainable over the next 2-3 years we will be in a much stronger position. I think 409(a) issues are overstated and that we will benefit from having lower strike price as we hire over next few years. Especially if that price becomes based on revenue rather than VC valuations. I don't think $3bn valuation for fundraising is going to go away - esp because TC and others are already pricing in market volatility. You've seen the data - we have high engagement and high retention product with tremendous growth ahead of us. Monetizing the business now only makes a stronger case for the permanence of our product. I think most important thing I want to communicate to you is that this is not an emotional decision and is not about "proving it" - this business needs to make money. The argument of grow now, monetize later doesn't make sense because we have reached abnormal levels of growth and our monetization product is value-added. I'd rather not burn another $100mm of OPM before we find out whether or not we have a business. If we can build profitable biz w Twitter-scale, 30-person headcount, and major growth ahead we are not going to have a problem attracting additional capital. (This does not preclude necessity of building a much larger team).

2) I completely agree. Not interested in Zander. I am working with Daversa on CAO/COO role and meeting with 4 terrific candidates this week. Will report back on those meetings. As far as GC goes, I have my dream candidate and I think we can make it happen. I am calling him today to discuss but don't feel comfortable bringing him on until we are making money. We will be able to attract best (and risk-adverse) candidates if we can show a path to real revenues. I am moving Philippe to internal operations (we can discuss this on the phone, please do not discuss with him as I have not yet had this conversation with him) and I think he will be able to monitor cash flow while we look for CFO or VP Finance. We're not doing anything fancy - we just need to know if the amount of money in our accounts is increasing or decreasing. We have outsource CFO resource in Keating Consulting and the combo of Philippe+ Keating will get the job done for now.

3) We texted last week, planning on calling him today.

4) Talked to David this am, sounds like Jeremy will be following up with Tencent later in the week. David seemed to think deal could get done. As I mentioned earlier, I don't care either way but we would probably have to offer it to all shareholders to avoid potential lawsuit down the road. Could be more trouble than it's worth.

5) Happened at 10am.

As a note: my view of the market is as follows --

Fed has created abnormal market conditions by printing money and keeping interest rates low. Investors are looking for growth anywhere they can find it and tech companies are good targets - at these values, however, all tech stocks are expensive - even looking at 5+ years of revenue growth down the road. This means that most value-driven investors have left the market and the remaining 5-10%+ increase in market value will be driven by momentum investors. At some point there won't be any momentum investors left buying at higher prices, and the market begins to tumble. May be 10-20% correction or something more significant, especially in tech stocks. Facebook has continued to perform in the market despite declining user engagement and pullback of brand advertising dollars -- largely due to mobile advertising performance - especially App Install advertisements. This is a huge red flag because it indicates that sustainable brand dollars have not yet moved to Facebook mobile platform and mobile revenue growth has been driven by technology companies (many of which are VC funded). VC dollars are being spent on user acquisition despite unknown LTV of users - a recipe for disaster. This props up Facebook share price and continues to justify VC investment in technology products based on abnormally large mkt cap companies (i.e. "If this company attracts just 5% of users that FB has, it will be HUGE" - fuels spend on user acquisition as user growth is tied to values). When the market for tech stocks cools, Facebook market cap will plummet, access to capital for unproven businesses will become inaccessible, and ad spend on user acquisition will rapidly decrease - compounding problems for Facebook and driving stock even lower. Instagram may be only saving grace if they are able to ramp advertising product fast enough. Total internet advertising spend cannot justify outsized valuations of social media products that derive revenue from advertising. Feed-based advertising units will plummet in value (in the case of Twitter, advertising spend may not move beyond experimental dollars) similar to earlier devaluing of Internet display advertising.

THAT SAID, we are still in very early days in mobile application market. I remember growing up wishing I had been a part of PC revolution - and I feel very fortunate to have the opportunity to watch smartphones take off. Snapchat has become one of the top 5 mobile phone brands with Facebook, Twitter, YouTube, and Instagram.

For Snapchat to capitalize on market conditions in next 3 years, it is imperative that we become a revenue-generating company. That will allow us to attract the best talent and prosper despite extreme scrutiny on traditional social media that will have failed to deliver on $$$ dreams. Team is working overtime to drive revenue and innovate on core product - we have a solid 3-year roadmap that we intend to follow.

As a profitable growth company with a focus on mobile we will not suffer from opportunities to raise capital at outsized valuations despite market conditions. Strategically it is important for us to keep expectations low with an understanding that Snapchat may be valued on revenues going forward and that $800mm valuation for a two year old company is remarkable and already more than enough to grow into. With 13-15 months of runway extended by minimally successful revenue generation activities I think we are positioned to capture the mobile communication market.

I disagree wholeheartedly with the notion that mobile will be forever fragmented - we are the only differentiated messaging service in the United States and we will continue to provide a unique and innovative product experience. Snapchat is not valuable in the long-term because it is used by teens or because it is a threat to Facebook. It is valuable because it has fundamentally changed the nature of digital communication inOur focus in the immediate term is revenue generation, growth and product development.

Lynton wasn't the only top executive impressed by Spiegel. Twitter CEO Dick Costolo raved about Spiegel in emails. 

"I'll stop making all of our conversations about Evan, I promise, but I thought this was just wonderful and told him as much yesterday," said Costolo in a message to Lynton, linking to a speech Spiegel delivered. Costolo continued, saying, "I really think he is one of the best product thinkers out there right now.

"I really think he is one of the best product thinkers out there right now. - Dick Costolo

Thoughtful, understands what the shifts in the landscape actually mean for people, clearheaded about what the implications are for product and design. Great."

In another email, Jerry Murdock, co-founder of venture firm Insight Venture Partners, raves about the success of Snapchat. All typos are his:

"I am not overstating it when I say that Snapchat's utility requires hours of your time a day. Kids get dozens of snaps during peak chat times. If you are on the app it's how you communicate with all your 'friends.' Snapchat's stickiness is very real and I think they will kill off 'what's app' and SMS or they will die a slow death by being relegated to a category of "who cares" apps"

In another email, we see a comprehensive break down of Facebook's business from Anthony Noto to Evan Spiegel. Noto was at Goldman Sachs at the time. Now, he's CFO at Twitter. The Noto email shows that Spiegel is thinking deeply about the state of the mobile industry. He wants to understand what the biggest, most successful mobile app is doing (Facebook). This way he can think about what Snapchat can do to build its own business.

The sum of these emails show that Spiegel is thinking carefully about his company. He is absorbing as much information as possible about the state of the company's business. 

Again, this shouldn't be surprising, but it runs counter to the narrative presented until now. Spiegel is not just some frat boy who backed into a successful company. He's a smart executive.