# The Snapchat Memo: Lightspeed's Jeremy Liew on The 4 Key Elements To Consider When Evaluating A Consumer Social Product What is Good/Great/World Class For Retention, Usage and Downloads in Consumer Social Today & The Core Insight Development of Eva 20VC · Feb 24, 2021 · 40 min · 8,309 words Speakers: Harry Stebbings, Jeremy Liew Source: https://www.996.fm/episodes/20vc--ep-6b854574/ ## Cold open **Harry Stebbings** [0:00]: This is 20 VC ## Intro **Harry Stebbings** [0:01]: with me, Stebbings, it's my favorite episode of the month. It's the memo, our new show where we unpack the greatest deals of the last decade with the VC that led that early round, and the entire discussion is centered around investment memo they wrote when they made the investment, and you can access that investment memo itself for the first time on the twenty minute VC dot com. Today, I'm so happy to welcome Jeremy Liew, partner at Lightspeed and the lead for Snapchat seed round. As I said, if you'd like to see the memo and follow along with the memo that Jeremy wrote, you can on the 20minutevc.com. As a little context on Jeremy though, as mentioned, partner at Lightspeed, one of the leading firms of the last decade with a portfolio including the likes of Affirm, Snap, Mulesoft, Epic Games, and more. As for Jeremy, in the past, he's led deals and sat on the boards of Snap, Affirm, blockchain.com, and The Honest Company. And before Lightspeed, Jeremy was with AOL, first as SVP of corporate development and chief of staff to the CEO, and then as general manager of Netscape. Due to his incredible investing success, Jeremy has been featured on the Forbes Midas List multiple times. But before we dive into the show today, ## Sponsor read **Harry Stebbings** [1:02]: let's face it. This new world of remote work is here to stay, and so are all of the new headaches that come with running a remote team. 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RCrowd investors have benefited from rCrowd companies IPO ing, like Beyond Meat or being bought by companies like Intel, Nike, Microsoft, and Oracle? Today, you can join our crowd's investment in Nexa three d, a three d manufacturing innovator that's shaping the future of a projected $150,000,000,000 market. Nexa three d's best in class solutions give customers a productivity advantage of 20 times their competitors at up to 85% lower cost. You can get in early on Nexa three d and other unique opportunities at rcrowd.com/memo. The r crowd account is free. Just go to rcrowd.com/memo. But that's quite enough for me. So now I'm very, very excited to hand over to Jeremy Liew, partner at Lightspeed. 32, one, zero. You have now arrived at your destination. ## Conversation **Harry Stebbings** [3:39]: Jeremy, this is such a joy to do. I've wanted to see this one for a long time, so thank you so much for joining me today, Jeremy. **Jeremy Liew** [3:45]: Oh, thank you for having me. **Harry Stebbings** [3:46]: Not at all, but I do wanna go back and I wanna unpack the original Snap memo that you wrote back in 2012. And I always love a good story, so I wanna start with that and some history. So how did you meet the team? Where was the meeting? Paint that picture and contextualize it for me if that's okay. Sure. **Jeremy Liew** [4:01]: Yeah. It's actually kind of a roundabout story. We first heard about Snapchat because one of my partners, Eggers, is a very involved dad and he noticed that his daughter had started taking weird selfies of herself. So rather than selfies where she was trying to look pretty as possible and in beautiful settings, she was making weird faces and looking strange. And he asked her like, what's going on? And she said, oh, dad, you know, there's this new app that everyone's using at school. It's called Snapchat. You know, there's three apps that everybody at school has Instagram, Angry Birds, and Snapchat. He thought to himself, I've heard of those first two, but I haven't heard of that third one. So he mentioned it to me, and I thought I would look into it. And the strange thing is if you start using Snapchat without having other friends who use Snapchat, you lose all context. You don't sort of understand what it's for. So I initially didn't get it. Nevertheless, sort of persisted and tried to get a meeting with the company to find out more about it. And the challenge was the website only had an info at Snapchat, the only contact info available. So I emailed them, and I never heard back. And so, you know, later on, Barry asked me if I ever found out, you know, what was going on with the Snapchat company. And I said, yeah, I'm I'm working on that. I then looked up Snapchat on LinkedIn, and I couldn't find any contact information. And I was in a little bit of a loss. I wasn't getting any responses from the email. There was nothing listed in LinkedIn. So I ended up doing a WHOIS lookup to try to find out who had registered the Snapchat URL, and I got a info Toyota Group email. So I emailed back. I did, yeah, and I didn't get any response. So now this has started to become a bit of a challenge. And so what I did was I looked up a Toyota group on LinkedIn, and I found one employee, Evan Spiegel, CEO of Snapchat and a student at Stanford I was like, great. So I contacted him through LinkedIn. And again, I didn't get any response. And so now I just started trying all sorts of different things. Tried Evan Spiegel at Snapchat, spiegel. Heaven at Snapchat. And I tried all these different email addresses, you know, based on the information, Evan at Tokyo Book Group, like all these different things, didn't get any response on any of it. And finally, what I decided to do was, since Evan was a student at Stanford, and since I graduated from Stanford for Business School, at that time, Facebook allowed you to message people who were in the same network and Stanford constituted that. So I messaged him through Facebook. And I finally got a response, but this time I got a response within five minutes just down the road on at Sandhill, and I suggested that we get together to learn more about the company. And the very next day, we had a meeting set up. You know, that was a super interesting example of sometimes you have to find different ways to get in touch with people. A few years later on, I asked, and I told this story actually in an all hand at Snapchat. I asked him like, why did you not respond to all those other emails, but you finally responded to my Facebook message? And at the time, I had as my profile a picture of me at Obama from a fundraiser that I had attended during his first election campaign. And he said, well, you know, you had a picture of you and Obama there, so I figured you must be a decent person. So I I figured I would take the meeting. **Harry Stebbings** [6:59]: Can I ask, when you look at the persistence that you put in there just to get in that first meeting, is there any lessons or advice that you give to, like, young hungry associates hunting, hunting, hunting day in, day out? Is there any takeaways that you give to them from, like, what you went through there? **Jeremy Liew** [7:13]: When there's a meeting that you particularly wanna have, it's often the case that a lot of people wanna have that same meeting. And so, yeah, I do think you gotta try to find, you know, some ways to differentiate and to stand out and to keep trying because for sure, if you give up, the answer is going to be no. But this was a particular instance where it wasn't clear to me what was going to work. And frankly, I think the thing that probably changed the most was that they finally had a need for financing. You know, at that first meeting, they ran us through some of the metrics of the business and it looks tremendous. And we said, well, like, is is there anything we could do to help? And he said, well, listen, you know, my super bills are getting too much from my credit card. So, yeah, I think we need we're gonna need to figure out something to to help us figure out how we can pay our server bills. And I said, I think we might be able to help you with that. **Harry Stebbings** [7:54]: I think that's a value we can provide. I do wanna ask it because I you know, we're gonna unpack the traction in a little bit. But starting on the the market from a higher level, I guess the first question and, you know, really suggested from the wonderful mister Barry Eggers who you mentioned, is, like, how, when, and why did you realize that young women as a segment were one of extreme value and really worth paying attention to maybe before the rest of the venture world did? **Jeremy Liew** [8:17]: Well, one of the things that really has changed around consumer tech is it's become a lot more about consumer and a lot less about tech. And you know, today, if you think about social networking, apps, messaging, ecommerce, streaming media, it's all part of pop culture. And so as much as movies or television or music or dance. And so if you ask yourself who are the early adopters of pop culture, it tends to be young women, whether it be kind of television or the music or the apps that they use, perhaps five or ten years later, we find a much broader swath of the population using those exact same apps or shopping at the same websites or watching those same TV shows or following those same artists. And so one of the key questions that we think about when we look at a potential investment is could this become part of pop culture? It's always a positive indicator when you know what some of the early adopters of pop culture are heavily over indexed in using an app or an e commerce store when it's not specifically targeted to them. So as a messaging app having lots of young women, you know, use it, whereas obviously a messaging app could be used by anybody. That's a really positive sign. Unlike, say, for instance, a mascara brand where obviously the targeted young women. So the fact that it heavily indexes in young women doesn't tell you anything. But when we met Snapchat, one of the things that really caught our attention was that 75% of the user base were young women in high school and college. And that is definitely right in the middle of that early adopter base that, you know, that we look for. **Harry Stebbings** [9:45]: It's fascinating in terms of young women being the nucleus and ahead of the curve, so to speak. Can I ask you, in terms of market evolution, how has the market evolved? Has it evolved as you expected as a space? **Jeremy Liew** [9:57]: Yeah, I think that there's a lot of good reasons for why young women do tend to be these early adopters. And I'm going be generalized a little bit, but hopefully it's not too obnoxious. I think if you think about the way that men interact with each other and the way that women interact with each other socially, it's quite different. Women find excuses to get together so that they can talk. And men find excuses to get together to avoid having to talk to each other. And that's, I think, something that's intrinsic about the way that relationships get built between men and between women. Women build their relationships through conversations and they build those relationships through sharing information with each other. And obviously that sort of conversation or relationship is a fantastic conduit for word-of-mouth for anything that people really appreciate. And that's how I think pop culture can spread so quickly through women. Whereas if you think about what you might do with your guy friends, you might get together to play basketball in order to avoid having to talk, or you might get together to play video games in order to avoid having to talk. Or you might go to a sports bar and watch a game in order to avoid having to talk. And, you know, if you're not talking to each other, then the ability for kind of social spread becomes very, very limited. And then, obviously, as you think about young women versus or young people versus older people, as people start to have families, that becomes the center of their time and attention. And so their ability to sort of talk to other people becomes a little bit more limited. And so again, that social spread becomes a little bit more limited. That's why young women are so often the carriers of social culture, the spreaders of social culture and pop culture. And I think that's been seen to be true not just with Snapchat, but also with a number of other social media and messaging sites and apps. So whether it be Facebook or Instagram or Pinterest or Vine or Tumblr back in the day or TikTok you know it's always been young women who've been that first set of early adopters. And also I think it's fair to say at least in The US the African American population has also been one of the core early adopters that has again, sort of propagated pop culture across apps and more broadly. **Harry Stebbings** [11:58]: Kenneth, you've had this firsthand insight in into, you know, specifically, obviously, the Snapchat journey. And I am interested when you think about that and the market evolution, what did you not expect in the evolution of how the market developed that maybe either did or did not happen the way that you thought it would do? **Jeremy Liew** [12:12]: We had always thought that this was something that was genuinely spreading through word-of-mouth, and that is the most compelling way for people to adopt a product. Back in the early days, the only way that you could really kind of friend somebody through Snapchat was in person because they had to open up their profile page and you had to form that friendship by literally kind of taking using the photo of the camera to like capture their profile. And so we knew that this spread was happening through direct word-of-mouth and through people talking to each other. And that I think was confirmed when we looked at the usage patterns back in seed and that was very much geographically concentrated. Know, that geographic concentration again is another indicator of very strong word-of-mouth. And one of the things that surprised us a little bit was that this was very strong in Southern California, Northern California, and Georgia when we first invested and parts of the South. Within a few months, it had hopped to Norway, and it had built a very, very large new following in Norway, which had actually transcended that sort of high school and college age population, in fact, become the number three most most popular app in Norway at that time. So ahead of Instagram, ahead of Facebook, and so forth. And so that's what I think gave us that early indication that the app was gonna be able to break out beyond its high school, college student initial starting point, not just in The US, but everywhere because there was this existence proof that in Norway, it had already let's become top app for across all the apps and therefore was already part of pop culture in that country. **Harry Stebbings** [13:48]: Did it need to be to be attractive? And this is what I often think when I'm looking at investments, which is like, you know, you often layer on the ancillary market or the ancillary audience and you go, ah, if they unlock this, it could be x. But, actually, it's such a large wave being, you know, young people 25 or 30 that it could be a huge company in social network in that in its own right. In your mind, did it need to unlock the broadest wave to be the massive outcome or could it have been its own standalone and super exciting company just with the core? **Jeremy Liew** [14:17]: Obviously, you want to see the biggest possible market. And so, you know, I think it's fair to say that back in April 2012 when the app was six months after it had started, it's hard for us to predict with any degree of accuracy what it could become but certainly the fact that we had seen by August 2012 that at least in one country it had spread beyond young people and encompass the entire population was was really, really positive. And part of the reason for that is that you do have to think about business model at some level, not immediately, but you know, thinking about what could be possible. And then in that instance, the bigger the population, the broader the population, you know, the bigger opportunities are for advertising. **Harry Stebbings** [14:59]: Totally. No. I do absolutely see that. And as a fellow Norwegian, I'm I'm I'm thrilled to hear that we were ahead of the curve on Snapchat as well. But I do have to ask, in terms of traction, you mentioned that kind of becoming number three in Norway and some of the growth they had. If we kind of take it from the top on traction, what did that Snap in store to use account look like at the time? And I guess, how did that compare? You spending so much time in this space, how did that compare in terms of benchmarking to others? **Jeremy Liew** [15:23]: So when we met them in March, April 2012, they had about 90,000 daily active users off of a base of 180,000 installs. That's a very, very high ratio. And I recall, there were three things that really struck me, even though the base was, at 90,000. It's statistically significant, but it's not enormous. But I remember seeing 50% month on month growth, 50% DAU to MAU ratios, which suggests very high engagement and 50% retention after ninety days, which again suggests high engagement, high retention, high growth. That speaks to upside volatility. We look for four things when we're making an investment. I mentioned before, can this become part of pop culture? The second question we ask is, does this create new habits? And with such high engagement and such high retention, it was clear that Snapchat had become a habit for a lot of the users. I remember we were seeing that a median of six sessions per day. So people were opening the app six times per day. They were opening it at least once every second day. And those were numbers that were far, far higher than the average for photography and social media and so forth. So those were the things that gave us a lot of confidence that it was forming new habits. And then the third question that we ask is, is there a scalable, repeatable way to grow? And I think we talked earlier about how we could see that it was growing through word-of-mouth, and that growth was happening very quickly. Like I said, 50% month by month growth. So it really checked the three boxes that we were looking for from that perspective and gave us a lot confidence that there was a lot of upside volatility. And I think you you also have to bear in mind that in 2012, the dominant narrative was that social was dead. Facebook and Instagram had run the table. It's like there was no more new opportunities in social anymore. And so what you really gave us the confidence that this company might be really quite special, and have a different way of thinking about it was the combination of that engagement, retention, growth, these new habits that were being formed. **Harry Stebbings** [17:17]: I always worry on engagement numbers in particular, worry it's a little bit like customer acquisition costs, where, like, the initial market is so directly aligned that, obviously, the numbers, either customer acquisition costs or engagement numbers are gonna look good. But as you move and saturate the market more and move into maybe less obvious or aligned audiences, you're gonna see worse numbers. How do you think about that? And am I wrong to be negative in that perspective? **Jeremy Liew** [17:40]: I think you have a couple of different things going on, and then it really depends on the product. So in ecommerce, for example, I think that can be true. You have a certain target market, and they are gonna be the most engaged. They're gonna perhaps have the highest LTV spend the most money. Then as you move further and further from that core target market, you some of the attractiveness of some of those customers starts to diminish. But when you have something like messaging, you know, that's a core use case that applies to anybody. You could be a young woman, you could be a retiree, that use of messaging is universal. And that's when we talk about kind of pop culture, we talk about a set of young women as early adopters that are not a niche, but early adopters. So this idea that messaging is important to people, not just to young women, but the young women were the first set of adopters is that combination that we look for. It has scalability to the use case, but an early adopter audience that oftentimes does predict more widespread adoption. **Harry Stebbings** [18:37]: In terms of the retention, you said there about the incredible 50%. This is a unfair question of me to ask. But if you're building in the consumer social space, as as many are today, I think we're both very, excited by the resurgence that we've seen over the last eighteen months. But for those building in the space, I think there's a lot of confusion, question marks over what is good and what's great and what's maybe average or not good. When you think about, like, simple benchmarking for great, good, and average, what would that look like ballpark to you? And I know that's unfair to ask. **Jeremy Liew** [19:05]: I think it really does depend on the specifics. But you know, if you looked at something that was comparable to Snapchat, so messaging and social media, and social networking in particular, and I draw the distinction between social media and social networking as to whether or not a response is required. So messaging and social networks, if you leave someone a message or post something, there is a social obligation to respond. To not reply would be rude. Whereas with social media, can enjoy someone's post without having any obligation to respond. And because of that, that creates different levels of engagement and retention. And therefore the benchmarks are different. But I would say as a rule of thumb in messaging and social networks, you would want to see at least a DAU to MAU ratio of north of 50%. And you would want to see at least a d 30 of say, 30 to 40% for, you know, for something to to really be working to be sort of at that outlier level. And Snapchat exceeded both of those metrics. It was part of what gave us, you know, a lot excitement around it. And I think it's one of those things where you may not necessarily have a thesis that there's time for a new messenger. But when you have kind of familiarity with kind of what benchmarks are, and you see something breaking out, it's that distinction between kind of being purely thesis driven and having your head on a swivel and looking for outliers and anomalies and just being sort of very open and quick to respond when you see those. **Harry Stebbings** [20:29]: Yeah. No. Absolutely. In terms of kind of the response and being plastic to move with market. So I do wanna ask, you mentioned that the traction obviously being one part that excited you. Obviously, the team was another part that really excited you. You mentioned Evan being a student at Stanford at the time, and it was maybe less common, so to speak, in terms of backing a student team, especially in 2012. And so Barry Eggers asked this one, it's like, how did Evan, being a student at Stanford at the time, how did you factor that into your thinking? **Jeremy Liew** [20:57]: So to be fair, I think that there's been a history of social networks and social media largely being founded by people who are relatively earlier in their career. You know, if you look at Snap, if you look at Vine, if you look at Facebook, if you look at Instagram, if you look at Tumblr, they were all started by people who were, you know, in their early twenties. Some of them had graduated, some of them had not. But what's far more important than their age is is the fourth thing that we look for in a consumer investment, which is does the founder have a unique insight that explains the success, that explains what's going on. And in this case, that was the thing that really kind of drew us with a lot of conviction, which was in that very first meeting, you know, we were trying to understand what was going on and, you know, why people were so drawn to Snapchat. He said something that I think we are all now know, but at the time, it was a real revelation. And he talked about how social media, Facebook and Instagram were creating a lot of performance anxiety in people because they were the highlight reels of your life. You know, they were capturing the time, you know, the best points of your life. And that was creating a lot of performance anxiety because if you weren't having dinner at some super fancy restaurant or if your soccer team wasn't winning, you weren't at like some really fun party with all the popular people, then you weren't necessarily posting as much. And what he realized was that if you think about how relationships are built, they are built through sharing sharing experiences with people the full three sixty of them. It's not just the top near 10% of their when they're happy and proud and excited. It's that but it's also when they're anxious, when they're depressed, when they're nervous, when they're sad, when they're angry. That is the richness that really builds the basis of long term strong relationships. And you recognize that people willing to put those onto Facebook or Instagram or even frankly into iMessage or texting because of the permanence of those messages that were just sat there forever. And so, you know, by making the default of these messages, these photos would disappear, he allowed for a lot more silliness, a lot more frivolity, a lot more spontaneity that allowed people to build these very full relationships, these very full views of people's lives with their closest friends. There was a social network called Path, which had been started a few years earlier by Dave Marin, who had explicitly set out to try to build a use case for close friends. He did it by trying to cap the number of friends you could have. We felt that the opportunity for Snapchat was that they'd actually found a way to build a new social map, a new social graph just of close friends through this mechanism of initially disappearing photos that allowed that far greater freedom to post and therefore share more, but that was something you're most willing to do with your closest friends. And when he explained it in that way, in fact, I think I remember one of the things that he said was like, look, if you're having a conversation with a friend and afterwards you said, hey, by the way, if you don't mind, I just recorded that. You'd feel somehow betrayed if you were having just a conversation. But he said, look, but somehow the default changed from all the conversations you have with your friends being ephemeral to them all being recorded for posterity because they shifted to digital and digital shift and recorded for posterity by default. He said, so what we're trying to do is to return to the original ways that people have historically built relationships with each other, return to that ephemerality of all the communications. And it was just such a powerful, powerful insight that explained the growth, explained the engagement, explained the retention, that we were just extremely compelled. And then on top of that, you know, was partnered with Bobby Murphy, who was a fraternity brother of his from Stanford who graduated a couple of years earlier. And he'd been the guy who was building all of this and had obviously demonstrated an ability to, like, build high quality scalable code incredibly quickly because he was doing it on nights and weekends since he, at the time, was working for another startup. And so, you know, the combination of, you know, this really compelling product vision and a very high quality, you know, engineering product being built by, you know, a very high quality engineer. I mean, it wasn't that hard to get excited. **Harry Stebbings** [25:01]: No. I'm sure it wasn't. And I I love that in terms of that kind of core vision. I guess the question for me is like, that's the core vision. Obviously, change and evolve and develop over time. And you've seen this with Evan. So I guess a big one for me is like, what's been the biggest changes in Evan as a leader? And I guess what were some of the big inflection points do you think that caused them? **Jeremy Liew** [25:19]: Actually, the most important thing about Evan as a leader is not what's changed, but what stayed the same. And that is that incredible product vision. You know, one of the funny things about product management is that it gets built up on the quote unquote, best practices of product over time. And so you know, everything ends up being an iteration on top of the thing that came before. And that can lead you to local maxima, but it can cause you to miss a global maxima. And so one of the, I think, things that was so special about Evan, and that I think has continued to contribute to the success of the company has been that he's always been able to do that, to look at something with fresh eyes and not iterate over what the current state of the art is, but just from a first principles basis, think about what should be. And a good example of how he did that was Stories. The feed has always been up until this point in reverse chronological order. I think largely because that's what Friendster chose to do. They just have the most recent post on top followed by the one and before and before and before so that you could see when you visited someone's profile page what had happened most recently. And that reverse chronological order was then adopted by Myspace because it's what Friendster had done. It was adopted by Facebook because that's what Myspace had done. It was adopted by Instagram because that's what Facebook had done. And then Evan comes along and he says, how do you tell stories? Beginning, middle, end. Now go to social media. How do they tell stories? Reverse chronological order means end, middle, beginning. Well, that doesn't make any sense. So he said, we're going to create a whole new feed of stories, and they're going to be told in chronological order, beginning, middle, end, and they're going to expire after twenty four hours because that's the FMRI that is so core to what Snapchat stood for. And with that one insight, starting from first principles, thinking about how people interact with each other, he has changed the course of all social networks, because you can't find, you know, whether it's Twitter or LinkedIn, or, you know, obviously WhatsApp, Snapchat started it, but Instagram, Facebook, you know, who famously copied it. Stories has become the dominant format. And that's another great example of how he had this remarkable product vision that starts with what do users actually need, not with what's the best practices today. And that is actually more important. The commonality of that having still being true is one of the key drivers I think of Snapchat's success. But your question was how has he changed and evolved? And I think when he started Snapchat, he was a college student. You know, today, you're nine years on, he's been running, you know, a multibillion dollar company for many years now. And I think his maturity as a business leader, as a leader of people, as a manager, you know, as a strategist. Although he always had very good strategic instincts, but they have just continued to grow and evolve and and blossom. And that's why you you see Snapchat as such a valuable company today. **Harry Stebbings** [28:07]: Can I ask a very tough question? Is in the consumer social space where teams are very reactive to what each other are doing, How does one think about the value of product vision when you can have teams at Facebook and Instagram copy you and spin up the same product in a day? I often think that when I'm evaluating pre seed consumer socials there, I'm like, great insight. Facebook and Instagram are gonna take Yeah. **Jeremy Liew** [28:27]: That's an excellent question. I think that, you know, there's social media, social software, there's two key components. There's the features and functionality, but then there's also the user culture. And user culture is very, very, very hard to change. So you can look at Stories, for instance, on Snapchat, and they are used quite differently than Stories on Instagram. Stories on Instagram, the culture of Instagram is still look at how great my life is. You know, it's still highlight real type, you know, use case and culture, and that then propagates into Stories. So while Stories still they are able to capture the beginning, middle, and far more sensible way to tell a story, it still is very much this highlight real, best of my life type use case because that's the overarching culture of the app that it started with. And you can see that, you know, Stories is used very differently and as a result much more authentically and frequently on Snapchat. So I think that that's one of the key things that you do need to think about. And there have been plenty of examples of companies copying features and functionality, but without the user culture, that's a key ingredient. And the user culture can be set by features and functionality that are introduced new, you know, by a startup because there is no existing user culture. There's less degrees of freedom in an existing service where user culture is largely set in stone. **Harry Stebbings** [29:44]: No. I agree with you, especially on on the culture element and Instagram retaining the highlight real life. I do have to move into a quick fire round there, Jeremy. So I say a short statement, and then you give me your immediate thoughts. Are you ready to dive in? Yeah. Let's do it. Okay. So we always have a pre and a post mortem. If all the stars align, what does this look like in 2012? Do you think was in your head when you were presenting to partnership? **Jeremy Liew** [30:05]: Yeah. I think it was you know, we thought that there was an opportunity to build a new social graph, a new social network that was much more focused on close friends. You know, even at this time, we'd seen the deterioration of the quality of the social map in Facebook, you know, as people had friended people and never defriended people. And so there was this sort of sprawl. And so this idea of, you know, a new social graph based on close friends, we'd seen path attempt that and pass on unsuccessfully. We thought that that was what success might look like. **Harry Stebbings** [30:34]: Got it. On the flip side, what were some of the core reasons this wouldn't work on the post mortem? So you bear **Jeremy Liew** [30:39]: in mind back **Harry Stebbings** [30:39]: in 2012, **Jeremy Liew** [30:41]: you know, there weren't a lot of unicorns. Companies didn't raise as much money as they do now. The norms were very different. And one of the biggest challenges of social media companies is that they succeed, they scale users and therefore costs far, far, far in excess of their scaling revenue. And so burn within a year from our investment, burn was in excess of $1,000,000 a month, and that felt like a very large number back in 2012. And so there were questions about, you know, financing, capital efficiency, business model, so forth. But historically, what we found is that if a social network can get to a 100,000,000 monthly active users, it typically finds a way to monetize. And so that was the upside opportunity. And then we just needed to make sure the company was adequately financed until some of that revenue started to kick in. **Harry Stebbings** [31:24]: Wow, I did not know it was 1,000,000 a month within a year. That's fascinating. Tell me what's the most challenging moment of the snap journey for you? Just after we **Jeremy Liew** [31:32]: invested in the company, we had another firm approach looking to lead very quick, like a month after I think we invested in April and they approached in May and looked to to lead the next round. They ended up deciding that they didn't want to proceed on that basis because I think they weren't able to get the ownership that they wanted. But Evan came back and said, hey, you know, the guys wanted to invest, and now they're not going to. How about you guys invest on the same terms? We should have just said yes, but we didn't. We said, well, you know, we just invested a month ago, and this new valuation is three times higher. You got plenty of money, you don't need it. Let's just see how things go for a bit longer. And, you know, if we'd invested, I think that we've done that round. I think the terms were three on 13 or something like that, it would have been a great outcome for a company and for Lightspeed. **Harry Stebbings** [32:17]: Sorry. Too interested not to ask. That can happen in a lot of cases, and it's easy to look back in hindsight and say, oh, what a mistake. But in the nine times out of 10, you actually lose money or whatever that is, six times out of 10. But like, did that teach you anything from not just going, yeah, absolutely, here it is, or actually, did it change your mindset? This **Jeremy Liew** [32:35]: was a company that had incredible upside volatility. Everything was going right. We had real conviction around the the team and their their vision. And our mistake was, I think, overthinking valuation and, like, anchoring on the fact that thirty days before we'd invested it and at the seed at four and a quarter pre. And, here we are looking at 13 and just thinking, you know, that's three times higher. That was the wrong way to think about it. And absolutely, given the growth of that business, what was a fair valuation today felt like a high valuation day in a quarter would have been a fair valuation, you know, assuming current growth. And so that was a a 100%, and that was my mistake. I own that. **Harry Stebbings** [33:14]: You also got the first decision right, Jeremy. So I mean, you win something, you lose something. If you were to choose one thing above anything else that drove the company, what would it be? What did they get so right that you think is the core? **Jeremy Liew** [33:24]: I really do think it's Evan's product, your vision, leadership, and that we talked about a little bit earlier. That has just been the true north for the company through its good times and its bad times. Product vision has been unwaveringly right. **Harry Stebbings** [33:37]: Unsung hero from the Snap team. What did they do behind the scenes? We've mentioned Evan and Bobby in terms of like an unsung hero that you always thought was stellar. What did they do and who are they? **Jeremy Liew** [33:46]: I think that, you know, Bobby doesn't get enough credit from the very beginning from I think maybe a couple of months in was thinking about the the breakthroughs that have been happening in computer vision and the implications for what that could build. And he had been working on a lot of that computer vision stuff well, well, well in advance of the products eventually showing up in the app, whether it be with lenses, both the inward facing camera lenses where you can do all the fun stuff with your face, the outward facing lenses where you could identify other things either for AR purposes or to be able to kind of interact with things. From back in 2012 and 2013, he had started to lay out a roadmap for that and he had just been steadily building technology and team towards that. And so that has obviously become so much of the power of Snap today. So that's one that I think one person that I think has been definitely an unsung hero. The second one I would probably say is Imran Khan. So Imran joined as chief strategy officer from Credit Suisse. I think it was probably around 2013. And, you know, he really helps take a lot of the load off of Evan. He allowed Evan to focus on product engineering. He took over sales and monetization ops. He he did a lot of financing work in the time when Snapchat raised a lot of capital. And really, I think kind of allowed Evan to focus on the things that only he can do and kept the trains running on time and, you know, drove a lot of monetization growth, revenue growth, so forth. He did a fantastic job of that in his time at Snap. He ended up leaving, I think, a couple of years ago after maybe four or five years at the company. And we ended up funding him and his wife, Kate Carta, in their new company, Verishop. You know, builds a strong relationship with him through his time at Snap and really, you know, grew to immensely respect him and and his ability as a as an entrepreneur and as a business person. And so we're excited to be continuing to be in business with him in his new company. **Harry Stebbings** [35:47]: I love that question. It's one of my favorites. And then the final one, Jeremy, is like, what's your favorite story from working with Snap over these years? And what's the one that really sticks out in your memory? **Jeremy Liew** [35:56]: I just have this memory of when the company was very small, it was maybe like seven to 10 employees. And they were working out of a little beach house in Venice was right on the boardwalk, all glass windows. And this was I think probably late summer, early fall of twenty twelve. Things were humming along, we'd help them hire their first couple of engineers who had been Lightspeed Fellows with us over the summer working on a different startup. Picked up a couple of other employees. And I remember coming to visit the team after they'd all just completed a group workout on the beach. And they had a trainer out there who had them flipping tires and running through the sand and so forth. And when I came in to meet with them and catch up, I just really remember feeling so grateful that I had showed up directly after the workout and not directly before because it looked like they were working themselves very, very hard before coming back in and like hitting the writing more code. So that was just something that I always remember as something that brings a smile on my face. **Harry Stebbings** [36:58]: Always turn up post workout, very strategic entry. Listen, Jeremy, as I said at the beginning, I wanted to see this one for a long time. So thank you so much for doing it and it's been so good to unpack. **Jeremy Liew** [37:07]: Yeah, thanks for having me on. It's always fun to walk down memory lane with with a company like Snap because it really has been such an incredible company. **Harry Stebbings** [37:17]: I mean, I just so love doing that and it's such a joy to have Jeremy on the show that hear some of the incredible early chapters with Snapchat. If you'd like to see the memo that Jeremy wrote at the time of making the seed investment, you can. You can find that on the twenty minute vc.com. Likewise, always love to see you behind the scenes. You can do that on Instagram at h Stebbings nineteen ninety six with two b's. However, before we leave you today, ## Sponsor read **Harry Stebbings** [37:37]: let's face it. This new world of remote work is here to stay, and so are all of the new headaches that come with running a remote team. Well, Rippling helps fast growing startups automate their HR and IT. And now they're making it super easy to manage employees and contractors anywhere. When you hire people in new states, Ripple can now automatically register your startup with each state tax agency and keep you compliant with all the different local labor there. From there, Rippling lets you onboard new hires in literally ninety seconds. You can instantly set up people's payrolls, benefits, all of their apps like Slack and GitHub. 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As always, I so appreciate all your support, and I can't wait to bring you an incredible episode this coming Friday.