Snapchat Is 'Only for Rich People'?
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In 2015, did Snapchat founder Evan Spiegel say the app is "only for rich people" and that he didn't "want to expand into poor countries like India and Spain"? That's the claim by a former employee who is suing Snap Inc. for wrongful termination. Anthony Pompliano alleges he was fired after accusing the senior leadership team of inflating app metrics before the IPO.
Pompliano says the company falsely advertised the number of daily active users (DAU), violated a non-solicitation and non-compete agreement, and exaggerated growth and retention data. Pompliano claims that Speigel's response about poor countries came when he suggested going into international markets to expand the user base.
A representative for Snap responded:
"This is ridiculous. Obviously, Snapchat is for everyone! It's available worldwide to download for free. Those words were written by a disgruntled former employee. We are grateful for our Snapchat community in India and around the world."
Snap doesn't deny data discrepancies, but says they aren't as significant as Pompliano claims. Pompliano contends that the discrepancies indicate "a wide-spread, systemic failure in Snapchat's internal controls over its user data." A Fortune article warns that questions about user registrations and engagement could be important to investors, who bought stock in what Fortune calls a "giant IPO" that "just proved we're in a tech bubble."
Discussion:
- Let's assume Spiegel made those comments. Do you find them offensive, taken out of context, or something else?
- How well did Snap handle the response?
- How serious are Pompliano's claims? What effect, if any, do you think they might have on investors?
