Snapchat

Episode 12 breaks the format: the deal that didn't happen at all — Facebook's attempted $3 billion acquisition of Snapchat, November 2013. The cool part: not only did the deal fall through, but history gives the hosts the benefit of knowing exactly what would have happened if the offer had gone through — and what would have happened otherwise if Facebook hadn't acquired Snapchat is, as Ben puts it, actually easy.

2010: Evan Spiegel, a Stanford sophomore, has just moved into the Kappa Sigma fraternity house; across the hall lives senior Bobby Murphy. They become friends, and Bobby recruits Evan to work on a social app inspired by Google Plus ("what?") — unsurprisingly, it goes nowhere. Evan majors in product design with David Kelley — founder of the Stanford d.school and of IDEO — as his advisor, notable because the d.school normally only admits grad students. He also finds his way into auditing the business school's entrepreneurship and venture capital course, taught by Sierra Ventures co-founder Peter Wendell and co-taught by Eric Schmidt and Raymond Nasr (Google's first head of communications), with guest speakers like Meg Whitman, Biz Stone, Peter Fenton, and Scott Cook — who was so taken with young Evan that he hired him as an intern on a project he wanted to launch at Intuit. "No doubt a special individual even before Snapchat."

The summer after sophomore year, Evan and Bobby team up again on Future Freshman — a website helping high schoolers navigate the college admissions process. The story already feels super familiar: a failed idea before the big idea, college together, somebody claiming it was their idea... "there was some twins who—" — the hosts are obviously referring to The Social Network and Facebook; the similarities are eerie. Future Freshman goes nowhere again.

April 2011, Evan's junior year, Bobby graduating: fraternity brother and close friend Reggie Brown comes running up — "I've got an idea for an app. I sent this picture to this girl last night... an app that can make pictures disappear." These details all come out in court filings. Supposedly Evan got really excited and repeatedly called it "a million dollar idea" — which he denied in court proceedings, while acknowledging he was excited. Reggie and Evan recruit Bobby back as CTO (he'd graduated into a real job); Evan happens to be in a Stanford design class where you build a product and a company.

They submit the app — named Peek-a-Boo — as Evan's class project; the final-day panel of esteemed venture capitalists judges the projects. The prototype is a website, not even a phone app — you click the "choose file" button on your computer. "It was janky. And it goes over like a lead balloon": the VC judges hate it; per an Evan interview, they suggested maybe talking to Best Buy about a partnership (cameras?). Not an auspicious start. Undaunted, they work all summer — and end it with 127 users. Ben, who's worked on consumer products that didn't work and is working on one now, knows how terrifying those super-low numbers are while the press is full of insanely high engagement stories: "I need three to four more orders of magnitude before this is..." "Anything." "Meaningful." Almost inspirational that they only had 127 users — working on it all summer.

At the end of that summer, a big argument breaks out among Evan, Bobby, and Reggie — and Evan and Bobby kick Reggie out of the company. The argument came right around the equity-split discussion (prompted by it, David thinks) — a lesson for founders: settle equity before people start feeling they've contributed and earned more than the group thinks. "Unless your strategy is really Machiavellian and you want to push your cofounders out and get more equity for yourself." Pro tip: have the equity discussion early.

The app still goes nowhere; the summer ends, Evan returns to Stanford for senior year, Bobby takes a job at another startup in San Francisco — "they left the app in the store and went back to their lives," literally putting it on ice. More bad news: a cease-and-desist from another startup also called Peek-a-Boo (also in the photo space, the hosts think) demanding they stop using the name. They brainstorm and come up with Snapchat — keeping the ghost, which the hosts believe was Reggie's contribution before he was kicked out.

One thing in the fall turns out to be really important — all per internet articles including a big Forbes profile of Evan Spiegel: Evan's mom tells her niece, a high schooler in Orange County (Evan's cousin), about the app. She downloads it, thinks it's cool, and starts using it with her high school friends. One reason: it works on iPads too, not just phones — and the iPads their private school issued were locked down so you couldn't use iMessage (and couldn't install Facebook, Ben recalls). Incredibly ironic: because those iPads didn't have Facebook, they needed a different way to communicate — so they installed this random cousin's app to text each other during the day.