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Meet the 23-Year-Old Kid Who Turned Down $3 Billion for Snapchat

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Meet the 23-Year-Old Kid Who Turned Down $3 Billion

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Two years ago, Evan Spiegel was just another beer-soaked frat boy obsessing over sex and dot.com riches. This week, the 23-year-old co-founder of Snapchat was offered big -- big -- money for the tiny smartphone app company he created.

Instead of dancing into the sunset, Spiegel did the unthinkable, turning down a $3 billion offer from Facebook (FB) and then a $4 billion bid from Google (GOOG). A college dropout running a company with almost no assets, no revenue and a mountain of legal problems, Spiegel is betting Snapchat can transcend the stigma of the "next big thing" and become an industry unto its own.

There's no going back now. History will paint Evan Spiegel as either one of the most brilliant entrepreneurs ever, or a delusional fool.

With him there is no in between. The irony of the weird tale unfolding around this boyishly handsome child of privilege is that Snapchat is based on the idea of not leaving any history at all. Dreamed up as a way to send so-called "sext" messages that self destruct before falling into the wrong hands, Snapchat doesn't actually posses the things that made Facebook and Google huge. Snapchat knows nothing about its users. Each of the millions of Snaps that will be sent this month will be erased from a third-party server within seconds of being received.

What Snapchat has is explosive growth with the teenagers that are already sick of Facebook. Snapchat is sexy and subversive. It's cool. It's everything Facebook isn't. That may be precisely why Spiegel thinks Facebook CEO Mark Zuckerberg, Google, or maybe even Twitter, will be coming back with even bigger offers soon.

How it started

After leaving school, Spiegel moved in with his father and used some of the $70 million the company has garnered in venture funding to continue to build out the app. In a recent interview with the Associated Press, Spiegel recounted how his controversial company came to be:

"A buddy of mine was bummed about a photo he (regretted sending). And so we started looking at some of the other applications in the space that were doing disappearing texts, photo, video. And they really had a hard time because there was a lot of stigma around deleting things. But when Bobby (Bobby Murphy, Snapchat chief technology officer and co-founder) and I built the prototype and started using it, we realized how much fun we were having sending the photos back and forth. And based on our experience with the application we were able to do a good job describing how ephemeral content can make an experience that is really fun, exciting and way more engaging."

According to his bio on Snapchat's website, Spiegel dipped his toes into software development while in high school "developing simulators and video game emulators" before moving on to more complex websites he would build for friends and family. The young tech hot shot now serves on President Obama's Council on Technology and Media and apparently has finished up his degree at Stanford.

Tech gossip site Valleywag and others describe Spiegel as a spoiled frat boy who stumbled into a fortune while brainstorming ways to send less-incriminating sext messages with his fraternity buddies. According to this less-charitable version of events Spiegel and credited co-founder Bobby Murphy adapted much of what is now Snapchat from an earlier company called "Picaboo" that was created by Reggie Brown.

Brown, a former Kappa Sigma fraternity brother of Murphy and Spiegel, has filed suit against the company in Los Angeles Superior Court. It became an even higher stakes lawsuit Wednesday evening when it was reported that Snapchat had turned down a $3 billion cash offer from Facebook. By Thursday afternoon, the founder of GigaOm, Om Malik, reported via Twitter (TWTR) that Spiegel had subsequently rejected nearly $4 billion from Google.

New visionary

According to Snapchat's website, the company's infrastructure and unopened Snaps are stored on Google's cloud computing service, App Engine, until they are viewed and then deleted. Snapchat claims more than 350 million Snaps were sent in September, but the company has no reliable information on users. Right now, Snapchat's most tangible assets are a cute icon, a great app and lawsuits.

Hyper-growth or not, who is Evan Spiegel to turn down a $4 billion offer for his little app company? As Yahoo Interactive Editor Phil Pearlman sees it, Spiegel is the latest, no-holds barred visionary tech titan in the making. "He's a smart guy, a super young guy, and my impression is that he's in it to win it," offers Pearlman in the attached video.

As for the aforementioned lawsuit, Pearlman notes that "the parallel to the Facebook story is really interesting from a Machiavellian perspective. You need that kind of a cutthroat or warrior mentality to make it."

If Spiegel getting sued by Brown calls to mind Zuckerberg fighting off the Winklevoss twins' claims to have invented Facebook, Snapchat's other legal woes give off a whiff of a much creepier entrepreneur named Joe Francis, former king of the Girls Gone Wild empire. Much like Girls Gone Wild, Snapchat has been dogged from the start by claims of trafficking in illicit visuals. Francis built a huge business selling videos and DVDs of women flashing the camera and engaging in other lewd behaviors. In return for their consent, Francis would pay the women as little as a hat or T-shirt.

Ultimately, a series of increasingly weird lawsuits destroyed the business, which filed for bankruptcy earlier this year. Whether he proves to be another Zuckerberg, Francis, or something entirely different, Evan Spiegel couldn't seem less concerned. The rabid appeal of Snapchat to the highly coveted teen audience makes it likely that Facebook, Google or perhaps Twitter will come around with even larger bids for the company. Better still, high-profile venture backer Benchmark Capital gives Snapchat a veneer of respectability and legal cover of which Francis could only have dreamed.

Spiegel is straight out of central casting. A 23-year-old soon-to-be billionaire from Southern California who already has enough money and self-assurance to wait as long as it takes for someone to make him an 11-digit offer for his sexting app. It's a Millennial version of the American dream.

Or at least that's one version of it. Pearlman sees substance under the sizzle. "The media is going to frame things so that they're as sellable as possible," he concludes.

However brilliant he is, or is not, Spiegel has the world convinced Snapchat is a better social network mousetrap. The only question seems to be exactly how much gold gets laid at his door.

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