A big day for L.A.'s Silicon Beach: Snap Inc. the owners of the photo-sharing app, Snapchat made its stock market debut Thursday, trading at $24 a share.
The IPO gives Snap Inc. an initial valuation of nearly $24 billion. Not bad considering the California company lost more money than it made last year and that its 26-year old, Stanford frat boy, helicopter-flying, Ferrari-driving founder will not allow anyone who buys shares in Snap Inc. to have any voting power. Not even after he dies.
Joel Stein wrote about all this for Time Magazine and joined A Martinez for more.
Before jumping into it, Stein clarified that Snapchat is in a league of its own and shouldn't be lumped in as a "social media" app. "Let me reassure you, it's not really a social media platform. You don't need to be on it, it's not a way to broadcast to a billion people..."
Will I be cooler if I'm on it?
"Well, no one will know if you're not snapping that's the thing, it's a very private place, it's not connected to the rest of the internet...most people think it's a social media company, it's really a way to visual text. You don't open up to a newsfeed of information or pictures, you open up just to a camera. Then you can send a picture or video of yourself then you can put little stickers on it or draw on it or write on it and then send it to your friends."
And it will last just 10 seconds, right? Is that a part of why it's so popular?
"So if you're a 13-year-old girl or maybe even a 45-year-old guy...you go on Instagram, you can take a picture of something and you want it to be perfect and you mess with the filters and you spend all this time finding the exact right caption for it...it's a lot of pressure if you're a teen girl. And you're waiting for people to comment and how many likes you get. Snapchat erases all that. It lets you be really casual, 'cause you're just sending a picture that's going to be erased...it's used for communication, not commemoration.
What these guys [Snapchat] kind of figured out is that photographs are cheap. We still treasure them but...I've got 7,000 on my phone that I'll never look at. I'm creating this museum to myself that no one will ever go in. Including me. And so Snapchat said, 'No, photographs are free. Let's just use them to communicate.'"
And you spoke to a psychologist about why this is so popular to the 18-34 crowd.
"Yeah, because people are worried about iGen, especially the girls of iGen. Their depression rates and suicide rates are really high and part of this is they have Instagram anxiety like they're being rated on their brand all day. Snapchat is kind of an escape for them."
Why is a non-voting share such a big deal? Why did that cause such a stir?
"Oh, it's crazy. This company would be worth more if it didn't have that rule. No one has ever done this before with a publicly traded company. It means that all of the institutions and people that own these stocks can't control the company. So if Evan Spiegel, the CEO, starts doing a really bad job...destroying the company, destroying the company they own, they can't get rid of him. They can't make changes to the company. He's CEO for life basically.
And in fact, the rule is...nine months after he dies he'll still have control over the company. So they can't pry the company out of his cold dead hands."
Evan Spiegel is an L.A. guy...so is it important for this to be in Los Angeles? Why?
"He really shuns Silicon Valley. He talks pretty poorly about the culture there and everyone being in each other's business. So, he moved his company basically across the street from where he grew up, near his dad...he ran the company and lived at his dad's house even when he was worth a billion dollars. And he's built Venice.
Google's there obviously and YouTube's there. You know, they're Silicon Beach, it's definitely happening but Snap is now like the king of Silicon Beach by far...it's just taking over all of Venice and it's attracting other investors and other companies down there."
Stein also touched on Spiegel's image and how "a Bond villain has better optics," how a company that lost money last year can be so successful and more.
Answers have been edited for length and clarity.
To hear the full conversation, click the blue play button above.