Snapchat Quietly Bought a Smartglass Startup Owned by the CEO’s Friend

Sony hack also reveals Evan Spiegel's outlook on advertising

It's not just Sony whose corporate secrets are being outed by an ongoing leak of hacked documents. Emails released today also reveal Snapchat CEO Evan Spiegel green-lit the $15 million purchase of a smartglass company owned by his college friend.

Emails received by Sony Entertainment CEO Michael Lynton, a Snapchat board member, show that the popular photo-sharing app company bought Vergence Labs, which was co-founded by Spiegel's college friend Jonathan Rodriguez.

The company developed smartglasses called Epiphany Eyewear, which allow the wearer to record video. It's unclear if Snapchat bought Vergence Labs in order to recruit its talent, including Rodriguez, or if the multibillion-dollar startup has plans to get into hardware. Snapchat did not immediately return a request for comment.

What is clear is that Spiegel and Rodriguez have been friends since freshman year at Stanford University where the two lived in the same dorm building, Donner House, according to an e-mail conversation with Rodriguez last year.

"I know Evan from living on the same floor of our freshman dorm (Donner)," Rodriguez wrote, responding to questions about his memories of Spiegel. "Evan is very friendly and hardworking and I have warm memories of his kind and outgoing nature. I am extremely impressed with the great success he is achieving through countless hours of dedication to a product he truly believes in."

The Silicon Valley-based university is a fertile incubator for emerging tech, and it should come as little surprise that startup founders have close connections when so many hail from that campus.

The leaked Snapchat e-mails—including one between Spiegel and a venture capitalist—shed new light on the young CEO. Here is some of what we learned on top of the purchase of Vergence Labs:

  • Snapchat had interest from Mark Zuckerberg for an acquisition late last year at a value of about $4 billion.
  • At the time, Snapchat also was looking to raise money, and Spiegel kept the valuation modest at about $800 million. It is now reportedly worth about $10 billion.
  • While Snapchat has been launching ad products this year, it also had considered a subscription service.
  • Spiegel was clearly interested in ramping up revenue as quickly as possible to create a sustainable business, a point he has made publicly when releasing the first Snapchat ad products.
  • He also had some thoughts on main rivals like Facebook and Twitter. He said Facebook was in jeopardy because of decreased user engagement and its limited appeal to brand advertisers. He wrote that "sustainable brand dollars" had not yet moved to Facebook. The email, from last year, predicted wrongly that Facebook was on the verge of a stock drop. 
  • Instagram could be Facebook's only "saving grace," he said.
  • He said Twitter ad dollars were largely experimental. "Feed based advertising units will plummet in value … similar to earlier devaluing of Internet display advertising," he said.
  • Lastly, Spiegel also said that high valuations of social media companies completely dependent on advertising revenue were unjustifiable based on the overall digital ad market. A year later, Snapchat's only revenue is from advertising, though it's a new kind of advertising that does blend video with mobile.

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