The Stolen Billion Dollar Idea

Snap, Inc, one of the faster growing companies of the decade, went public in 2017 for $3.4B and quickly rose to a market cap of $24B. However, as the company claimed its place in tech startup folklore, major product flops and interesting news events created an environment of skepticism and distrust amongst the financial analyst community, but its application, Snapchat, continues to be viewed by millennials as an icon of bubbling innovation. The controversy surrounding this company that has brought breakthrough innovation to the world of instant communication raises the question: Can a company formed on the basis of someone else’s idea make a go of it?

The idea for Snapchat came one evening when Reggie Brown, a student at Stanford University, was deep in thought about how he wished he could send disappearing photographs while sending intimate photos without having to worry about the photograph’s future. He ran his idea by two of his former fraternity brothers, who offered a lukewarm reaction.. Evan Spiegel, a third frat brother with a reputation for being quite an operator, grasped the concept and thought it was outstanding.  So outstanding in fact, that Evan eventually became CEO of Snap Inc. What started as a simple idea has now blossomed into a nearly $25B company and resulted in many breakthrough innovations, however frivolous they may seem. However, Evan is the CEO, and Reggie is out. As of December 2015, Snap Inc. has paid Reggie Brown $157.5M as compensation for the misappropriation of his idea. Brown claimed that Spiegel stole his idea and ran with it, and, in fact, Spiegel agreed. After forcing Brown out with no compensation, and as the valuation was rising, Brown was awarded a hefty sum for his idea.

Snap is regarded as a highly successful enterprise as indicated by their lucrative funding rounds and IPO. The company has pumped out some of the decade’s most innovative products, including Spectacles (sunglasses that snap photos), Bitmoji (personal emojis), and Zenly (an app designed to provide real-time information about where your friends are and what they are doing). These efforts have led to crazy valuations of Snap and a rat-race to work for what is considered by some to be one of the most innovative companies in the world.  Evan spearheads the innovation charge at Snap, leading his company to introduce products like Snapchat, Snapchat Stories in 2013, and Snapchat Discover and Spectacles in 2015.

More recently, Snap garnered significant backlash from its customers after they redesigned their mobile app, and Evan’s response was essentially deal with it, a telling sign that the company produces innovation, but its timing is not always perfect. As we can see, the C-suite at Snap is clearly innovative, as are the products the company produces. But the question is—if Snap has all of these great attributes regarding innovation, why do their products seem to fail?

For example, the Spectacles at the moment of release were regarded as a breakthrough innovation, but soon sputtered and disappeared. The leading reason for this failure was the botched delivery of the Spectacles.  Besides limited availability (popup shops were it),  there were few influencers willing to back the product, a lack of content, limited content portability,  and poor timing given the flop of Google Glass.

All of these failures are a crucial part of innovation in addition to C-suite guidance and overall product innovation including Snapchat, Zenly, and Bitmoji. What can be learned with Snap’s mounting problems is that innovation can turn out bad or good depending on implementation and execution.

Since innovation can be attached to c-suite management, product design and development, and the idea itself to name a few pathways, that raises the question — Can you steal innovation by stealing the idea?

Instagram may offer the answer.

Peter Kloss is a master’s student in the Technology Commercialization and Entrepreneurship program at Rensselaer Polytechnic Institute’s Lally School of Management.

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